NCGA, AEA Highlight Natural Gas Prices, Transportation Issues (11-9-05)

The National Corn Growers Association (NCGA), as members of the Agriculture Energy Alliance (AEA), highlighted the effects of high natural gas prices on farmers in two events this week. On Tuesday, NCGA Director of Public Policy Samantha Slater spoke to the media about the effects of high natural gas prices on farmers. On Wednesday, the Senate Agriculture Committee heard testimony about the same topic and Mississippi River transportation issues.

AEA, along with other coalitions addressing high natural gas prices, spoke to the media on “America’s Natural Gas Crisis.” The group stressed the importance of the Ocean State Option Act (OSOA) to American consumers. The act would allow coastal states the right to drill or prevent drilling for natural gas and oil supplies within 125 miles of its shore. States would be allowed to opt-out of a moratorium that prohibits drilling and allow the states to drill off their coasts. The states will be able to receive up to half of the revenues from off-shore production. Currently, states have no control over drilling in their waters and receive less than one percent of the revenues if there is drilling taking place.

The act is important to corn growers because it increases domestic production of natural gas that growers could use in the future. Currently, ammonia, a fertilizer made from natural gas, costs more than $500 per ton. That is nearly triple the cost since 2000.

“The Ag Energy Alliance urges Congress to pass legislation that would allow natural gas exploration and production in the outer continental shelf,” Slater said. “Development of offshore natural gas reserves is crucial for both homeowners and manufacturers that use natural gas as a feedstock, such as nitrogen fertilizer.”

Testimony before the Senate Agriculture Committee on Wednesday addressed the natural gas issue and transportation issues on the Mississippi River. Sen. Norm Coleman (R-Minn.) noted the effects of Hurricane Katrina on shipping on the Mississippi River have drastically affected farmers’ abilities to transport good at reasonable prices.

“Hurricane Katrina resulted in the extended closure of the Ports of New Orleans and South Louisiana, and still, we are only operating at two-thirds capacity,” said Sen. Norm Coleman (R-Minn.). “This tells me two things: first, USDA (U.S. Department of Agriculture) needs to continue working hard to mitigate the barge backlog and second, Congress needs to pass WRDA (Water and Resources Development Act). Rail and truck transport have been critical for agriculture during this time of interrupted river traffic, but clearly, agriculture is heavily dependent on our rivers and we cannot expect to compete with the rest of the world using locks over 70 years old, as we have on the Upper Mississippi River System.”