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 Natural Gas and National Energy Policy -- Key Facts 

Energy is the lifeblood of the U.S. economy.

  • A growing U.S. economy – and the standard of living that each of us enjoys – depends on increasing the supply of traditional and non-traditional forms of energy.
  • Natural gas is widely recognized as the ideal “bridge” between the twin goals of continued economic growth and a cleaner environment.
  • Everyone -- from home owners to factory owners -- plans to increase their use of natural gas in coming years, in part because it’s a highly efficient, reliable fuel found in abundance in the U.S., Canada and Mexico – and therefore virtually free of disruptions from foreign energy cartels.

Natural gas utilities strongly support development of national energy policy because our customers want a supply of energy that is affordable, reliable, and as environmentally benign as possible.

  • Increased supplies of natural gas will help bring prices down for consumers.
  • An expanded pipeline infrastructure is needed to transport the 50-60% increase in natural gas supplies sought by customers during the next 20 years.
  • Wise use of natural gas and other energies is imperative, so research and development of efficient appliances and equipment should continue to be a priority for the natural gas industry, manufacturers and the federal government.

Congress must act soon on a balanced energy policy.

  • Continued economic growth depends on reliable energy supply and wise use of that energy. Energy and environmental policy can’t be addressed effectively by short-term measures.
  • Consensus can be reached if residents of energy-consuming states support natural gas supply and production provisions, and if residents of energy-producing states endorse energy-efficiency measures.

Rising prices for all forms of energy hit low-income households the hardest; they need additional help.

  • Only one of every three households eligible for the federal Low Income Home Energy Assistance Program (LIHEAP) receives help from it, because funds are inadequate.
  • Congress should increase LIHEAP appropriations to at least $1.7 billion (from the current $1.4 billion), and raise the authorized spending limit from $2 billion to at least $3 billion.
  • More than half of LIHEAP beneficiaries use natural gas heat.

Just as roads and bridges need to expand to keep up with increased traffic, the nation’s natural gas pipeline system needs to expand during the next 20 years in order to accommodate growth in demand for natural gas.

  • Twenty years from now, the nation will be using 50 – 60 percent more natural gas than it’s using today. (Roughly 33 – 35 quadrillion Btus, compared with about 22 quads today.)

In fact, the natural gas industry will need to invest roughly $150 billion during the next 20 years to expand the system by about 30 percent.

  • Local natural gas distribution companies will need to add 255,000 more miles of distribution pipelines (up from the current 952,000 miles).
  • Interstate pipeline companies will need to add 38,000 miles of pipe to the 270,000 miles currently in the ground.

Congress should amend current tax law to allow natural gas companies to accelerate the rate at which they depreciate, or “write down,” the cost of pipelines, storage facilities and other infrastructure. Specifically, a 7-year depreciation would be most beneficial.

  • Currently, it takes 15-30 years for companies to fully depreciate these costs.
  • The current depreciation schedule makes it hard for companies to get the capital they need to expand pipelines, thus jeopardizing the gas industry’s ability to build out pipelines fast enough to meet increasing demand.
  • Over the past 15 years, on average, local natural gas utilities have spent $3 billion - $5 billion per year on infrastructure. But even this impressive level of investment will be inadequate to meet increased demand for natural gas. More rapid tax depreciation for these needed new facilities will provide the necessary impetus for investment in this infrastructure.

Both Democrats and Republicans support 7-year depreciation for natural gas infrastructure.

  • The national energy policy bills sponsored by the leading Democrat (Jeff Bingaman, NM) and Republican (Frank Murkowski, AK) on the Senate Energy Committee both contain 7-year depreciation for natural gas pipelines.
 
 

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