US chemicals sector moves to block fast-moving natgas bill

17 May 2011 18:56  [Source: ICIS news]

WASHINGTON (ICIS)--Chemical industry officials on Tuesday urged US House members to oppose a bill that would subsidise and otherwise encourage use of natural gas as a transportation fuel, warning that the legislation could drive gas prices higher.

The American Chemistry Council (ACC) said it sent letters to nearly 250 representatives, asking that they vote against HR-1380, titled “New Alternative Transportation to Give Americans Solutions” (NAT GAS Act).

Introduced by a bipartisan group of House members in April, the NAT GAS Act would provide tax incentives for the purchase of natural gas-fuelled vehicles (NGVs), construction of natural gas retail fuelling stations and use of natural gas as a vehicle fuel.

The bill also would establish a new tax credit for auto manufacturers to produce more NGVs, and it would provide incentives for conversion of large commercial vehicle fleets - such as service companies, utilities and taxis - from gasoline to natural gas.

The bill has yet to face hearings at key House committees and was not expected to get a House floor vote before Congress goes into recess for the month of August.

However, because it has 186 cosponsors, the bill would need only 32 additional votes to win a simple 218-vote majority approval in the House - a prospect that has chemical producers and other manufacturing interests worried.

The measure has gained traction in Congress because natgas is more environmentally friendly and cheaper than gasoline, and the US has benefitted from recent development of previously inaccessible and vast shale gas resources

The NAT GAS Act would “contribute to market distortions and higher production costs for the domestic chemical industry and other US manufacturers”, said ACC president Cal Dooley in his letter to 249 House members.

He charged that it would create “a new, multi-billion dollar tax subsidy” at a time when Congress is struggling to find ways to reduce federal spending, balance the budget and cut the ballooning national debt.

Dooley pointed out that “many companies with large transportation fleets are currently using natural gas without receiving any tax subsidies because it is the most cost-effective option”.

He said that chemical makers have no problem with growing demand for natural gas in transportation and power generation based on normal market developments.

However, he added, “We do oppose subsidies that would artificially increase natural gas demand, distort markets and suppress the emergence of other energy technologies”.

Dooley said the NAT GAS Act would provide billions in tax preferences “to subsidise a well-established fuel in a well-functioning market”.

The legislation also is opposed by other high-volume industrial consumers of natural gas.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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