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Some US Plastic Shortages Seen From Natgas Price

Date: 07-Oct-05
Country: USA

Most chemical plants in the US Gulf Coast are closed or operating at reduced rates since Hurricane Rita hit the Texas-Louisiana border on Sept. 24, Andrew Liveris, chief executive officer of Dow Chemical, told the Senate Energy Committee. He testified at a hearing on hurricane damage to energy production, processing and transportation.

The US government should help repair damaged natural gas processing plants and declare a "national emergency" to make consumers aware of supply problems triggered by the storms, Liveris said.

"Soon the loss of chemical manufacturing in the Gulf will ripple through the economy in the form of shortages and higher prices," Liveris said. Some of the products that may develop shortages include widely used consumer goods such as plastic bottles and bags, he said.

"The short-term outlook for natural gas consumers is grim," he said. "If prices remain at or near current levels, manufacturers will be driven out of the market and many may not return."

Natural gas, a crucial raw material for chemical plants, soared to a record high of $14.75 per million British thermal units in futures trading on Wednesday. Prices fell on Thursday, to around $13.69 per million Btus in midday trading.

The government should dispatch the Coast Guard, Army Corps of Engineers and other federal experts to help repair damaged gas processing plants on the Louisiana coast, which purify natural gas before it can be shipped in pipelines, he said.

The Energy Information Administration said 21 processing plants are closed, half due to lack of electricity and half due to hurricane damage.

"Help is needed to transport and house repair crews, pump out the plants, restore power, repair damages and resume operations," Liveris said.

The government should also "declare a national emergency" to shock consumers into awareness of tight supplies, he said.

For example, if all Americans turned down their home thermostats by 2 degrees this winter, an extra 3 billion cubic feet per day of gas would be available, Liveris said.

Liveris also testified on behalf of the American Chemistry Council, which has urged Congress to open more offshore areas to drilling, including a controversial area off Florida known as Lease 181.

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