Energy Crisis Focus On The Hill
May 21, 2008 The impact of the natural gas crisis on the U.S. fertilizer industry was the talk of the U.S. Senate this week.
The Fertilizer Institute (TFI) discussed the situation’s impact before the U.S. Senate Republican Conference at a May 19 hearing titled "More American Energy: Lowering the Cost of Energy and Balancing the Family Budget." Terra Industries Inc. President and TFI Chairman Michael L. Bennett, who testified on behalf of TFI and its member companies, outlined the serious threat from the country’s ongoing natural gas crisis to the U.S. fertilizer industry, its grower-customers, and all food consumers in the U.S. and around the world.
Specifically, Bennett explained that the U.S. natural gas crisis has evolved into a domestic and global energy and food supply crisis stating that "in seven of the last eight years since 2000, global consumption of grains and oilseeds has exceeded production. If the world’s farmers stopped growing food today, we would only have enough grains in the world’s storage bins to feed the world’s population for 55 days."
Fertilizers currently represent 40 percent of the world’s food production and will have to continue to be a part of the solution toward resolving the world’s ongoing food crisis. In order to meet the world demand for plant nutrients, U.S. nitrogen producers need reliable and plentiful supplies of natural gas. Natural gas is the major feedstock for producing ammonia, which is the building block for all nitrogen fertilizers. The cost of natural gas accounts for 70 percent to 90 percent of the production cost of ammonia.
Bennett emphasized that the escalation in domestic natural gas prices has caused 26 U.S. nitrogen plants to shut down since 2000. "Currently, only 30 nitrogen plants are operating in the U.S. and 55 percent of the U.S. farmer’s nitrogen fertilizer is imported. In less than 10 years, we went from being basically self-sufficient in nitrogen fertilizer supply to importing more than half of our needs," said Bennett. "America’s food security — and by extension, our national security — will be jeopardized if action is not taken to address our country’s current natural gas crisis."
During his testimony, Bennett also took the opportunity to acknowledge and commend the U.S. Senate Republican leadership for its recent introduction of the "Domestic Energy Production Act" (S. 2958). "Our industry strongly supports this important legislation, particularly provisions in the bill that would allow states to petition to lift federal moratoriums on drilling off their shores, and the bill’s efforts to promote important coal-to-liquids technologies and energy production initiatives," said Bennett.
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