In comments submitted last week to the Senate Energy and Natural Resources Committee, the National Corn Growers Association (NCGA) and 26 other agriculture-related groups known as the Ag Energy Alliance said steadily increasing natural gas prices are significantly impacting the profitability of U.S. farmers.

In December, Committee Chairman Sen. Pete Domenici (R-N.M.) issued a request for comments and legislative proposals that offer long-term solutions to the looming natural gas supply and demand crisis. In the Jan. 7 comments, the groups state, "The agricultural community's ability to be efficient and environmentally friendly farmers will face huge obstacles if the nation cannot come to grips with its desire to have limitless resources, like natural gas, for production and not realize that these resources have to come from somewhere."

The comments call for the need for better policy with regard to natural resources, stating action must be taken to expand all sources of domestic energy to meet growing demand for natural gas.

In addition to addressing domestic natural gas supply, the comments also addressed using on-shore and off-shore resources; liquefied natural gas issues; natural gas infrastructure and legislative and regulatory policy implementation; environmental challenges and barriers; diversification and conservation; tax incentives, encouraging more investment in natural gas supplies and infrastructure, and natural gas market data.

NCGA Public Policy Director Samantha Slater said the nation's economy and energy security will be seriously impacted if lawmakers do not take action to expand all sources of domestic energy to meet growing domestic demand. "Our ability to produce food and fuel for our nation and the world depends on sound energy policy," Slater said. "Agriculture can play an important role in helping to solve our nation's energy problems through the production of domestic liquid fuels, such as ethanol and biodiesel."

NCGA advocates congressional passage of a comprehensive energy bill that not only addresses the natural gas crisis, but also includes a Renewable Fuels Standard.

"We urge Congress to act expeditiously to promote the development of domestic energy resources to help secure future economic growth for our nation," Slater said. "Congress needs to enact a comprehensive energy policy now that provides an enhanced role for renewable energy sources, further development of all energy resources for a more diverse portfolio, and environmentally sensitive production of adequate domestic supplies of natural gas."

According to the USDA, farm gate prices for fertilizer have jumped to near record-high levels, rising in parallel with natural gas prices. Nitrogen fertilizer prices in the Midwest have increased by approximately $20 per acre since 2000.

Climbing natural gas prices in the United States have caused domestic nitrogen fertilizer producers to severely curtail production. Of the 16.5 million tons of nitrogen capacity that existed in the U.S. prior to 2000, almost 20 percent has been closed permanently. Another 25 percent is at risk of closing within the next two years. Lower natural gas prices in Europe, Asia and South America make it difficult for U.S. nitrogen fertilizer producers to compete with foreign nitrogen fertilizer producers who could buy natural gas at lower prices and export their products to the United States.

The alliance stated that increasing domestic supplies of natural gas will require opening additional federal lands and Outer Continental Shelf areas to oil and gas exploration and production; assure that these areas have access to the necessary pipeline infrastructure to bring supplies to market; and make certain that producers have the financial incentives to develop these vast domestic supplies. The comments also included proposed legislative language that address the discussion topics put forward by the committee.

Slater said Domenici's Jan. 24 Natural Gas Supply and Demand Conference is a positive step toward addressing these issues. "The natural gas conference is a great start to the much needed dialogue on the natural gas crisis," Slater said. "We look forward to participating in what should be a great forum to discuss these issues with the committee in much greater depth."

Source: Association Release