EPA says air rules aren't a major driver of gas prices

Washington (Platts)--9Feb2006

A Republican Senate subcommittee chairman held a hearing Wednesday to
bolster his "theory" that clean-air regulations issued by the US Environmental
Protection Agency were driving up the price of natural gas. 

     But things didn't go exactly as planned for Sen George Voinovich
(Republican-Ohio), who chairs the Senate Environment and Public Works
subcommittee on clean air, climate change and nuclear safety.

     Bill Wehrum, EPA's acting assistant administrator for air and radiation,
had not submitted any advanced written testimony to the subcommittee, saying
he had had trouble "clearing" it with the White House.

     That allowed committee Democrats to grill Wehrum about whether he was
pressured to alter his testimony to support Voinovich's "theory" on the
impacts of EPA's clean-air regulations.

     Wehrum said he had not been pressured. 

     When Wehrum was asked if EPA's clean-air regulations were affecting gas
prices he said the regulations play some role in power plants' decisions to
switch from coal to cleaner-burning natural gas. He added, though, that EPA's
regulations were only a "small" factor in this fuel switching. 

     "EPA has not seen evidence that regulation of the power sector is a major
factor in the price of natural gas," Wehrum said. 

     Wehrum said that EPA's "acid-rain" trading program "has had only small
impacts on natural gas markets." Wehrum said the same is true of the New
Source Review program, another power sector regulatory program assailed by
Republicans. Nor does EPA anticipate that its recently promulgated rule to
reduce power-plant mercury emissions will lead to widespread fuel switching
and higher gas prices, Wehrum said. 

     "EPA designed these [regulations] to achieve large emissions reductions
through the installation of pollution controls on coal-fired units rather than
by switching to natural gas," Wehrum said.

     Voinovich, though, seemed unconvinced. "My theory is that clean-air
regulations have exacerbated the demand for gas, and some of our environmental
policies have limited the supply," he said. "If we keep doing [things this
way], we're going to be in real deep trouble."

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