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August 01, 2005 02:00 AM

Energy bill addresses gas prices, skips drilling

Steve Toloken
Assistant Managing Editor
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    Washington's first major rewrite of U.S. energy policy in more than a decade will help stabilize sky-high natural gas prices, plastics industry lobbyists say, but they caution that it won't do very much in the short term to lower resin prices.

    Four years after President Bush first unveiled detailed plans for a new energy policy, lawmakers in Congress reached agreement July 26 on a compromise that is expected to be approved by both chambers and signed into law by the president.

    The bill contains a number of provisions favored by plastics lobbyists, including incentives for more natural gas drilling in limited areas, requirements for improved energy efficiency in appliances and tax incentives to boost so-called clean coal and nuclear power, which are seen as taking the pressure off natural gas demand.

    But the legislation does not include what has been one of the industry's biggest priorities, opening up vast sections of ocean waters in the Outer Continental Shelf to drilling.

    ``Does it solve the problem of bringing the gas prices down in the near term? No,'' said Gene Steadman, head of the Washington-based Society of the Plastics Industry Inc.'s energy task force. ``It won't bring them down, but it will ameliorate the increases.

    ``I think we are very happy with the bill because it does include a lot of things that will help take the pressure off of natural gas in the near term and the long term,'' said Steadman, who is also a Washington-based lobbyist for Celanese Corp. in Dallas.

    Natural gas is the main feedstock for much of the North American plastics industry, and in recent years, prices have soared from $2.50 per million Btu to between $7 and $8 currently, well above other parts of the world. Industry argues that the increases have contributed to 100,000 lost jobs in U.S. chemical plants since 2000.

    The legislation includes other provisions industry officials like, such as giving the Federal Energy Regulatory Commission exclusive authority over approving new terminals to import liquefied natural gas, rather than states, and allowing coastal states to share in revenues from gas drilling off their shores.

    ``While breaking new ground in areas like energy efficiency, fuel diversity and infrastructure upgrades, the [legislation] falls short in one area: increasing access to offshore domestic natural gas reserves,'' said Jack Gerard, president of the American Chemistry Council in Arlington, Va.

    Still, Steadman said, the plan contains provisions calling for an inventory to determine how much natural gas is available in the OCS, which some see as paving the way for future drilling.

    Lawmakers in coastal states oppose that inventory, as do environmentalists, arguing that offshore drilling would harm the environment, tourism and marine life.

    OCS drilling remains controversial, and energy-bill sponsors feared filibustering from coastal state senators, particularly Florida, if it was in the final legislation.

    Steadman said industry officials believe Congress is sensitive to natural gas issues facing the plastics and chemical industries, and said lawmakers have given commitments to bring up OCS drilling provisions again.

    While environmental groups pan the bill, saying it avoids tough choices needed to reduce U.S. dependence on foreign energy and fight global warming, the bill is seen as more likely to pass than previous versions because it does not include controversial provisions like drilling in the Arctic National Wildlife Refuge.

    ``Not one politician in Washington, from the president on down, believes this bill makes any serious difference in foreign oil imports, gasoline prices or the use of renewable energy technologies,'' said Phillip Clapp, president of the National Environmental Trust. ``But they'll all puff themselves up and tell the American public the big lie: We finally have a new energy policy!''

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