The American Spectator

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Special Report

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Since 1990, 95 percent of the new power plants in the country have been built to burn natural gas. Utilities and the new merchant companies are happy to oblige. Knowing environmentalists won't object means you can build your plant in less than ten years.

But American gas production peaked in 2001 and probably isn't going to rise again. Almost overnight we were importing 15 percent of our consumption from Canada -- but now the Canadians have peaked as well and are also diverting more gas to development of the Alberta tar sands.

The result has been a fourfold price increase since 1999. That's a huge hit for industrial consumers of natural gas -- the fertilizer industry, plastics, rubber, chemicals, and a dozen others. That wouldn't be so bad except the utilities are crowding them out. Utilities are still guaranteed an automatic pass-through by state regulatory boards and are better able to compete on price. In addition, many liberal states are so excited about "clean energy" that they are rigging special pipeline rates so power plants can buy gas even cheaper.

The results have devastated the manufacturing industry. More than half the fertilizer industry -- centered around gas wells in Louisiana -- has decamped for Mexico and the Middle East. DuPont recently announced it would be moving the "center of gravity" of its plastics manufacturing abroad because of impossibly high gas prices. More than 100 plants in the chemical industry have closed and 100,000 jobs are lost. Goodyear recently cut U.S. tire production 30 percent because it can't get rubber, synthesized with natural gas. Simmons Bedding Company can't find polyurethane foam for its bedding. Business Week recently reported that of 120 large-scale chemical plants under construction around the globe, only one is in the United States.

There's plenty of natural gas left in the world but it's not in North America. If we're going to import from Asia and Africa, we're going to have to build liquid natural gas (LNG) terminals. But as Steven Pearlstein reported in the Washington Post, the Sierra Club alone is stalling every one of the 15 LNG terminals being proposed by the industry. At the same time, of course, they're still encouraging utilities to switch to natural gas.

We've got problems in this country. We're living on a knife's edge as far as energy supplies are concerned and the environmental ethos makes it almost impossible to formulate any suitable response. We need to let high oil prices push consumers into buying hybrid autos. We need to back away from encouraging utilities from burning natural gas. We need to revive nuclear power.

Worrying about what Exxon made last quarter is the least of our problems.

topics:
Business, Environment, Global Warming, Iran, Africa, Energy, Oil