27 September 2004 13:17 [Source: ICIS news]
MONTE CARLO, Monaco (CNI)--Liquefied natural gas (LNG) will only provide 5-10% of US natural gas needs and US industry must get better government support for gas trading controls and better management of gas supplies, Huntsman companies president Peter Huntsman said here Monday.
Speaking with reporters at the 38th annual meeting of the European Petrochemical Association (EPCA), Huntsman said his company is working with members of Congress and officials in the US Department of Energy (DoE) in an effort to secure Congressional action to improve trading controls for natural gas.
He said additional controls on natgas trading are needed because the price of gas fluctuates too widely. He noted that controls on the trading of beef in US markets keep price fluctuations to within one cent per pound, while the less regulated market for natural gas allows for price shifts of as much as $1000 per barrel-equivalent of oil.
“We’re not saying that natural gas trading should be taken off the Nymex [New York Mercantile Exchange], but we are saying that the price should not be allowed to fluctuate so wildly,” Huntsman said.
Huntsman noted that the US natural gas market is the most volatile in the world. And he said that half the traders in natgas on the Nymex are hedge fund operators or bankers who are not users of natural gas and yet “who only have to say that the coming winter will be cold, and the price of natural gas will go up wildly.”
“We all know that North American winters are cold,” Huntsman said, “they always are cold. I can tell you that North American winters for the next 50 years are going to be cold. That should not affect the price of natural gas so greatly.”
Huntsman said his company’s efforts to enlist Congressional interest in better regulation of natgas trading is having some success. “There is growing interest in this topic on Capitol Hill,” he said, “ but our prospects for success would be better if we could get more chemical companies and more trade associations involved.”
He said he asked US officials in Congress why beef trading is so closely controlled but that natgas trading is not. “They told me that the beef industry has more clout in Washington than the chemicals industry,” he said, adding: “I find that unacceptable.”
Huntsman said that LNG will not by itself resolve the high cost issue for natural gas, as LNG will at best provide 5-10% of US natgas needs going forward. And, while 50% of US natgas reserves are on government-owned lands and could be further exploited, Huntsman said that conservation and energy management are the only real answers to the US natgas crisis.
“If the US were to adopt European conservation methods in the use of gasoline,” he said, “we could cut US imports of crude oil by 80%, and that would drop the cost of all hydrocarbons precipitously.”
“We in the US,” he added, “have to get over our addition to hydrocarbons.”
The Huntsman companies are headquartered in Houston, Texas.
The EPCA conference concludes tomorrow.
CNI EPCA newsroom: Suite Naiades C, Grand Hotel; Tel. + 377-9315-1070/71
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