US is in 'natural gas crisis,' Dow Chemical chief tells Congress

Washington (Platts)--6Oct2005

Soaring natural gas prices have put the US chemical industry in jeopardy,
and will likely push new investments overseas, Dow Chemical President Andrew
Liveris told a US Senate committee Thursday.
     "This [natural gas] price of $14, simply put, renders the entire US
chemical industry noncompetitive," Liveris said in testimony to the Senate
Energy and Natural Resources Committee, during a hearing on the effect of
hurricanes Katrina and Rita on the energy market. If natural gas prices were
translated into "gasoline terms," current front-month futures prices around
$14/MMBtu would be equivalent to about $7/gal, he said. 
     Because chemical companies use natural gas both to power their plants and
also as a raw material to make products, recent high prices
have stifled profits and made it difficult to do business, he said. 
     Energy and raw material costs now represent about 50% of Dow Chemical's
costs--the highest in the company's history, Liveris said, even though the
company has increased its energy efficiency by 42% since 1990.
    Dow Chemical, and other companies, are "now investing in China and the
Middle East," because the high costs have made the US market unpalatable. 
     "The US is in a natural gas crisis," Liveris said, adding that while the
hurricanes exacerbated the crisis, it did not cause it.
     He suggested the US promote greater production on offshore federal lands
in the Outer Continental Shelf by offering to share revenues with states;
expedite the opening of federal lands that are not under federal moratoria,
but are not being developed, like the Lease Sale 181 area offshore Florida;
and declare a "national emergency" to mobilize Americans to conserve energy.
                                      ---Cathy Landry, cathy_landry@platts.com

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