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October 28, 2005

Natural gas prices hurting production, pushing up cost of bedding, tires, fertilizer and more

The American Chemistry Council is warning that high natural gas prices are hurting production and pushing up prices of many items we don't normally associated with the fuel:

Consumers will pay more this winter not just for home heating, but for manufactured products that contain chemical compounds -- which is nearly every good manufactured in the US, from tires, telecommunications and carpeting to pharmaceuticals and shampoo. That's because all chemical compounds are made with natural gas as a raw material. There are already product shortages because manufacturers cannot get natural gas at an affordable price: Simmons Bedding Company cannot obtain enough polyurethane foam needed to make bedding. Goodyear is cutting U.S. tire production by 30 percent due to rubber shortages. Newell Rubbermaid has seen resin costs jump 21 percent in a year, and is looking at switching to alternative materials. And a bottled water company that wanted to supply water to FEMA found that its suppliers could not provide the plastic needed. Production of carpet and fertilizer are also down.

The council, a trade association for the U.S. chemical industry, says the way to bring down gas prices is conservation, as well as legislation to increase gas supply:

...It is critical that legislation to increase domestic supplies is enacted into law. This legislation is currently working its way through Congress and could increase the nation's access to domestic reserves of natural gas. That could send a strong signal to the natural gas market that policymakers are serious about fixing the problem by increasing the supply (supply/demand has been grossly out of balance for years), and prices can come down. Public policies have a huge impact on natural gas prices and supply.

Posted by Tim Barmann at October 28, 2005 01:58 PM

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Posted by: R Froais at November 9, 2005 12:14 PM

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