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More Energy News From NAM

By Eric McErlain
Our friends over at the NAM Blog have been all over energy issues and how they affect American businesses. Earlier this week, NAM's President, Gov. John Engler, went to St. Louis and delivered a speech at Rockwell Automation on the current energy crunch in America's economy, and how it's walloping domestic manufacturing (text, video):
Consumers will pay 48 percent more for natural gas this winter than last year -- and at least 31 percent more for home heating oil. The average household heating bill will top $1,000 for the first time. In some parts of the country, like my home state of Michigan, those figures could be much higher.

For manufacturers, the problems are magnified. Dow Chemical's plastics plant in St. Charles, Louisiana -- a 2,000-acre city of pipes, steel towers and spherical holding tanks -- uses about 100 billion Btu of natural gas every day. The St. Charles plant produces a range of man-made compounds needed to make everything from shampoo to shaving cream, from plastic cups to house paint. We don't even think about these compounds, but they are essential to make the products we use every day.

Every time natural gas prices go up just one dollar, costs at that chemical facility go up about $100 million per year.

It's not that the Dow plant isn't conserving energy. They've cut their usage per pound of output by 22 percent in the last year.

But this year for the first time, Dow's energy costs are expected to exceed 50% of the company's overall sales.
For NAM, part of the answer is authorizing oil and gas exploration of the Outer Continental Shelf. And, as we've said many times before, nuclear energy is a logical choice to displace natural gas-fired electric generation, and free up the supply for home heating and industry.

Elsewhere, NAM has finally compiled the results of its latest energy survey, and the news is pretty grim. 45% of the 10,000 small and medium-sized businesses that participated said that rising energy prices are forcing them to layoff employees, or freeze and cut wages.

Some of the comments from the survey are instructive:
"This is a crisis. It's the worst I've seen since we started this company 45 years ago. I don't think people recognize that this shortage of energy is new to the United States. It's a seismic market disruption."

"We make automotive components. The cost of oil and natural gas has increased our price of materials by as much as 93.1% since March 1, 2004. We will have to resort to job cuts, wage freezes and benefit cuts to stay in business."

"Our paint line ovens and our galvanizing kettle will cost more than double to operate this winter than last. We're trying to compete with imports that don't have this pressure. Our freight costs have doubled because of the price of fuel. This is a crisis for manufacturing."
And finally, click here for the story of Oil-Dry, a company adding a 10% surcharge on all of their shipments due to high natural gas prices.

Looks like times are tough all over.

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