A bill proposed in the U.S. House of Representatives - HR1380, “The Natural Gas Act” - would extend existing tax credits for natural-gas-fueled vehicles and related infrastructure support and create new tax credits for natural-gas vehicular manufacturers.
This bill would provide an unneeded $5 billion taxpayer subsidy to the U.S. trucking industry and certain natural-gas interests. More importantly, it would artificially redirect vast supplies of newly available U.S. natural gas away from the U.S. manufacturing sector, bringing higher prices and increased volatility back to our natural-gas market - just as we have seen encouraging signs of a U.S. manufacturing revival. This would be bad policy.
Years of rising, volatile natural-gas prices in the United States have played a major role in the closure of countless U.S. manufacturing plants and the loss of millions of jobs. Now, for the first time in decades, makers of critical energy-intensive products see the potential to build new plants here, and hire new workers here, because U.S. natural-gas prices are globally competitive.
Affordable domestic natural gas - with prices set in the open market - is a game-changer. Now is precisely the time our government should not intervene to distort market forces that should be allowed to continue to allocate natural gas to the most appropriate users throughout the economy.
The experience of the U.S. nitrogen fertilizer industry illustrates this point. Our company, CF Industries, is a major nitrogen producer and economic driver in south Louisiana. Natural gas accounts for roughly 80 percent of the production cost of ammonia, the building block for all nitrogen fertilizers. High U.S. natural-gas prices in the 1990s hit the U.S. nitrogen fertilizer industry hard, resulting in bankruptcies, significant job loss and a severe blow to U.S. competitiveness. Twenty-six U.S. ammonia plants were closed. U.S. ammonia production fell by more than 42 percent between 1999 and 2007.
Thankfully, the U.S. nitrogen fertilizer industry has since recovered, in large part because of the ingenuity of and investment by U.S. natural-gas producers. The resulting increase in production from shale has brought much needed stability to domestic natural-gas users and restored the global competitiveness of our natural-gas-based industries. That is welcome news to American companies and workers.
There is simply no compelling reason for the U.S. government to distort the price and availability of U.S. natural gas. Legislation such as HR1380 would create base load natural-gas demand, raising the price and injecting volatility, by using government subsidies to redirect supply to a chosen beneficiary. We believe that enough natural gas is being produced for all users in the U.S. economy to compete for supply through the open market - if the market is allowed to work.
Stephen R. Wilson, chairman, president and chief executive officer
CF Industries Holdings Inc.