Jul/Aug 2003 │ The Aluminum Association │
Congress Mulls National Energy Legislation: Aluminum Industry Seeks Reliable Cost-based Electricity and Natural Gas Supply
Manufacturing needs Congress to complete action on President Bush’s comprehensive energy proposals so that the economy will benefit from adequate supplies at reasonable prices over the long term. Since the 1970s, our energy consumption has grown at twice the rate of domestic energy production. The mismatch between energy use and production will continue to adversely affect manufacturing if the country does not resolve national energy policy with a comprehensive energy strategy to enhance supply, improve infrastructure and increase efficiency, without compromising environmental safeguards or imposing efficiency mandates.
The manufacturing sector has lost 2 million jobs since 1998 and energy costs are a major factor. It is vital that Congress act quickly to stem the national energy crisis by enacting legislation that provides a robust, diverse, and affordable energy supply. It is particularly critical that Congress and the states act to increase natural gas supply, and address regulations such as New Source Review to make it easier for power generators to meet air quality standards without switching from coal to natural gas. Congress must also expedite commercialization of clean coal technology, the ultimate solution for power generation using coal in an environmentally acceptable manner.
Energy represents about one-third of the total production cost of primary aluminum. Electricity is essential to primary aluminum production. These factors together make energy efficiency and energy management prime objectives for the industry. While the aluminum industry is a large consumer of both natural gas and electricity, its annual expenditure for electricity is over $2 billion.
The high cost of natural gas in the U.S. is having a devastating impact on manufacturing competitiveness and jobs. Prices from January 2000 to January 2003 are more than double the average price from 1991-1998.
U.S. natural gas production, meanwhile, has stagnated at 19 trillion cubic feet per year since 1995 despite an abundant resource base and increasing demand. (U.S. production in 1970 was 21 trillion cubic feet.)
Many business and labor leaders, economists, and policymakers agree that America must: increase domestic energy supplies in an environmentally sensitive way; improve energy efficiency, conservation, and development of new technologies; expand and secure our energy delivery infrastructure; ensure affordable energy for low-income households; and thoughtfully streamline energy development regulatory processes.
Certainty of an affordable energy supply is essential to capital investment in the manufacturing sectors that provide high-paying jobs. Putting the U.S. on a path to reliable, affordable domestic energy supply is essential to this country's short-term economic rebound and long-term growth prospects. All supply options should be considered to contribute to a diverse, robust energy supply.
Every major energy crisis since 1973 was followed by an economic recession. The energy crisis of 2000-2001 was no different. The link between affordable energy supplies and our economic well being is no coincidence. Industrial energy-consuming companies were devastated by high-energy costs that resulted in plant closures, plant idling, worker layoffs, and the transfer of production to offshore facilities. This same story is being repeated again, only from a lower number of manufacturing plants and jobs that may never return.
President Bush on January 28, 2003 asked Congress to pass a comprehensive energy bill that promotes energy "independence for our country, while dramatically improving the environment." He said, "the greatest environmental progress will come about not through endless lawsuits or command-and-control regulations, but through technology and innovation."
In the coming weeks--or months--Congress will debate and define America’s national energy policy. Manufacturing and the aluminum industry need for the future energy supply to be both reliable and affordable for all Americans--consumers and industry alike. Our industry depends on it.
