High gasoline prices have been a major concern for consumers and policymakers alike in recent years. However, the real story is the rise in natural gas prices, which have been significantly higher than gasoline prices and have had a profound impact on various industries and consumers.

The Rise of Natural Gas Prices

Natural gas prices have been on the rise, averaging $9.00 per thousand cubic feet in 2005. This is a significant increase from the $2.00 per thousand cubic feet of the previous decade. The price increase has brought with it serious consequences, including higher electricity prices, the closure of natural gas-using industries, and a significant impact on consumer demand.

Consequences of High Natural Gas Prices

• Higher electricity prices: The rise in natural gas prices has led to higher electricity prices, which have affected households and businesses alike.
• Closure of natural gas-using industries: The high cost of natural gas has led to the closure of several natural gas-using industries, resulting in job losses and economic impacts.
• Impact on consumer demand: The high cost of natural gas has reduced consumer demand, particularly in industries that rely heavily on natural gas for energy and feedstocks.

The Domestic Natural Gas Production Problem

The domestic natural gas production problem is a complex one, with several factors contributing to the constraints on production. These include legal and political constraints on drilling, as well as the impact of environmental regulations and coastal state opposition.

Legal and Political Constraints on Drilling

Throughout the 1990s, the federal government placed strict limits on new exploration and drilling, especially in offshore areas. This was largely due to opposition from environmentalists and legislators from coastal states.

Environmental Regulations and Coastal State Opposition

Tough Clean Air Act regulations have raised the cost of coal-fired electricity generation, making natural gas an attractive alternative. Additionally, consumer demand for natural gas was rising, as were the needs of natural gas-dependent industries, particularly chemical and fertilizer production.

Impact of Legal and Political Constraints

The limits on supplies and strong growth in demand have resulted in a significant increase in natural gas prices. The price of gasoline has also increased, but at a slower rate than natural gas. This has brought with it serious consequences, including higher electricity prices and the closure of natural gas-using industries.

A Proposal to Open Lease Sale 181

Sen. Pete Domenici (R-NM) has introduced a proposal, S. 2253, to open the Lease Sale 181 area of the Gulf of Mexico to drilling. This area contains an estimated 6 trillion cubic feet of gas, as well as some oil, and would require policy changes from Washington to reach the market.

Background on Lease Sale 181

Lease Sale 181 is located off the coast of Alabama and the Florida panhandle and contains an estimated 6 trillion cubic feet of gas, as well as some oil. The proposed drilling would occur well offshore and would not be visible from land.

Opposition to the Proposal

Strident opposition from Florida’s congressional delegation has blocked the opening of Lease Sale 181. Sen. Bill Nelson (D-FL) has threatened to filibuster the bill, while Sen. Mel Martinez (R-FL) has introduced an alternative bill that would virtually outlaw new drilling within 150 miles of his state.

Administrative Procedure

The Department of the Interior’s Minerals Management Service is also trying to open Lease Sale 181 through an administrative procedure. Domenici and others believe that legislation would expedite the matter.

Other Promising Offshore Areas

There are several other promising offshore areas currently blocked to development. Other proposals in Congress would go much further than Domenici’s and give all coastal states the option to allow oil and gas drilling off their coasts.

Benefits of Opening Lease Sale 181

Opening Lease Sale 181 would mark the first significant expansion of domestic natural gas production in many years and could lead to other offshore areas also being opened. This would increase gas supplies and benefit those Americans impacted by high natural gas prices.

Increased Gas Supplies

The nation’s natural gas problem is a self-imposed one, and opening Lease Sale 181 is a first big step towards a solution. The additional energy could be brought online quickly, as the area lies near the existing pipeline system.

Conclusion

Anything Congress can do to increase domestic natural gas production will benefit those Americans impacted by high natural gas prices.