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Ag Groups Ask Congress to Expand Natural Gas Production

In the wake of Hurricane Katrina agriculture groups are asking Congress to expand production and construction of infrastructure for natural gas and other domestic energy resources.

With harvest under way, growers are feeling the impacts of already increasing energy prices following the hurricane. Over 70 agriculture groups sent a letter to Congress expressing the importance of expanded natural gas production and remove barriers that would provide new sources of natural gas and oil supplies.

Fertilizers account for more than 40% of the total energy input per acre of corn harvested and natural gas is the primary feedstock used in the production of virtually all nitrogen fertilizers. National Corn Growers Association President Leon Corzine says farmers have seen the price of nitrogen fertilizer increase from $175 per ton in 2000 to more than $400 per ton during the 2005 planting season, and the price is moving closer to $500 per ton for the 2006 planting season.

"The 2005 corn crop was already the most expensive corn crop to plant, and, now, with these historic increases in energy price, producers are feeling the effects of dramatic increases in fuel prices," says Corzine. "Corn growers, like all consumers, are paying high prices at the pump. Producers are also getting an added cost passed onto them through increasing rates in transportation and supplies."

According to recent news reports, six refineries and four natural gas processing plants in the Gulf of Mexico remain closed and are expected to be closed for several months. Hundreds of oil rigs and production platforms also were also evacuated.

According to analysts, as of last weekend, 95% of the Gulf's daily oil production and 88% of its natural gas production were closed. Nine hundred thousand barrels a day of oil, a little more than 60% of normal production, and 40% of natural gas production remained down. Almost 30% of U.S. oil and a little more than 20% of natural gas is produced along the Gulf coast.

"Following the historic energy bill passage last month, Congress once again has an opportunity to take action on diversifying and increasing our nation's supplies of natural gas," Corzine says. "Increasing production of natural gas is not only good for farmers, but it is important for the entire nation."

The letter emphasized a major lesson learned from Hurricane Katrina was that the United States was operating on the edge in respect to oil and natural gas supplies.

"A single incident has led to major disruption of supply," says the letter. "A related lesson is that the U.S. is too dependent on an energy infrastructure that is concentrated in a small geographic area. We also do not have the fuel diversity required to insure that industries have the energy they need to produce strategic products, including food."

In the letter, the organizations says increasing supply, reducing demand and implementing needed policies is the most prudent way to provide new sources of natural gas and oil supplies.