Natural Gas Experts Predict Dire Price ConsequencesNASHVILLE,...

Natural Gas Experts Predict Dire Price Consequences
NASHVILLE, Tenn.,
January 9, 2006

Without a considerable increase in natural gas production in the U.S., the resulting tighter supply levels and higher prices will continue to undercut the bottom line of farmers and ranchers, according to industry experts at a conference at the American Farm Bureau Federation’s 87th annual meeting.

“You can’t have increased demand without increasing the supply and expect prices to go the way you want them to go,” said Bill Rozett, energy team leader at the American Petroleum Institute.

Fifty-four billion cubic feet of natural gas is produced daily in the U.S. Rozett predicted the demand for natural gas will increase by 20 billion cubic feet between now and 2025.

The growing demand for natural gas and the price increases that will follow do not bode well for fertilizer prices, explained Glen Buckley, chief economist for CF Industries Inc.

“Ninety to 95 percent of fertilizer production cost is for natural gas,” he said. On average, fertilizer costs $326 per ton to produce and $306 of that is for natural gas, the panelist said.

While Buckley did touch upon the spring price outlook, which he characterized as uncertain, both he and Rozett emphasized the importance of longer-term solutions, specifically, a comprehensive energy policy that would boost domestic production capacity.

Rozett and Buckley said the U.S. is capable of meeting the growing demand for natural gas.

“We need to produce,” Rozett said. “We can do it cleanly. We can do it intelligently.”

Both experts suggested increasing natural gas supplies by opening the outer continental shelf to drilling and urged conference attendees to push Congress to address the supply issue.