Economist warns legislators about need for better energy management

23-07-04

A national energy bill that failed to pass last autumn has fuelled advocates fearing Americans are doomed to live the life of Bill Murray.

"Until we do something to fix the problems we have, in a sense we are almost doomed to be like the movie 'Groundhog Day' and wake up to the same music over and over again," John Felmy, chief economist for the American Petroleum Institute, told National Conference of State Legislatures delegates gathered in Salt Lake City.

Felmy urged legislators to encourage their colleagues at the federal level to pass a controversial, Republican-backed bill once it resurfaces in Congress. The Energy Policy Act would have provided tax incentives to the oil, coal, gas and nuclear industries and protected manufacturers of the gasoline additive MTBE from environmental lawsuits.

He said because supply and demand for all US energy sources including petroleum, natural gas and coal are so tight, the system of providing energy to the consumer is getting strained. Strong economic growth, restricted world supplies, cold winters and refinery outages are among the factors increasing energy prices.

"The effect is that we are on a treadmill constantly trying to catch up," he said.

Despite a slight dip in prices, AAA reported the average price for a gallon of regular unleaded gasoline in the Salt Lake area was $ 1.91, 31 cents higher than it was a year ago. On June 1, the price reached an all-time high of $ 2 per gallon.

Felmy said Utah prices are generally a little lower than the rest of the country, but still follow the national trends.

"Right now everyone is talking about gasoline prices," he said, but another storm of concerns about winter fuel is brewing.

Prices of heating oil, natural gas and propane are all significantly higher than they were last year, and Felmy warns that high demand caused by another cold winter could continue to drive prices up.

The Rocky Mountain natural gas average price is at $ 5.54 per 1,000 cf. That figure is up more than a dollar from last year. Nationally, Felmy said, natural gas prices have nearly doubled since July 2002.

Petroleum industry leaders agree that meeting demand is crucial for energy viability.
"I don't think this country is ever going to be energy independent again," said Larry Harlan of ExxonMobil. "But with today's environmental standards and the capabilities of our companies to look for oil in an environmentally prudent fashion, we think getting access to [restricted areas] would increase the supply, which would help meet the growing demand."

Source: The Salt Lake Tribune