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February 2, 2004
Volume 82, Number 5
CENEAR 82 5 p. 10
ISSN 0009-2347


Chemical CEOs Protest Natural Gas Prices


Chief executives from the nation's 19 largest chemical companies have written President George W. Bush and congressional leaders, asking that the government curb high natural gas prices.

The CEOs urge the government to adopt a national program to raise energy efficiency, reduce natural gas use for electricity, increase drilling, and expand tax relief for gas producers.

The chemical industry has been hard hit by high gas prices because it uses gas as fuel and feedstock and is the U.S.'s leading gas consumer.

The CEOs say today's high prices come when national gas inventories are at record highs--9% above the five-year average. The CEOs blame the government, charging that its environmental policies have spurred greater gas use for electricity generation.

However, natural gas use by electric utilities over the past several years has been flat or declining, according to Energy Department figures, and its analysts note that even if gas prices drop, chemical companies will still be in trouble.

Utilities have indeed installed more clean-burning, efficient natural-gas-fired turbines over the past decade. However, high gas prices have led utilities to burn cheaper fuel, mainly coal, while waiting for the price of gas to decline.

The analysts argue that high gas prices are likely to fall later this year, but they also warn that with cheaper prices, utilities will fire up now-idle gas turbines, leading to more demand, price volatility, and a new round of price spikes.


Chemical & Engineering News
Copyright © 2004 American Chemical Society

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[C&EN, Jan. 26, 2004]

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