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2004 Policy Positions
of the Southern Legislative Conference

2.  Policy Position on Rectifying America’s Natural Gas Supply/Demand & Network Imbalances


BACKGROUND

On June 10, 2003 the Chairman of the Federal Reserve Bank bluntly warned that rising natural gas prices could negatively impact the economy.  The U.S. Energy Information Administration also has advised that strong increases in natural gas production and imports are urgently needed to meet demand over the next two decades.

Natural gas prices already are up sharply.  In the 1990s, wellhead prices were approximately $2 per thousand cubic feet.  In 2003, they averaged nearly $5 and now exceed $6 per thousand cubic feet.

United States natural gas consumption is mainly in the industrial (34 percent), electric power (24 percent), residential (21 percent) and commercial (14 percent) sectors.  Unless our supply and demand needs - and our ability to network them together - are better addressed, America’s economic cornerstones are at risk.  Production from existing wells drops by more than 25 percent annually, gas wellhead prices are up dramatically, and much of the world’s fossil energy supplies are at risk.  Unless access to natural gas, and all other forms of energy, America’s economy, is improved, consumers will suffer.

RECOMMENDATION

The Southern Legislative Conference of The Council of State Governments urges federal policymakers to take immediate steps to develop regulatory and fiscal policies that promote:

  • Greater conservation and efficiency for buildings and appliances;
  • Tax credits for advanced oil and gas recovery efforts;
  • Investment in energy network enhancements (e.g., pipelines, terminals and ports);
  • Environmentally-sensitive access to substantial domestic gas reserves;
  • Tax credits for coal gasification; and
  • Full funding for oil and gas research and development.

Furthermore, the Southern Legislative Conference of The Council of State Governments recommends that this policy position be forwarded to the president of the United States; leaders in the U. S. House of Representatives and U. S. Senate; members of the Southern congressional delegation; secretaries of the U. S. Departments of Energy and Interior; and governors of the 16-member states of the Southern Legislative Conference.

 

Adopted by the Southern Legislative Conference, August 18, 2004, Little Rock, Arkansas.

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