I thank the Chairman for holding this hearing on natural gas supply and demand.

After years of relatively low natural gas costs, consumers in Michigan and other parts of the country have experienced wide price swings in recent years. In January 2001, gas peaked at nearly $9 per million Btu. One year later prices were under $3 per million Btu, but by January 2003 they crested at nearly $8 per million Btu. These fluctuations make budgeting for energy use difficult for both residential and industrial consumers.

Currently, gas is at about $6 per million Btu, and predicted to stay at least that high for the foreseeable future. Chairman Greenspan has noted with concern that these prices seem out of kilter with moderating prices for oil and gasoline in recent months. Secretary of Energy Abraham recently noted that natural gas working storage levels are 42 percent below the previous five-year average, and that hot summer weather would hinder efforts to refill these inventories. In the event the storage levels remain low going into the winter heating season, consumers could once again face skyrocketing prices.

While Congress has attempted to deal with natural gas supply issues in the past, the wrinkle that makes this particularly difficult today is that the Nation has become so reliant on natural gas for various uses that higher prices reverberate even more broadly throughout our economy. Most of the new electric generating capacity added in the recent years is fueled by natural gas. So when prices rise, it is felt not only in homes that use natural gas directly but also in those that use electricity made from gas. Moreover, electric consumers in many parts of the country, particularly in the Western states, have had more than their fair share of volatility in their utility bills. And since a number of industries also depend on natural gas, directly or indirectly, the Nation’s economic recovery could be jeopardized by a prolonged period of high prices.

Unfortunately, it is easier to comment on the nature of the problem than to come up with solutions. If Congress enacts comprehensive energy legislation, provisions to encourage greater conservation and energy efficiency may provide some relief -- but not in the short run. I am interested in suggestions from our witnesses regarding what can be done to prevent consumer hardship next winter. I know Secretary Abraham has called on industry to come up with ideas along these lines and perhaps some of those are gelling. Members of this Committee led the successful effort in 1987 to repeal most of the restrictions on natural gas use under the Powerplant and Industrial Fuel Use Act of 1978. I would be interested if our current Committee Members have a different opinion.

With that, I wish to extend a special welcome to Carl English from Consumers Energy. They provide great service to Michigan consumers, and I am glad he could be with us today. I also look forward to Chairman Greenspan’s testimony and recommendations.

I thank the Chairman and my colleagues for their attention.