Remarks by
Spencer Abraham
Secretary of Energy
U.S. Department of Energy
to the
National Petroleum Council Summit on Natural Gas
in Washington, DC
on
June 26, 2003

Thank you, Bob [Catell] for that kind introduction, and thank you for your assistance in organizing this summit.

Thank you all for being here today.

I know this meeting was pulled together rather quickly. I appreciate the fact that so many of you had to make significant changes to your schedules in order to be here.

I also want to offer my special thanks to the National Petroleum Council president, Bobby Shackouls, and all the good people at the NPC who worked very hard to organize this meeting.

Thanks to your efforts, we have with us today a distinguished group of experts, representing diverse regions and perspectives on an issue that is vital to our nation's economic and energy security.

This natural gas summit comes at a critical time.

Over the last decade, demand for natural gas increased 19 percent to levels that are difficult to sustain under current supply and production constraints. This demand growth has occurred despite improvements in energy efficiencies during the past several years.

Even more worrisome, perhaps, is the fact that total natural gas demand is projected to grow 50 percent over the next 25 years.

The challenge of our administration is to ensure adequate supplies of natural gas at prices consumers can afford.

And we've been working on this since our first days in office, when the President appointed a task force that developed a national energy plan to ensure diverse, plentiful, and clean sources of energy to power the nation's economy.

Most of its recommendations, which were released two years ago, have been implemented through executive action.

Now we are continuing our work with the Congress to enact comprehensive energy legislation.

And this fall, the National Petroleum Council will release the long-term natural gas study that I requested last year. I look forward to joining with you again in a few months to review your long-term outlook and recommendations.

I'm proud that we are all committed to addressing the difficult, long-term challenges in a way that ensures the energy security of future generations of Americans, decades down the road.

However, until we have all aspects of our long-term energy plan in place and Congress passes comprehensive energy legislation, and until we have had an opportunity to review and begin acting on the recommendations to be included in the NPC's natural gas study, we will continue to experience periodic price spikes and market dislocations of the sort we may see this winter.

It is our job to be prepared for them as well and to minimize their impact. And that's why we are getting an early start to address the current unusually low supplies of natural gas in underground storage.

Gas in storage is 32 percent below last year's level and 22 percent below the previous five-year average.

The Department of Energy has been monitoring this situation closely. We are concerned that the nation may not reach the normal level of about 3 trillion cubic feet of gas in storage by the heating season.

For that reason, in May I asked the National Petroleum Council to convene a special summit to discuss these trends and identify ways to manage the short-term natural gas shortage.

At its heart, this is not some abstract problem about numbers and percentages like those I just mentioned.

It's not just about low reserves or supply-and-demand imbalances.

Rather, for the President, Vice President, myself, Secretary Gale Norton, our administration, and the people here today, it's about real people and the real problems they confront when gas prices soar.

It's about senior citizens, living on fixed incomes, being forced to choose between skyrocketing heating bills or some other of life's necessities.

If gas prices this winter are as high as some predict, the average residential winter heating bill for a typical Midwest consumer is expected be $915, a 19 percent increase over last year's bill.

It's also about the men and women who work in gas-intensive businesses and industries. They are worried about the economic uncertainty that high gas prices bring - worries about layoffs, paying the mortgages, or providing for their families.

The situation is particularly worrisome in the fertilizer industry, where natural gas accounts for 97 percent of total energy use and less than 1 percent of it can be switched to some other energy source.

Some layoffs have already occurred and several companies have warned about possible production cuts and layoffs should these high gas prices continue.

In fact, there is even concern that gas prices could go so high that manufacturers find it more profitable to shut down production and sell their natural gas reserves.

With all of these potential, real-life consequences, it is our job - all of us - to get to work to ensure an adequate supply of natural gas at reasonable prices.

This is not just a problem for federal, state, or local governments.

This is not a regional problem.

It is not just a problem for gas-intensive businesses and industries.

It is a national concern that will touch virtually every American.

As such, it demands a coordinated national, public-private effort.

That's why I asked the National Petroleum Council to convene this summit.

When we announced this meeting last month, I hoped that it would bring together a wide-ranging group - consumers, producers, businesses and industries, regulators, efficiency experts, and government officials - to brainstorm and share ideas about ways to conserve energy, as well as things industry and governments can do to affect short-term gas use, storage, and production.

These discussions won't be limited to the panelists.

There will also be opportunities for all participants to contribute, and I encourage you to do so.

You can be assured that we will take your ideas very seriously.

I have discussed this situation with President Bush and he has indicated to me that this is a top priority. Therefore, I will be reporting to him on the ideas that are generated here today.

I will also share your ideas and concerns with Congress as we work on this issue and to secure passage of comprehensive energy legislation and the President's Clear Skies initiative.

Passage of energy legislation is long overdue.

It's time to finish the job.

It is our hope that the energy bill will contain provisions that help spur domestic production of natural gas and enhance our importation facilities to boost supplies, while reducing our nation's growing over-reliance on this one source of energy.

The energy bill builds upon President Bush's national energy plan by promoting new technologies to broaden our domestic energy portfolio while ensuring a cleaner environment.

Clear Skies legislation also needs to be enacted.

Clear Skies, which provides a range of benefits such as improved health, cleaner air, and economic efficiency is the best approach to addressing dual energy and environmental challenges. It avoids the serious economic consequences of other approaches to cleaner air and provides market-based flexibility to the energy sector.

It is my sincere hope that the Congress will soon complete work on the energy bill and the Clear Skies initiative.

In the meantime, we will continue to focus on the short-term solutions to the challenge of high natural gas prices and low supplies in storage.

Our goal coming out of this summit will be to take quick and decisive action where possible to diminish the immediate impact of lower-than-expected supplies of gas.

Some of the steps may be administrative actions that we can initiate immediately.

For example, I am pleased to announce today that the Department of Energy will soon undertake an ambitious Natural Gas Data Collection Initiative that will fundamentally improve the way the Energy Information Administration and the Office of Fossil Energy gather and disseminate information about the use and origin of natural gas supplies in the U.S.

In a tight and volatile natural gas market, consumers and producers must have the best information possible regarding the availability of supply and the forces that drive prices in order to make wise decisions about their consumption and production activities.

With this initiative, we plan to conduct new surveys of natural gas production as well as on-system liquefied natural gas storage. We also plan to collect critical information on natural gas imports each month, instead of waiting until the end of each quarter. We will enhance and streamline our data-collection operations and we will better regionalize EIA's Short Term Energy Outlook.

Better information means more efficient markets, and that means stability for consumers.

In addition, I am announcing that the Department of Energy will expand on the discussion we begin here today with a series of regional natural gas conferences with consumers and producers.

These regional conferences - to be held in key locations around the country - will be brainstorming sessions much like this meeting. But they will also provide us with an opportunity to discuss, expand upon, and draw attention to the ideas and suggestions offered today.

These are small steps, but necessary ones; every one of which will make some difference.

By the end of our meeting today, I am sure we will have identified more actions that can be taken to help ensure adequate supplies of natural gas.

So I am grateful that you have gathered here to offer solutions to a vexing problem and I look forward to hearing your ideas and suggestions.

Thank you for coming.

I appreciate your service.

The President appreciates it.

And the American people, who will no doubt profit from your wisdom and counsel, appreciate it.

Thank you.