| The Other Gas Crisis |
23 June 2003
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Natural Gas Prices Threaten Recovery
The Bush administration received a great deal of aggravation during the war with Iraq due to the oil dimension. Many detractors said the war was about oil and nothing else. With its oil-business ties (both the Mr. Bush and Vice-President Cheney are oilmen by trade), there is some validity to the claim. However, one would hope that such energy wizards would understand that the soaring natural gas problem in America needs their attention. The hope seems to be in vain.
Much of America's electricity and home heating is generated by the burning of natural gas, and prices in the last year have soared -- some utilities are even advertising how strenuous their struggle to keep rates constant are. And Stephen Brown, who is director of energy economics with the Dallas Branch of the Federal Reserve, suggested the high prices are likely to harm the US economic recovery.
"A rough estimate is that a sustained doubling of natural gas prices would reduce US GDP by 0.6 per cent to 2.1 percent below what it would otherwise be," he was quoted by Reuters on Thursday. In some markets, the price has tripled, not doubled.
So, one would think the Bush administration would be all over this, arranging for increased supplies, more profits to drive them, and making sure of re-election by keeping the economic recovery on track. Yet, there is nothing. No policy statement, no blue-ribbon commission, no meetings with industry leaders. Congress is silent on the matter as well. Could it be that the silence stems not from other issues taking priority but rather from the fact that no solution is at hand?