Manufacturers warned Congress today that they are worried the nationwide push to use more natural gas to generate electricity and fuel cars will leave them paying more for the fossil fuel they use to power plants and create other products.
Paul Cicio, president of the Industrial Energy Consumers of America, said the group “is becoming very alarmed at the ever-increasing potential demand and over reliance on natural gas.”
Energy companies are taking advantage of technological advances in drilling to harvest natural gas from dense rock formations across the U.S., potentially tapping what analysts widely describe as a 100-year supply of the fossil fuel.
But Cicio warned that natural gas’ potential abundance could be illusory and is jeopardized by environmental regulations that could encourage utilities to abandon coal in some plants and new mandates on drilling. Additionally, at least eight companies have asked the federal government for approval to begin exporting liquefied natural gas.
“While we have an abundant supply, it appears that we also have explosive potential demand due to the suite of EPA regulations on the electric utility generators that could shut down 81,000 megawatts of coal-fired power generation,” Cicio told the Senate Energy and Natural Resources Committee. “Manufacturing is also concerned about the growing threats to continued robust and economic production of natural gas.”
Critics worry that all of those factors threaten to send natural gas prices upward and could put the fossil fuel on the same price roller coaster it has ridden for decades. Manufacturers that use natural gas to fuel their plants and as a building block to make other products were hit hard by volatile swings in prices over the last two decades, which last peaked over $15.00 in 2005.
In its hearing today, the Energy and Natural Resources Committee was studying the use of natural gas as a transportation fuel, amid questions about the federal government’s role in propelling new technologies and establishing infrastructure to support the transition.
Sen. Ron Wyden, D-Ore., a critic of proposed natural gas exports, said it is important for the U.S. to find “that sweet spot where companies really do have that sense of stability in order to make these long-term changes.”
But natural gas boosters said manufacturers’ concerns are overblown.
Dave McCurdy, CEO of the American Gas Association, said a steady ramp-up in cars using natural gas instead of petroleum-based fuels is not likely to cause a huge spike in demand and runup in prices for industrial consumers.
Some major fleet operators, including Verizon and Waste Management, already are switching to natural gas vehicles. Separately, 13 governors are coordinating a multi-state purchase program to make natural gas vehicles part of their state fleets.
A major challenge in adopting cars powered by natural gas — especially when it is liquefied — is the lack of fueling stations and other infrastructure to keep those vehicles on the road.
Sen. Jeff Bingaman, D-N.M., noted that there’s a “chicken and egg problem” standing in the way of big natural gas vehicle adoption.
“Vehicle manufacturers have historically been reluctant to develop and sell natural gas vehicles if the fueling infrastructure is not in place, and infrastructure developers have been wary of building fueling stations without demonstrated demand from consumers with natural gas vehicles,” Bingaman said.
One alternative to cars running on liquefied natural gas is using compressed natural gas to power the vehicles. Earlier this month, the Energy Department awarded $30 million in grants aimed at giving a boost to technology for using CNG in light passenger vehicles.
The development of lightweight, inexpensive equipment for storing compressed natural gas in vehicles could open the door for convenient, home-based refueling of cars.
McCurdy noted that gas utilities that belong to the AGA maintain more than 2 million miles of natural gas distribution pipelines nationwide. And there are more than 1,000 compressed natural gas stations in the U.S. already.
“This distribution network means that we can place compressed natural gas fueling stations around the country without the need to truck in fuel,” he said. “We believe that in the next few years, home refueling for natural gas vehicles will become increasingly available and attractive to residential consumers.”