Efforts to Increase Natural Gas Supply
APGA Issue Brief
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Background: Over the last six years, the American consumer has seen the price of natural gas more than triple. The increase in the price of natural gas has cost consumers an additional $200 billion dollars more than in the prior six years. Prior to 2000, these dollars went into local businesses, community infrastructure and more importantly, were the disposable personal income used for savings and investing in a child's education. Now these dollars are being sucked out of the communities served by public gas systems. Increasing domestic supply is a fundamental component of the solution to bring prices back to an affordable level.

The Issue: Limits on development (through Congressional and administrative moratoria) prevent exploration and production in most of the Eastern Gulf of Mexico and the entire Atlantic and Pacific OCS. That means almost 90% of the OCS acreage off the lower 48 states is "off limits" to energy development. The fact that federal policies limit supply is ironic since it is also federal policies that favor natural gas use because of its clean-burning properties.

Around the world, virtually every other country with oil and gas resources is promoting investment in and development of their offshore resources. If the US continues to reject opportunities to develop our domestic offshore energy resources, American consumers and businesses will suffer the consequences in terms of slower economic growth, higher energy prices, reduced competitiveness vis-a-vis overseas’ manufacturers and continued job losses.

Last Congress, Congress passed and the President signed into law the The Gulf of Mexico Energy Security Act. The legislation directs the Department of the Interior to begin oil and gas leasing in designated parts of Lease Sale 181 (which is located in the eastern Gulf of Mexico) and in areas south of Lease 181 as soon as practicable. It also places a 16-year moratorium on oil and gas activity in the Gulf of Mexico within 125 miles of the Florida coast and excludes certain parts of 181 and areas south that are either used for military training activity or are near the Florida coast. The Act also provides an increased share of revenues from offshore leases to “Gulf producing States” which are Louisiana, Mississippi, Texas and Alabama. While this bill was a positive first step, APGA believes much more work needs to be done in terms on increasing domestic supply.

This becomes even more critical given that Congress may move this session to enact climate change legislation. It is anticipated that natural gas will play a critical role in congressional efforts to mandate reductions in greenhouse gas emissions. It is APGA’s position that to the extent an additional natural gas demand is created by the enactment of climate change legislation, legislation also needs to be passed that achieves an identical increase in the amount of supply.

APGA Action: Going back to the beginning of the 109th Congress, in January 2005, when APGA testified before the Senate Energy and Natural Resources Committee, APGA has worked towards moving legislation through Congress that would allow natural gas production from areas that are currently off-limits to exploration. Last Congress, APGA worked closely with House and Senate Leadership towards getting the votes necessary to pass natural gas supply legislation and APGA and its members continue to work towards increasing supply.