New Report: Natural Gas Critical to Agriculture Sector
Washington, DC, – The American Gas Association today released a study that underscores the critical role natural gas plays in the U.S. agriculture sector. “Advancing America’s Agriculture: The Value of Natural Gas to U.S. Agriculture and Agrochemicals,” the first in AGA’s Advancing America series, examines how natural gas is essential for a healthy agriculture sector: “The American farmer relies on domestic natural gas for the fertilizer in their fields, the fuel to run their equipment, and energy to process, store and transport our nation’s food supply to feed 330 million Americans, in addition to the countless individuals overseas who depend on U.S. agricultural exports.”
“An abundant and affordable supply of natural gas is critical to the fertilizer industry and our ability to provide essential crop nutrients to farmers,” said Corey Rosenbusch, President and CEO, The Fertilizer Institute (TFI). “Natural gas is the primary feedstock for ammonia, the building block for all nitrogen fertilizers, and accounts for 70-90% of production costs. In the summer of 2022, when the cost of natural gas in Europe soared above $100/MMBtu, we saw 70% of European ammonia production curtailed. The United States needs energy policies that support robust natural gas production and supply.”
This study underscores the direct and critical impacts of the availability of low-cost natural gas to the cost of food on grocery store shelves globally. Restrictions or outright bans on natural gas would have broad implications to the agriculture sector, including disruptions to the supply chain, an impact on land value, a dangerous reliance on imports needed for agriculture from China and Russia and higher costs passed for consumers.
“This analysis shows how natural gas and the nation’s natural gas infrastructure is essential for a thriving agriculture sector in the United States,” said American Gas Association President and CEO Karen Harbert. “There is a direct connection between the availability of low-cost natural gas and the cost of food on store shelves in every state across our nation. We cannot afford to drive up the cost of food for Americans at a time when they are already feeling the impacts of inflation broadly. Any attempt to ban or restrict access to natural gas would do just that—driving up prices for energy directly and other critical products like food without the environmental gain that many claim.”
Findings of the report include:
- U.S. agriculture is one of the largest consumers of natural gas, consuming roughly 1.7 trillion cubic feet (“Tcf”) of natural gas – equivalent to almost 15% of all U.S. commercial and industrial consumption demand.
- Fertilizer and other agrochemical production is the most significant consumer of natural gas in the agriculture supply chain.
- Natural gas is required to produce nitrogen, a main fertilizer component, which enables increased crop yields.
- Between 70% and 80% of the energy used to produce critical fertilizers comes from natural gas.
- The U.S. agriculture sector supports 17.2 million jobs and approximately $1.75 trillion in U.S. GDP, roughly equivalent to the GDP of Texas, the second-largest state economy after California.
Harbert continued: “Natural gas is a key feedstock in a variety of items needed to maintain a productive and affordable agricultural sector, and because we can produce those items domestically with natural gas, we are able to shield our farmers from supply chain bottlenecks around the world. This helps to ensure Americans have the food they want at the prices they need regardless of global conditions.”
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