CNDI - Natural Gas DA

CNDI 2008 CAMP STARTER SET
NATURAL GAS DISAD AFF / NEG
NATURAL GAS DISAD – CNDI 1/2

NATURAL GAS DISAD – CNDI 1/2.............................................................................................................1
NATURAL GAS DISAD – 1NC.....................................................................................................................3
________________..........................................................................................................................................8
***UNIQUENESS...........................................................................................................................................8
U – SHORT TERM / AT OIL PRICES ...........................................................................................................9
U – LONG TERM .........................................................................................................................................10
U – LONG TERM .........................................................................................................................................11
U – NEW SUPPLY .......................................................................................................................................12
U – NEW SUPPLY .......................................................................................................................................13
U – NEW SUPPLY .......................................................................................................................................14
U – AT VOLATILITY / PRICES HIGH ......................................................................................................16
U – AT VOLATILITY / PRICES HIGH ......................................................................................................17
_________......................................................................................................................................................18
***LINKS.......................................................................................................................................................18
Links – CO2 Cap............................................................................................................................................19
Links – Permits...............................................................................................................................................20
Links – Permits...............................................................................................................................................21
Links – High Oil Prices..................................................................................................................................22
Links – AT Turns (Efficiency / Renewables).................................................................................................23
______________________________________________............................................................................26
***HIGH PRICES IMPACTS THAT TURN THE CASE............................................................................26
Low Prices Key Oil Peak................................................................................................................................27
_______________________..........................................................................................................................28
***ECONOMY IMPACTS............................................................................................................................28
1NC/2NC – Economy Impact.........................................................................................................................29
1NC/2NC – Economy Impact.........................................................................................................................30
Internal Link – Hits All Businesses................................................................................................................31
Internal Link – Recession...............................................................................................................................32
Terminal Econ Impacts...................................................................................................................................33
Terminal Econ Impacts...................................................................................................................................34
_____________________________________________..............................................................................35
***CHEMICAL INDUSTRY IMPACTS – EXTERNAL.............................................................................35
1NC/2NC – Chemical Industry Impact .........................................................................................................36
1NC/2NC – Chemical Industry Impact .........................................................................................................37
High Prices Kill Chemical Industry................................................................................................................38
High Prices Kill Chemical Industry................................................................................................................39
________________________________________________........................................................................40
***MANUFACTURING SHIFT IMPACTS – EXTERNAL........................................................................40
1NC/2NC – Manufacturing Shift Impact.......................................................................................................41
1NC/2NC – Manufacturing Shift Impact.......................................................................................................42
High Prices Cause Manufacturing Shift.........................................................................................................43
High Prices Cause Manufacturing Shift.........................................................................................................44
Manufacturing Shift Key to Economy / Heg..................................................................................................45
Manufacturing Shift Key to Hegemony.........................................................................................................46
_______________________________________________..........................................................................47
***MANUFACTURING SHIFT IMPACTS – TURNS THE CASE............................................................47
1
Manufacturing Shift Impact – Turns Oil........................................................................................................48

________________________________________........................................................................................49
***NATURAL GAS DISAD AFF ANSWERS.............................................................................................49
_____________________..............................................................................................................................50
***NONUNIQUENESS.................................................................................................................................50
2AC NU – High Prices Now..........................................................................................................................51
1AR NU – AT New Supply ...........................................................................................................................52
1AR NU – AT New Tech / Supply ................................................................................................................53
1AR NU – AT LNG Solves............................................................................................................................54
____________________________................................................................................................................55
***LINK DEFENSE AND TURNS..............................................................................................................55
2AC – NO IL – PREDICTION UNCERTAINTY ........................................................................................56
2AC – MUST READ......................................................................................................................................57
2AC – Permits Key Efficiency / Renewables.................................................................................................58
2AC – Permits Key Efficiency / Renewables.................................................................................................59
1AR – Efficiency / Renewables......................................................................................................................60
1AR – Efficiency / Renewables......................................................................................................................61
2AC – Auctioning Solves Link.......................................................................................................................62
2AC – Permits Key Natural Gas Industry......................................................................................................63
_____________________..............................................................................................................................64
***IMPACT ANSWERS...............................................................................................................................64
2AC – Warming Outweighs...........................................................................................................................65
2AC – Oil Peak Outweighs.............................................................................................................................66
2AC – Chemicals Impact................................................................................................................................67
1AR – High Prices Kill Chemicals Now........................................................................................................70
1AR – High Prices Don’t Impact Chemicals..................................................................................................71
1AR – High Prices Increase Chemical Revenues...........................................................................................72
2
NATURAL GAS DISAD – 1NC
A – UNIQUENESS
MULTIPLE MARKET PRESSURES WILL DRIVE DOWN NATURAL GAS PRICES IN THE
MEDIUM AND LONG TERM
FOSTER NATURAL GAS REPORT 5-16-2008
U.S. natural gas prices could fall "substantially" over the next three to four years, according to Strategic
Energy & Economic Research Inc. (SEER). Henry Hub prices could decline by as much as $2/MMBtu by
2012, said SEER's CEO Ron Denhardt in a presentation today. Quoting the famous New York Yankees
Yogi Berra - "the future isn't what it use to be" - Denhardt warned that several economic conditions would
drive down U.S. natural gas prices, including a weak dollar, a strong demand response, and higher-
than-expected growth in natural gas production, among other things.
3

B – LINK
Carbon cap and trade dramatically spikes natural gas prices and causes severe electricity shortages
National Association of Manufacturers 2005, http://www.nam.org/s_nam/doc1.asp?
CID=141&DID=226226
Those who advocate a “cap and trade” scheme for reducing carbon dioxide emissions argue that the
flexibility and “market-based” mechanisms will lower overall costs of the program. They compare their
legislation to the successful sulfur dioxide (SO2) emissions reduction program authorized by the 1990
Clean Air Act Amendments. However, that program was successful (and credits remained available at low
prices) because there were affordable options to reach compliance—fuel switching to lower sulfur coal or
installation of SO2 scrubbers. No such alternatives exist for carbon—utilities would have to compete for
limited supplies of natural gas with homeowners, agriculture and industry; and there are no “scrubbers” that
can be put on plants to remove CO2.
Nevertheless, with a “cap and trade” program that rations coal use, utilities will have to make large scale
changes in the energy they use. Historically, the only viable option to meet carbon dioxide reduction targets
on a large scale would be to switch to natural gas. But that option is disappearing with the recognition that
natural gas supplies are already failing to keep up with ever-increasing demand, as was very evident by the
high spot prices (reaching $19.00/mcf) this past winter. Unless nuclear power plants can be built quickly
and often to replace coal to generate electricity, a “cap and trade” program could lead to severe electricity
shortages—irrespective of price—and reduce fuel diversity and economic security, leading to ever greater
manufacturing job losses to overseas nations that do not have carbon caps. Unlike the SO2 program, there
is no inexpensive substitute fuel or technology to reduce carbon dioxide emissions. A “cap and trade”
scheme for CO2 would raise energy prices and create shortages of natural gas and electricity. Capping”
carbon dioxide means creating a limit on how much carbon intensive fuel—most notably coal—can be used
in the U.S. economy. Legislating less energy available to generate electricity necessarily leads to higher
electricity prices, if not actual shortages, because there is no other energy source that is sufficiently
abundant and cost-effective to replace coal. A CO2 cap and trade program would act as a tax on the
economy. The Congressional Budget Office (CBO), in their 2001 report, “An Evaluation of Cap and Trade
Programs for Reducing U.S. Carbon Emissions,” the CBO stated “the economic impacts of cap-and-trade
programs would be similar to those of a carbon tax: both would raise the cost of using carbon-based fuels,
lead to higher energy prices and impose costs on users and some suppliers of energy.” By raising the prices
of electricity and natural gas, a cap and trade program will be highly regressive, hurting the poor, the
elderly, minorities and anyone on a fixed income, disproportionately. It will also reduce general prosperity
and productivity. The CBO stated in the same report, “The higher prices for energy and energy-intensive
products that would result from a cap-and-trade program would reduce the real income that people received
from working and investing, thus tending to discourage them from productive activity. That would
compound the fact that existing taxes on capital and labor already discourage economic activity.” As the
NAM observed in our January 7, 2003, letter to members of the Senate Commerce Committee, “While
some companies would profit from a government program that would allow them to sell emissions
reductions to others, the overwhelming majority of U.S. companies will experience this as a tax on growth
that will hurt their international competitiveness and thus, their workers and stockholders.”
4

C – IMPACTS
1 – Natural gas is key to the chemical industry and the production of a laundry list of valuable inputs
into the economy and energy
Gupta 2003 – Chairman and CEO, Rohm and Haas (Global Chemical Manufacturer)
Testimony before House Committee on House Resources, 3-19, FDCH
The current price of natural gas is the chemical industry's number one economic issue. Natural gas is the
lifeblood of the chemistry business in the U.S. Not only do we use natural gas as a fuel in our
manufacturing processes, much like other industries, but we also use it as an ingredient, or feedstock, for
many of the products we make.
Natural gas and natural gas liquids contain hydrocarbon molecules that are split apart during processing and
then recombined into useful chemical products. These products include life-saving medicines, health
improvement products, technology-enhanced agricultural products, more protective packaging materials,
synthetic fibers and permanent press-clothing, longer-lasting paints, stronger adhesives, faster
microprocessors, more durable and safer tires, lightweight automobile parts, and stronger composite
materials for aircraft and spacecraft. The business of chemistry also makes many of the products that help
save energy throughout the entire economy, including insulation, house wraps, lubricants, and high-
strength light-weight materials, enabling American industries and consumers to be more energy efficient.
The business of chemistry is the only part of the economy that adds value to these hydrocarbon molecules
rather than combusting them for energy.
2 – Chemical industry key to the economy

The $460 billion business of chemistry is a key element of the nation's economy, providing the building
block materials that the rest of the U.S. economy relies upon. It is the country's largest exporter,
accounting for ten cents out of every dollar in U.S. exports. Chemistry companies invest more in research
and development than any other business sector. Safety and security have always been primary concerns of
ACC members, and they have intensified their efforts, working closely with government agencies to
improve security and to defend against any threat to the nation's critical infrastructure. SUMMARY OF
TESTIMONY A hearing on enhancing the nation's energy security could not come at a better time. The
nation is facing an energy crisis caused by runaway prices for natural gas. Unless Congress acts to increase
domestic natural gas supplies our economy will continue to struggle and we will fall short of our goals for a
cleaner environment. A crisis of this magnitude poses a grave threat to America's economic and national
security. Current energy prices are making it impossible for the US chemical industry, and other critical
industries, to compete in global markets. Because the business of chemistry produces the building block
materials that the rest of our modern economy relies upon, we are somewhat of a "canary in the coalmine."
As we go, so goes the rest of the nation.
5
3 – The impact is extinction and turns the case

Chemical and Engineering News 1999 Vol. 77, No. 49. pp. Pp.46-47. http://pubs.acs.org/sci-
bin/bottomframe.sci?hotartcl/cenear/991206/7749spintro2
The pace of change in today's world is truly incomprehensible. Science is advancing on all fronts,
particularly chemistry and biology working together as they never have before to understand life in general
and human beings in particular at a breathtaking pace. Technology ranging from computers and the Internet
to medical devices to genetic engineering to nanotechnology is transforming our world and our existence in
it. It is, in fact, a fool's mission to predict where science and technology will take us in the coming decade,
let alone the coming century. We can say with finality only this: We don't know. We do know, however,
that we face enormous challenges, we 6 billion humans who now inhabit Earth. In its 1998 revision of world
population estimates and projections, the United Nations anticipates a world population in 2050 of 7.3 billion to 10.7 billion, with a
"medium-fertility projection," considered the most likely, indicating a world population of 8.9 billion people in 2050. According to the
UN, fertility now stands at 2.7 births per woman, down from 5 births per woman in the early 1950s. And fertility rates are declining in
all regions of the world. That's good news. But people are living a lot longer. That is certainly good news for the individuals who are
living longer, but it also poses challenges for health care and social services the world over. The 1998 UN report estimates for the first
time the number of octogenarians, nonagenarians, and centenarians living today and projected for 2050. The numbers are startling. In
1998, 66 million people were aged 80 or older, about one of every 100 persons. That number is expected to increase sixfold by 2050
to reach 370 million people, or one in every 24 persons. By 2050, more than 2.2 million people will be 100 years old or older! Here is
the fundamental challenge we face: The world's growing and aging population must be fed and clothed and housed and transported in
ways that do not perpetuate the environmental devastation wrought by the first waves of industrialization of the 19th
and 20th centuries. As we increase our output of goods and services, as we increase our consumption of
energy, as we meet the imperative of raising the standard of living for the poorest among us, we must learn
to carry out our economic activities sustainably. There are optimists out there, C&EN readers among them, who
believe that the history of civilization is a long string of technological triumphs of humans over the limits of nature. In this view, the idea of a "carrying
capacity" for Earth—a limit to the number of humans Earth's resources can support—is a fiction because technological advances will continuously
obviate previously perceived limits. This view has historical merit. Dire predictions made in the 1960s about the exhaustion of resources ranging from
petroleum to chromium to fresh water by the end of the 1980s or 1990s have proven utterly wrong. While I do not count myself as one of the
technological pessimists who see technology as a mixed blessing at best and an unmitigated evil at worst, I do not count myself among the technological
optimists either. There are environmental challenges of transcendent complexity that I fear may overcome us and our Earth before technological progress
can come to our rescue. Global climate change, the accelerating destruction of terrestrial and oceanic habitats, the catastrophic loss of species across the
plant and animal kingdoms—these are problems that are not obviously amenable to straightforward technological solutions. But I know this, too: Science
and technology have brought us to where we are, and only science and technology, coupled with innovative social and economic thinking, can take us to
where we need to be in the coming millennium.
Chemists, chemistry, and the chemical industry—what we at
C&EN call the chemical enterprise—will play central roles in addressing these challenges. The first section
of this Special Report is a series called "Millennial Musings" in which a wide variety of representatives from the chemical enterprise
share their thoughts about the future of our science and industry. The five essays that follow explore the contributions the chemical
enterprise is making right now to ensure that we will successfully meet the challenges of the 21st century. The essays do not attempt to
predict the future. Taken as a whole, they do not pretend to be a comprehensive examination of the efforts of our science and our
industry to tackle the challenges I've outlined above. Rather, they paint, in broad brush strokes, a portrait of scientists, engineers, and
business managers struggling to make a vital contribution to humanity's future. The first essay, by Senior Editor Marc S. Reisch, is a
case study of the chemical industry's ongoing transformation to sustainable production. Although it is not well known to the general
public, the chemical industry is at the forefront of corporate efforts to reduce waste from production streams to zero. Industry giants
DuPont and Dow Chemical are taking major strides worldwide to manufacture chemicals while minimizing the environmental
"footprint" of their facilities. This is an ethic that starts at the top of corporate structure. Indeed, Reisch quotes Dow President and
Chief Executive Officer William S. Stavropolous: "We must integrate elements that historically have been seen as at odds with one
another: the triple bottom line of sustainability—economic and social and environmental needs." DuPont Chairman and CEO Charles
(Chad) O. Holliday envisions a future in which "biological processes use renewable resources as feedstocks, use solar energy to drive
growth, absorb carbon dioxide from the atmosphere, use low-temperature and low-pressure processes, and produce waste that is less
toxic." But sustainability is more than just a philosophy at these two chemical companies. Reisch describes ongoing Dow and DuPont
initiatives that are making sustainability a reality at Dow facilities in Michigan and Germany and at DuPont's massive plant site near
Richmond, Va. Another manifestation of the chemical industry's evolution is its embrace of life sciences. Genetic engineering is a
revolutionary technology. In the 1970s, research advances fundamentally shifted our perception of DNA. While it had always been
clear that deoxyribonucleic acid was a chemical, it was not a chemical that could be manipulated like other chemicals—clipped
precisely, altered, stitched back together again into a functioning molecule. Recombinant DNA techniques began the transformation of
DNA into just such a chemical, and the reverberations of that change are likely to be felt well into the next century.
Genetic engineering has entered the fabric of modern science and technology. It is one of the basic
tools chemists and biologists use to understand life at the molecular level. It provides new avenues to
pharmaceuticals and new approaches to treat disease. It
6

expands enormously agronomists' ability to introduce traits into crops, a capability seized on by
numerous chemical companies. There is no doubt that this powerful new tool will play a major role in
feeding the world's population in the coming century, but its adoption has hit some bumps in the road. In the second essay, Editor-at-
Large Michael Heylin examines how the promise of agricultural biotechnology has gotten tangled up in real public fear of genetic manipulation and
corporate control over food. The third essay, by Senior Editor Mairin B. Brennan, looks at chemists embarking on what is perhaps the greatest intellectual
quest in the history of science—humans' attempt to understand the detailed chemistry of the human brain, and with it, human consciousness. While this
quest is, at one level, basic research at its most pure, it also has enormous practical significance. Brennan focuses on one such practical aspect: the effort
to understand neurodegenerative diseases like Alzheimer's disease and Parkinson's disease that predominantly plague older humans and are likely to
become increasingly difficult public health problems among an aging population. Science and technology are always two-edged swords. They bestow the
power to create and the power to destroy. In addition to its enormous potential for health and agriculture, genetic engineering conceivably could be used
to create horrific biological warfare agents. In the fourth essay of this Millennium Special Report, Senior Correspondent Lois R. Ember examines the
challenge of developing methods to counter the threat of such biological weapons. "Science and technology will eventually produce sensors able to detect
the presence or release of biological agents, or devices that aid in forecasting, remediating, and ameliorating bioattacks," Ember writes. Finally,
Contributing Editor Wil Lepkowski discusses the most mundane, the most marvelous, and the most essential molecule on Earth, H2O. Providing clean
water to Earth's population is already difficult—and tragically, not always accomplished. Lepkowski looks in depth at the situation in Bangladesh—
where a well-meaning UN program to deliver clean water from wells has poisoned millions with arsenic. Chemists are working to develop better ways to
detect arsenic in drinking water at meaningful concentrations and ways to remove it that will work in a poor, developing country. And he explores the
evolving water management philosophy, and the science that underpins it, that will be needed to provide adequate water for all its vital uses. In the past
two centuries, our science has transformed the world. Chemistry is a wondrous tool that has allowed us to understand the structure of matter and gives us
the ability to manipulate that structure to suit our own purposes. It allows us to dissect the molecules of life to see what makes them, and us, tick. It is
providing a glimpse into workings of what may be the most complex structure in the universe, the human brain, and with
it hints about what
constitutes consciousness. In the coming decades, we will use chemistry to delve ever deeper into these
mysteries and provide for humanity's basic and not-so-basic needs.
7
________________
***UNIQUENESS
8
U – SHORT TERM / AT OIL PRICES
U – AT OIL PRICES – NATURAL GAS MARKET FUNDAMENTALS REMAIN STRONG

DESPITE SPORADIC INCREASES DUE TO OIL LINKAGE
GULF NEWS 4-29-2008
Unlike oil, however, the market fundamentals seem to be somewhat solid for natural gas.
Analysts are predicting that gas is going to stay in the $11 to $12 per British thermal unit (BTU) range, as
demand grows and reserves, especially in the United States, decline.
The US's Energy Department said that natural gas inventories have only risen 24 billion cubic feet, to just
over 1.2 trillion cubic feet, as of April 18, which Dow Jones called a much smaller increase than expected.
AT OIL PRICES – TURN – OIL INDUCED PRICE STRENGTH LEADS TO INCREASED

PRODUCTION AND INVESTMENT IN NATURAL GAS
GULF NEWS 4-29-2008
The good news? Higher natural gas prices mean more money to invest in new operations. The Petroleum
Services Association of Canada boosted its activity forecast 14 per cent from 14,500 wells to 16,500 wells,
and attributed what they call a "drilling revival" to increased interest in natural gas thanks to recent price
hikes and a healthy long-term price outlook.
Meanwhile, talks are in place to build natural gas pipelines everywhere from Turkmenistan to the
Subcontinent and from Turkey into Europe, just to name a few.
"This is the year of natural gas," said Jim Cramer of CNBC's Mad Money TV show in the United States.
His reasoning is pretty sound - as the price of oil increases, more people look to cheaper natural gas
for everything from heating and cooling to powering cars.
That increased demand is translating into more natural gas drilling, more interest in the pipelines used for
transport and more overall investment as energy companies look to fill the vacuum created by record oil.
AT OIL – OIL’S EFFECT IS OVERSTATED – NATURAL GAS IS NOT INTERCHANGEABLE

THE OKLAHOMAN 4-25-2008
Tony Say, a natural gas marketer who is president of Clearwater Enterprises Inc., said numerous factors,
including the high price of oil, factor into its value.
If natural gas were valued using its British thermal unit equivalency to oil, its price would be higher today,
he agreed.
"But it is not an interchangeable product," he said. "You can't take your house in the Southwest and
heat it using fuel oil. But is the high price of oil helping that commodity? Absolutely. The gas traders look
at what oil prices are doing. There is no doubt about it."
9
U – LONG TERM
NATURAL GAS MARKETS STABLE IN THE LONG TERM – NEW SUPPLY WILL ALLOW
THE INDUSTRY TO WEATHER CURRENT PRICE PRESSURES
CANADA NEWSWIRE 5-21-2008
Despite recent upward pressure on natural gas prices, additional supplies, particularly from unconventional
sources, expanding LNG import capabilities and increasing investment in natural gas storage will
keep the market in balance over the longer term, concludes a new paper released today by the Canadian
Gas Association.
North America continues to have an ample supply of natural gas with expected declines in some
conventional sources of supply being offset by stronger than expected performance by other
unconventional supplies, says the CGA paper entitled Natural Gas Markets - Price and Supply Update.
"Current prices are also drawing investment into exploration and development and increasing the supply of
natural gas in North America," says Canadian Gas Association President, Michael Cleland.
"Unconventional supplies such as shale gas, coal bed methane and gas from waste are becoming
increasingly economic in the present environment."
"Today's natural gas prices are being influenced by increasingly tight global markets for all energy
commodities" said Cleland. "No energy source, whether renewable or non-renewable will escape this
reality."
However, with multiple energy options and a strong responsive natural gas marketplace, North America is
well positioned to weather these storms. Natural gas will continue to play a key role in meeting the energy
needs of consumers.
The Canadian Gas Association (CGA) is the voice of Canada's natural gas delivery industry. CGA
members are gas distribution companies, transmission companies, related equipment manufacturers, and
other service providers involved in the delivery of natural gas in Canada.
U – LONG TERM PRICES ARE BELOW HIGH END PREDICTIONS

If natural gas production continues at its current higher level, on the other hand, working gas storage would
end about 185 Bcf higher than projections. Also, Henry Hub gas prices are "well below their historic
relationship" with residential fuel oil prices, Denhardt said, which suggests a near-term "upside potential
for natural gas prices." If prices do fall below $7/MMBtu to $8/MMBtu, "substantial volumes of
production could be lost," as 20% to 40% of wells at that price level are marginal, based on production
costs.
In 2010, SEER sees Henry Hub prices likely hovering near $9/MMBtu. Other industry predictions range
from $7.00/MMBtu to almost $11/MMBtu. High oil prices and carbon pricing in Europe could support the
high end of gas prices in 2010, "but there are downside risks as well," Denhardt said.
10
U – LONG TERM
All their evidence is systemically biased – most qualified studies and market fundamentals prove
prices will lower and stabilize
Inside FERC 2-21-2005
Seeking to debunk widely held views on the gas supply/demand picture, a new report asserts that futures
prices are not sustainable at current levels and "will moderate significantly" within the next year. "The
contemporary domestic political scene has rendered continued high prices for natural gas a convenient
problem for both political parties," wrote James Choukas-Bradley, an attorney with the Washington law
firm Miller, Balis & O'Neil, and Michael Donnelly, a consultant with Global Energy Advisors.
"Therefore, there is wide political satisfaction, though largely unstated and politically unspeakable, for
continued high gas prices," said the pair, who co-authored the report on gas market dynamics for 2005 and
beyond. "There is no consensus among industry experts that domestic supplies are dwindling," said the
report, issued last week. "Projections indicate annual rates for total domestic production that range from
minus 2% to plus 2%, [while] the federal government continues to project 1% to 2% annual growth to
2020." Moreover, bullish news for gas markets tends to get wider media coverage than bearish news,
according to the authors. "The trade press reports and responds to the pronouncements and projections of
stock analysts who cover the industry," and such analysts "implicitly consider the interest of their industry
to reside in higher prices." At the same time, the mainstream media cover stories about higher prices since
they tend to mean "bad news for consumers, and therefore sometimes worth reporting," the authors said.
"Neither the producer-oriented media nor the consumer-oriented media are served institutionally by bearish
natural gas price news." For their part, market players themselves no longer appear to concentrate on
fundamentals, the report said.
"We have been and remain in the midst of a climate of crisis concerning natural gas prices, with market
prices subject to wild swings resulting from trading decisions by both commercial and speculative traders
that respond to 'psychology' and 'spin,' either in spite of or in the absence of reliable, real-time fundamental
information," the authors said. While domestic producers have incentives to hedge their physical gas price
exposure, "producers generally do not hedge a large portion of their production on a long-term basis,
seeking rather to capture the upside of higher future prices." Meanwhile, "speculative traders dealing with
financial gas price exposure have the incentive to support price volatility and volume liquidity," according
to the study.
But fundamentally, the full-cycle replacement cost of gas in the U.S. and Canada "remains significantly
below market prices," running at about $2.75 to $3.00/MMBtu for most offshore Gulf of Mexico supplies
and at $3.25 to $3.50/MMBtu for deep-water Gulf supplies. "The full-cycle replacement cost for other
domestic sources is lower, in some cases considerably lower," the authors said. Increasing imports of
liquefied natural gas also will put heavy downward pressure on gas prices, the authors predicted. "If two
new LNG import terminals are built every three years, and North American gas demand reaches 30 Tcf by
2025, LNG should compete with indigenous gas, potentially displacing as much as 40% of Gulf Coast
production by 2010, with an expected reduction in gas prices," according to the study. "Even in the absence
of other factors, such gas-on-gas competition by itself should result in Henry Hub prices at $4.25/MMBtu
or lower, in 2004 dollars, before 2010."
11
U – NEW SUPPLY
INCREASED LNG INTEGRATION WILL MAINTAIN PRICE STABILITY IN NATURAL

GAS MARKETS
CGA 2008 – CANADIAN GAS ASSOCIATION
NATURAL GAS MARKETS PRICE AND SUPPLY UPDATE, 5-21, http://www.cga.ca/
Current outlooks expect increasing supplies from
liquefi ed natural gas (LNG). Forecasts call for LNG
to rise from 3% to supply 15% of North American gas
demand by 2020. Th is translates into just over 3 tcf of
natural gas being supplied by LNG by the year 2020.
LNG provides North America with access to natural gas
supplies from outside the continent. However, while
high prices in other markets are competing heavily for
available world supplies, North America is uniquely
positioned to employ LNG as a balancing supply in its
market.
Countries in Asia and Western Europe, that rely on
LNG for much of their natural gas supply are willing to
enter into longer term contracts, and pay premium prices
to ensure LNG supply for their high demand winter
heating season. In return these contracts often allow
for diversion of LNG cargoes to other markets during
periods of lower prices and demand, typically during the
summer months.
Given a ready supply of pipeline gas, North American
based LNG buyers would not be expected to match
the premium winter LNG prices. But North America’s
unique natural gas storage capability will attract LNG
cargoes during the typically lower price summer months.
Th e associated gas supply will then be stored for use
during their higher demand winter season.
12
U – NEW SUPPLY
U – SUPPLIES FOR NATURAL GAS KEEPING UP WITH DEMAND – MARKET IS STABLE IN

THE NEXT DECADE
A survey of recent North American gas supply outlooks
show steady to slightly upward expectations for natural
gas supply over the next 15 years.
Strong natural gas prices have drawn investment into
the exploration and development of natural gas supplies.
North America produced 26.6 trillion cubic feet (tcf) of
natural gas in 2006. Also North America has increased
its proven gas reserves to a total 282 tcf. Th is addition
of new supply has been refl ected in an increase in the
reserves to production ratio (R/P), the measure of
available short term supply of natural gas. Th e R/P ratio
has remained stable or slightly growing around the 10
year level for the last decade. Th is reflects the fact that
new gas discoveries, in the various North American
supply basins are being converted into reserve additions
at a rate roughly equal to the growth in continental gas
demand.
13
U – NEW SUPPLY
U – UNCONVENTIONAL SUPPLIES – FORECASTS DON’T TAKE INTO ACCOUNT

NEW SOURCES OF NATURAL GAS SUPPLIES
Other Supply Developments
In the meantime, other important technological
developments, which do not appear in current forecasts,
will add to the natural gas supply picture for Ontario
and North America.
MORE EV – UNCONVENTIONAL GAS

Unconventional Gas: North American developers are having increasing
success fi nding and extracting natural gas from unconventional formations,
particularly shale. In addition to simply fi nding more unconventional natural
gas plays; new technologies such as horizontal drilling and better fracturing
techniques, have made these plays far more productive than had been the
case even fi ve years ago. In Canada alone, there have been signifi cant
new discoveries such as the Upper and Lower Montney Shales and Muskwa
Shale in B.C. and the Utica Shale in Quebec which could add over 100 tcf to
reserves over the next decade. In the U.S., the Barnett Shale in
Texas alone has added an estimated 30 tcf to continental
gas reserves.
MORE EV – RENEWABLE GAS

Renewable Natural Gas:
Development of renewable natural gas (RNG) is increasing. RNG is gas that is
produced from the decomposition of waste from landfi lls, municipal
solid waste, forestry, and agricultural waste. RNG provides energy and in
doing so helps curtail the associated waste-based GHG emissions. Th
e Alberta Research Council estimates the technical potential supply of RNG in
Ontario alone at just over 110 bcf annually or about 12% of the province’s
current annual demand. Key issues to be addressed in the eff ort to develop
RNG projects centre on the basic economics of the proposed projects that
require sizeable capital investments to build the necessary gas collection,
purifi cation and distribution infrastructure.
MORE EV – HYDRATES
Gas from Hydrates:
Recent tests have successfully extracted gas from
hydrates at rates equal to that for coal bed methane.
Commercial development of hydrates-based natural gas
14
supply is still 10 to 20 years off and would require the

completion of the Mackenzie Delta pipeline to enable
the associated gas supplies to be brought to market.
Successful development of hydrates would increase the
world’s natural gas resource base by 7 to 19 times its
current level.
15
U – AT VOLATILITY / PRICES HIGH
TURN – Gas price spikes don’t kill the industry but sustained market imbalances will devastate
productivity and job growth
High natural gas prices also negatively impact productivity and employment in our industry. In any
industry, a company faced with declining profitability must evaluate whether or not to continue operations.
During the 2000-2001 "spike" in natural gas prices, many companies idled their operations. About fifty
percent of the industry's methanol capacity and fifteen percent of the industry's ethylene capacity were
simply shut down during this time. Many workers were sent home. As natural gas prices came down plants
reopened. These relatively short-term increases in natural gas prices led to relatively short-term shutdowns.
However, there are serious questions regarding how these companies will respond over the long-term if
faced with a business environment with sustained conditions of tightened natural gas supply and high
natural gas prices. For our employees, demand destruction sooner or later becomes job destruction.
TURN - The plan creates a permanent crunch in the natural gas market – sustained high prices will
eliminate the ability to cope with price volatility
A disturbing reality of the U.S. natural gas market is that nearly 70% of it is price insensitive. This means
that 70% of gas consumers have no option to either stop using energy or to use a different form of energy
and must pay whatever the price is for the gas they need. The remaining 30% of demand, predominantly
industrial manufacturers, can adjust to gas price swings by switching to more reasonably priced fuels or by
ceasing to operate their manufacturing facilities. It is in this 30% that demand destruction occurs. In the
past, this demand destruction generally has been temporary. Higher prices led to increased production and
lesser demand, thereby increasing supply and moderating prices. Once prices returned to more economic
levels, industrial consumers switched back to natural gas or restarted idled facilities. In light of recent
trends -- record numbers of working drill rigs in 2001 did not increase supply; more stringent air quality
regulations that limit or eliminate the ability to fuel switch; ever increasing demand for natural gas from
price insensitive users -- there is a significant risk that this historical pattern will not repeat itself. Rather,
ACC is concerned that temporary demand destruction may become permanent demand destruction for
many of its members.
16
U – AT VOLATILITY / PRICES HIGH
Natural gas market has stabilized, only government regulations on demand can create market
inbalances
Gas Daily 10-9-2003
Despite persistent warnings of a U.S. gas shortage, supply and demand in fact have reached an appropriate
balance now that the ''gas bubble'' of the 1980s and 1990s has burst, an executive of an inde-pendent
producer said this week.
''As a country, we've been somewhat spoiled over the last 20 years because we've had an overabundance of
natural gas deliverability, brought about by policy changes in the late '70s,'' said Bruce Vincent, executive
vice president of Houston-based Swift Energy. ''Our view is that the fundamentals of natural gas supply and
demand, and the uses for natural gas, are pretty much in balance.''
As a result, average prices will stay in the $ 4 to $ 5/MMBtu range for the foreseeable future, Vincent said
this week during the Independent Petroleum Association of America's 2003 Oil & Gas Investment
Symposium in San Francisco.
In an interview with Gas Daily, Vincent cited the Natural Gas Policy Act and the Powerplant and Industrial
Fuel Use Act, which in the 1970s pushed electric utilities and some industrial customers to use fuel oil
instead of natural gas. That, he said, led to the oversupply that came to be known as the gas bubble.
''For many years, we were always used to that surplus. Of course, that discouraged significant new
exploration, but eventually that worked itself off -- a lot of it through increasing demand, some of it
through decreasing supplies. So we find ourselves to where they really are in balance,'' he said.
Given that fundamental shift, the market has created both a floor and a ceiling for the value of gas. ''As the
price gets too high, we're going to drive some of the demand away from the market. And if the price gets
too low, the demand will come back and it will discourage the drilling activity and the supply will come
down,'' Vincent said.
''The key determinants of that overbalance/underbalance will be weather and the economy. Those are the
two big fundamentals that drive demand,'' he added. ''Both of those, particularly weather, are
unpredictable.''
Recent price spikes don’t point to a crisis in natural gas because higher prices have been offset by
lower capital costs
Energy Information Administration 2004 – Annual Energy Outlook
http://www.eia.doe.gov/oiaf/aeo/electricity.html
In AEO2005, the projected average price for natural gas delivered to electricity generators is 45 cents per
million Btu higher in 2025 than was projected in AEO2004; however, the impact of the higher prices is
offset by the assumption that capital costs for new natural-gas-fired power plants will be lower than
assumed in AEO2004, as well as the inclusion of more recently completed and announced plans for gas-
fired power plants. As a result, in AEO2005, projected cumulative capacity additions and generation from
natural-gas-fired power plants are higher than in AEO2004, and capacity additions and generation from
coal-fired power plants are lower. The AEO2005 projectione of 1,406 billion kilowatthours of electricity
generation from natural gas in 2025 is 8 percent higher than in AEO2004 (1,304 billion kilowatthours) and
more than twice the 2003 level of about 630 billion kilowatthours (Figure 5). Less new gas-fired capacity is
added in the later years of the forecast because of the projected rise in natural gas prices.
17
_________
***LINKS
18
Links – CO2 Cap

CO2 emissions caps cause sustained high prices due to increasing demand for natural gas
Liuzzi 2003 – President, CF Industries
The Fertilizer Institute, Testimony Before House Committee on Energy and Commerce, 6-10
More specifically, the fertilizer industry stresses that the most effective measure to deal with high natural
gas prices over the short- term are incentives and other regulatory measures that will reverse decades of
artificially induced demand for natural gas over other fuel technology for electric power generation.
Congress itself is among those who share in the responsibility for this problem, as the requirements of the
Clean Air Act have made it increasingly difficult to permit, construct and enlarge the nation's coal-fired
plants. Where the nation once relied on coal for the lion's share of its electric power, over 90% of all new
power plant construction intends to rely on natural gas. Recent proposals to impose further rules on
mercury and CO2 emissions will only add to the burden of coal-fired generators and hasten the move to
natural gas. This, of course, will cause a tremendous new demand to be placed on the existing gas
supply base, ensure high prices into the foreseeable future, and threaten the viability of the domestic
nitrogen fertilizer industry - an industry, unlike the electric power industry, that does not have an
alternative to natural gas. Accordingly, any legislation passed by this Committee should ensure that all
coal, nuclear and hydroelectric plants are able to operate safely at their full capacity, and that incentives are
provided and obstacles removed to ensure that new coal and nuclear facilities are constructed.
Any regulation of CO2 causes a crisis for natural gas

National Petroleum & Refiners Association 5-25-2004
http://www.npra.org/issues/petrochemical/NGsummary.pdf
The Economic Consequences of High Natural Gas Prices
From 2000 until early 2004, manufacturing sector employment declined for 32 consecutive months. This
equaled a loss of two million U.S. manufacturing jobs. More than 10,000 of those jobs were lost in the
chemical industry. High energy costs have played a significant role in those losses.
Higher natural gas prices can also put a large portion of the domestic petrochemical industry at a
competitive disadvantage to European and Asian producers. Additional loss of facilities and jobs could
occur if the current and prospective gas price and supply situation is not addressed promptly through more
supply-based policy changes.
Three years of extraordinarily high natural gas prices (2001-2003) have resulted in a depressed chemical
export market and contributed to a negative trade balance for the U.S. economy. This negative trade
balance allows foreign businesses to capture U.S. market share, in part because European and Asian
producers are not experiencing increased feedstock prices to the same extent as the U.S.
The natural gas supply situation has prompted Federal Reserve Board Chairman Alan Greenspan to warn
that sustained high natural gas prices are a “very serious problem” with the potential to offset the economic
recovery under way. Continues… Policy Recommendations
Immediate Actions: Efficiency Plus Conservation
We can delay discretionary environmental regulations that require the use of natural gas to achieve air
quality standards. A primary example of this is EPA’s ill-considered requirement that refiners use natural
gas as part of New Source Review settlements. Resist
 new public policy initiatives such asglobal
 
climate change legislation which have the potential to impact natural gas supplies.
Any “Clear Skies” legislation or regulations mandating reductions in certain emissions should meet the
following criteria: 1) not encourage fuel switching; 2) should not apply to combined heat and power; 3) be
limited to only three pollutants (NOx , SO2, and Hg); 4) not regulate CO2 in any way.

19
Links – Permits
EIA analysis proves the plan causes sustained high prices to do its constraint on the market
Energy Information Administration 2003 – Analysis of S.139, the Climate Stewardship Act
http://www.eia.doe.gov/oiaf/servicerpt/ml/pdf/summary.pdf
Delivered prices of coal, natural gas, petroleum, and electricity all increase in the S.139 case relative to the
reference case (Figure S.3) as a consequence of the emissions allowance program. Figure S.4 shows the
percentage change in delivered prices from the reference case to the S.139 case. In percentage terms, coal
prices are most affected by S.139: the price in the S.139 case is 474 percent above the reference case price
in 2025. Natural gas prices in the S.139 case are 46 percent above the reference case prices in 2025,
average petroleum product prices are 29 percent higher, and prices for petroleum-based transportation fuels
are 31 percent higher. These price changes reflect supply and demand shifts as well as allowance costs. For
example, the reduced U.S. demand for oil in the S.139 case is expected to reduce the world oil price by 7
percent and help mitigate the price impact on final consumers. The increased U.S. demand for natural gas
works in the opposite direction, increasing the market-clearing price of gas at the wellhead. Electricity
prices, reflecting the higher cost of using fossil fuels for generation and the incremental cost of plant
investments to reduce greenhouse gas emissions (e.g., by replacing coal-fired plants that do not sequester
carbon dioxide), are 46 percent above the reference case level in 2025.
Permits cause a shift to natural gas due to fears of carbon tax

Cicio 2003 – Executive Director, Industrial Energy Consumers of America
The Natural Gas Crisis, http://www.ieca-us.com/downloads/homepg/gas_summit_recommendations.doc
Climate Change
The Administration must not implement “GHG transferable credits” embodied in the GHG Registry 1605
(b). Doing so will signal that a carbon cap is nearing and all corporate energy related decision making will
plan to use the least carbon intensive fuel, natural gas. This will only further aggravate a very serious
natural gas shortage.
1990 cap mandates forever increasing natural gas prices and fundamentally alters the market
Montgomery 1997 – President, Charles River Associates
FDCH, 10-9
In percentage terms, an emission trading program or a carbon tax sufficient to return emissions to 1990
levels in 2010 would produce a 23% increase in the cost of electricity, a 45% increase in the cost of heating
oil, a 40% increase in the cost of gasoline, and a 46% increase in the cost of natural gas in 2010 to
households.
As the U.S. economy grows and it becomes more difficult to hold emissions at this fixed level, increasingly
expensive efforts will be required to hold to the cap. Therefore, the carbon tax or permit price would rise to
about $400 per tonne by 2030. The taxes on individual fuels would also increase in proportion to the
growing carbon tax.
Cap and trade increases natural gas demand

Breslow 2004 – Mass Climate Action Network
http://www.massclimateaction.org/PrimerCarbonCap&Trade2.doc
The point of cap-and-trade is to obtain the goal of reducing GHG emissions at the lowest possible cost to
generators of power, by giving owners the choice of either reducing emissions from their plants or buying
permits and continuing to emit CO2. The assumption is that existing and new generators who can reduce
emissions at low cost will do so (by producing from natural gas plants or renewable sources) and then can
sell their permits to generators that have higher costs to cut emissions.
20
Links – Permits
Tradeable permits increase natural gas costs by 147%
National Center for Policy Analysis 1999
http://www.ncpa.org/hotlines/global/pd113099d.html
To comply with the Kyoto Accord, the Clinton administration has proposed a tradable CO2 emission permit
plan. Supporters argue that an emissions trading scheme would be a less expensive way of reducing
emissions than the other primary option, a carbon tax on all fuels, because it allows emissions reductions to
be concentrated at sources where it is least expensive. However, economist Margo Thorning points out that
"Carbon taxes could be imposed instead of tradable permits: there should be, in principle, no difference in
energy prices under the two alternative systems."
Under either system, energy prices will rise. For instance: The Department of Energy estimates that carbon
permit prices would be equal to a carbon tax of $348.00 per ton in 2010. WEFA, Inc., an econometrics
forecasting firm, estimates that the cost of carbon permits would top $265.00 per ton. The DOE estimates
that these permit prices would increase the cost electricity by up to 86.4 percent, gasoline by 52.8 percent,
home heating oil by 76 percent and natural gas by 147 percent.
Best studies prove permits increase natural gas prices by 13%

Business Week 1-8-2001
What's in this scenario? Key elements include a ''voluntary'' 45%-50% increase in Corporate Average Fuel
Economy standards, replacing our premiums for a minimum level of vehicle liability insurance with a
gasoline tax of 34 cents a gallon, and instituting a $ 50-per-metric-ton ''tradable carbon emission permit
programs.'' The tradable carbon permit scheme alone would collect $ 73 billion in ''energy taxes'' from
individuals and businesses in 2010. The five-lab study itself acknowledges that these policies would raise
gasoline prices 29%, natural gas prices 13%, and coal prices 120%.
21
Links – High Oil Prices

High oil prices solve the impact of natural gas prices on the chemical industry
Chemical News & Intelligence 1-3-2005
Rogers said substantial increases in oil prices as well as natural gas prices helped limit cash flow generation
in 2004. US producers using natural gas feed stocks were not disadvantaged by higher natural gas prices as
their competitors coped with elevated oil prices. However, should a recession limit oil demand in 2007-
2010 and lower oil prices, Rogers said US companies that rely on natural gas could be at a competitive
disadvantage. Other long-term factors of concern include product liability lawsuits and pension funding
requirements.
22
Links – AT Turns (Efficiency / Renewables)

All their turns assume multiple pollutant standards and carbon sequestration
Pew Center for Global Climate Change 2003
http://www.pewclimate.org/policy_center/analyses/mit_analysis.cfm
The Massachusetts Institute of Technology (MIT), through its Joint Program on the Science and Policy of
Global Change, has assembled a world-class collaboration of economists and scientists to model and
analyze global climate change policies. Using their EPPA1 model, one of the world’s premier energy-
economic models, MIT has undertaken the only analysis of the Lieberman-McCain Climate Stewardship
Act (S.139) as it will be offered on the Senate Floor in October 2003 – i.e., Phase I only – achieving 2000
emissions in 2010.
MIT uses the same economic, energy use and emissions baselines as the U.S. Energy Information Agency
(EIA), but has a much less pessimistic view of the future supply curve for natural gas, based on potentially
available natural gas sources (federal lands, unconventional gas, Alaska, deep sea and LNG).
The strength of the MIT-EPPA model is its treatment of non-CO2 greenhouse gases2 (GHGs) and biomass
sequestration – both these sources offer opportunities for low-cost reductions.
MIT finds considerable efficiency opportunities, including accelerated penetration of combined heat and
power plants and distributed generation.
The use of efficiency, non-CO2 GHGs and sequestration means that much less switching in energy supply
is required.
- This allows coal use to remain consistent at around 24 Quads per year.
- This also means that, although there is some fuel switching to natural gas, overall gas demand growth is
less because overall, less energy is being consumed.
Companies won’t respond to regulation with innovation, lack of certainty and experience proves
Stavins 2000 – Prof Government @ Harvard
Economic Analysis of Global Climate Change Policy: A Primer, http://papers.ssrn.com/sol3/papers.cfm?
abstract_id=240389
Since the compliance costs associated with most climate policies are initially incurred by private firms, it is
important to analyze correctly the behavioral response of such firms to various policy regimes. Most
economic analyses treat firms as atomistic profit-maximizing or cost-minimizing units. This is satisfactory
for many purposes, but it can lead to distorted estimates of the costs brought about by some policies. For
example, one potentially important cause of the mixed performance of implemented market-based
instruments is that many firms are simply not well equipped internally to make the decisions necessary to
fully utilize these instruments. Since market-based instruments have been used on a limited basis only, and
firms are not certain that these instruments will be a lasting component on the regulatory landscape, most
companies have not reorganized their internal structure to fully exploit the cost savings these instruments
offer. Rather, most firms continue to have organizations that are experienced in minimizing the costs of
complying with command-and-control regulations, not in making the strategic decisions allowed by
market-based instruments (Hockenstein, Stavins, and Whitehead 1997).
The focus of environmental, health, and safety departments in private firms has been primarily on problem
avoidance and risk management, rather than on the creation of opportunities made possible by market-
based instruments. This focus has developed because of the strict rules companies have faced under
command-and-control regulation, in response to which companies have built skills and developed processes
that comply with regulations, but do not help them benefit competitively from environmental decisions
(Reinhardt 2000). Absent significant changes in structure and personnel, the full potential of market-based
instruments will not be realized. Economic models may thereby underestimate the relative costs of
employing such instruments to achieve global climate targets.
23

Comprehensive studies prove fossil fuel regulation on balance increase energy costs
Long 1995 – Director For Environment, OECD
Business Economics, April, Vol. 30, No. 2, Pg. 25
Assertions of competitiveness impacts are clearly influential. Each of the five Western European countries
that have unilaterally introduced climate-related energy taxes have included exemptions for those domestic
industries that would be most affected. Peter Sorensen, of the Copenhagen Business School, in a paper
prepared for a 1993 OECD seminar on "Environmental Policies and Industrial Competitiveness," observed
that: "Not surprisingly, many opponents of the (carbon) tax argue that it would be irrational for Denmark to
introduce such a tax unilaterally, thereby incurring a loss of competitiveness, since Denmark's contribution
to global warming is very small. The main arguments advanced in favor of the tax were that it would
increase the pressure for the introduction of a carbon tax at the EC level, and that Denmark might in fact
gain a strategic competitive advantage in the long-term by adjusting to such a tax at an early stage."
If, however, the climate change threat prompts governments to press for substantial reductions in energy-
related greenhouse gas emissions, then much stiffer carbon and/or energy taxes, or the introduction of
tradeable emission rights schemes, could have important effects on prices and competition by driving up
the price of energy and energy-intensive products.
The OECD has carried out some quite detailed analyses of the likely economic consequences for various
countries, and regional groupings of countries, of efforts to reduce levels of carbon dioxide emissions using
different economic instruments. Drawing on a GeneRal Equilibrium Environmental model ("GREEN"), the
studies reveal that, indeed, there would be quite differentiated, and substantial, economic costs, and also a
"carbon leakage" situation as energy-intensive manufacturing moves toward countries with lower energy
taxes.
Increased costs tradeoff with renewable investment

South China Morning Post 5-25-2004
Kyoto has been signed and ratified by 124 nations, although only developed countries involved have to
adhere to the requirement of cutting greenhouse gas emissions by 5 per cent less than 1990 levels between
2008 and 2012. Developing nations that have ratified the pact - China among them - are not required to
meet the target, although they are encouraged to participate through a tax credit trading system.
The problem for Kyoto supporters is that the world's biggest polluter, the US, is not participating. Although
central to the formulation of the treaty and a key participant at the 1997 signing ceremony, US President
George W. Bush pulled his country from the mechanism in 2001, claiming it was ineffective and damaging
to economic growth.
Australia and Canada have cited the same reasons and, like the US, embarked on their own pollution-
control programmes. Russia was using the same argument until Mr Putin's announcement.
Dr Michaels described the reasoning as "logical" as the Kyoto Protocol "will do nothing measurable about
global warming".
"But it does cost a lot of money and could impede the development of technologies that would emit much
less carbon dioxide per unit of economic output," he argued. "The creation of new technologies requires
capital investment, largely in the US, on the part of individuals. It is therefore counterproductive to
artificially raise the price of energy or enact taxes to fight global warming because that takes the capital
away that would normally be used for investment."
24

Regulation can only impair innovation because it imposes costs upon a market that will innovate on
its own
Altman 2001 – Prof Economics @ U Saskatchewan
Ecological Economics, Vol. 36, Issue 1, January
Following the Axiom of Modest Greed, rational profit seeking economic agents would not allow any
significant or economically meaningful economic opportunities to go unexploited. As McCloskey (1990, p.
112), articulates the axiom: ‘The Axiom of Modest Greed involves no close calculation of advantage or
large willingness to take risks. The average person sees a quarter and slides over it. He sees a $500 bill and
jumps for it. The Axiom is not controversial. All economists subscribe to it, whether or not they believe in
the market… and so should you.’ It follows from this Axiom that $500 cannot be expected to be lying
around. To wit, economic inefficiencies, of any substantive order of magnitude, should not be assumed to
be lingering in the economy waiting to be exploited through the action of regulators and prescient
economic agents. Therefore, forcing firms to become greener, although generating social benefits,
necessarily elicits private economic costs. Moreover, any evidence that greener economies appear to be
economically vibrant and, therefore, viable and competitive, should not be taken as evidence that
environmental regulations have induced appropriate cost countervails as such a deduction runs contrary to
the analytical predictions of the conventional economic wisdom ( Stewart; Jaffe and Palmer). It is, indeed, a
long standing scientific tradition, as pointed out by Thomas Kuhn ( Coase, 1994, p. 27) that: ‘Anomalous
observations… cannot tempt [a scientist] to abandon his theory until another one is suggested to replace
it… In scientific practice the real confirmation questions always involve the comparison of two theories
with each other and with the world, not the comparison of a single theory with the world.’1
25
______________________________________________
***HIGH PRICES IMPACTS THAT TURN THE CASE
26
Low Prices Key Oil Peak

Natural gas supplies solves the impact to oil peak by constraining the price of oil at a competitive
level
Discover 1999 June, Curtis Rist,
http://www.findarticles.com/p/articles/mi_m1511/is_6_20/ai_55926786/print
The most promising copper bullet is new technology for turning natural gas into fuels like gasoline and
diesel. For years, natural gas has been used mostly for generating electricity and fueling kitchen stoves and
some home furnaces. In the Alaskan oil fields the gas is pumped back into the ground to maintain pressure
in the oil wells. In Nigeria and the Middle East, it's simply flared. But such waste is soon to become a thing
of the past.
Chemical engineers long ago figured out how to convert natural gas into liquid fuel (see "Gas to Gasoline,"
page 86), but the process was never cost-effective. "The Nazis did it in the final days of World War II
because they had to," says Anderson. The South Africans followed suit during the international boycott
through the apartheid years. "No one would sell them any oil," he notes. "They had to figure out how to
make it themselves." Still, it was expensive. Twenty years ago, a natural gas plant that produced 100,000
barrels of liquid fuel a day would have cost about $100 billion to build, says Anderson. But now that
companies are doing it on a large scale and with better technology, the cost of building a natural gas plant
has come way, way down. Today a natural gas plant can be constructed for as little as $10 billion, bringing
the total expense of producing a barrel of fuel from natural gas down to under $20.
"That will effectively put a ceiling on the price that anyone can charge for a barrel of oil--which is
something that has never existed in history," says Anderson. "The moment anyone tries to charge above
that amount, people will switch to fuels derived from natural gas."
By most estimates, there's enough natural gas to produce about 1.6 trillion barrels of oil. Most of that gas
probably will not be converted to oil. Still, the figure offers a hint at the extent of the world's natural gas
reserves: more than all the petroleum ever consumed--roughly 830 billion barrels--and enough to fuel the
world for some 60 years at current rates of consumption. And there may be far more. John Edwards, a
former Shell geologist and now an adjunct geology professor at the University of Colorado in Boulder,
believes that underwater deposits of another form of natural gas could raise the total to 5 trillion barrels.
In many parts of the world, the seafloor contains natural gas trapped inside ice crystals called hydrates. The
hydrates can be extracted by lowering a pipe into the ground and drawing up a core of mud and crystals.
The problem is that unless the core is properly contained, the change in pressure and temperature at the
surface can cause it to explode, says Edwards. But that isn't stopping the Japanese, who plan to drill and see
if it's feasible to extract such fuel. The payoff could be huge. "There's at least again as much natural gas
trapped in hydrates as has already been discovered, and probably more," Edwards says.
When and if supplies of natural gas begin to run out, the oil companies will focus on squeezing usable fuels
out of even more difficult prospects, Already, the Canadians are starting to mine the tar sands of Alberta,
where an estimated 300 billion barrels of oil are trapped. And Venezuelans are beginning to excavate the
solid tarry deposits of the Oronoco sludge belt, which contains as much as 1 trillion barrels of oil. If those
supplies run out, there's always coal--the most abundant and environmentally damaging of all fuels. Ninety
percent of the world's fossil fuels are contained in coal deposits. Tapping it and converting it to liquid fuels
(a process nobody has fully mastered yet) could yield a Supply lasting a millennium.
27
_______________________
***ECONOMY IMPACTS
28
1NC/2NC – Economy Impact
High gas prices ripple through the entire economy

Sun.com 2004 – March, http://www.sun.com/br/0304_ezine/man_gas.html
Natural gas use is widespread. This raw material accounts for 38 percent of industrial energy use, 15
percent of commercial building use, and 16 percent of electric generation use. Increases in gas prices ripple
throughout the economy. For example, as average gas prices rose by 303 percent at the end of 2000,
fertilizer prices increased by 144 percent. Without offsetting cost savings from other farming expenses,
farmers would have curtailed production to boost corn prices to recoup expenses. Higher corn prices lead to
higher prices for corn syrup and grain feed, ultimately forcing up prices for hundreds of consumer products
such as soft drinks, breakfast cereals, burgers, and ethanol used in gasoline.
High natural gas prices will cause recession more likely now than oil
For the U.S. chemical industry, economic survival depends on having access to an abundant and affordable
supply of natural gas. Every recession since World War II has been proceeded by a steep increase in
energy prices. In the past it's been the cost of oil. This time, it may by natural gas, the "other" fuel and the
hidden energy crisis.
Recessions due to high gas prices continue even after gas prices stabilize
Livingston 2004 – Editor, Labor Standard
http://www.laborstandard.org/Environment/Greenspan.htm, 6-23
Price spikes in oil prices pushed the U.S. and the world into recessions in 1974 (the Arab oil embargo),
1979 (the Iranian Revolution), and 1991 (the Persian Gulf War). These price spikes have a so-called
asymmetrical effect—the recessions continue after the prices return to their previous lower levels.
Greenspan knows that a price spike in natural gas would push the U.S. into a serious recession. Combined
with price increases in oil, such a spike in natural gas prices would be deadly.
29
1NC/2NC – Economy Impact
Global war
Mead 2004 (Foreign Policy, March/April)
Similarly, in the last 60 years, as foreigners have acquired a greater value in the United States-government
and private bonds, direct and portfolio private investments-more and more of them have acquired an
interest in maintaining the strength of the U.S.-led system. A collapse of the U.S. economy and the ruin of
the dollar would do more than dent the prosperity of the United States. Without their best customer,
countries including China and Japan would fall into depressions. The financial strength of every
country would be severely shaken should the United States collapse. Under those circumstances, debt
becomes a strength, not a weakness, and other countries fear to break with the United States because they
need its market and own its securities. Of course, pressed too far, a large national debt can turn from a
source of strength to a crippling liability, and the United States must continue to justify other countries'
faith by maintaining its long-term record of meeting its financial obligations. But, like Samson in the
temple of the Philistines, a collapsing U.S. economy would inflict enormous, unacceptable damage on
the rest of the world. That is sticky power with a vengeance.THE SUM OF all POWERS?The United
States' global economic might is therefore not simply, to use Nye's formulations, hard power that compels
others or soft power that attracts the rest of the world. Certainly, the U.S. economic system provides the
United States with the prosperity needed to underwrite its security strategy, but it also encourages other
countries to accept U.S. leadership. U.S. economic might is sticky power. How will sticky power help the
United States address today's challenges? One pressing need is to ensure that Iraq's econome reconstruction
integrates the nation more firmly in the global economy. Countries with open economies develop powerful
trade-oriented businesses; the leaders of these businesses can promote economic policies that respect
property rights, democracy, and the rule of law. Such leaders also lobby governments to avoid the isolation
that characterized Iraq and Libya under economic sanctions. And looking beyond Iraq, the allure of access
to Western capital and global markets is one of the few forces protecting the rule of law from even further
erosion in Russia.China's rise to global prominence will offer a key test case for sticky power. As China
develops economically, it should gain wealth that could support a military rivaling that of the United States;
China is also gaining political influence in the world. Some analysts in both China and the United States
believe that the laws of history mean that Chinese power will someday clash with the reigning U.S.
power.Sticky power offers a way out. China benefits from participating in the U.S. economic system and
integrating itself into the global economy. Between 1970 and 2003, China's gross domestic product grew
from an estimated $106 billion to more than $1.3 trillion. By 2003, an estimated $450 billion of foreign
money had flowed into the Chinese economy. Moreover, China is becoming increasingly dependent on
both imports and exports to keep its economy (and its military machine) going. Hostilities between the
United States and China would cripple China's industry, and cut off supplies of oil and other key
commodities Sticky power works both ways, though. If China cannot afford war with the United States, the
United States will have an increasingly hard time breaking off commercial relations with China. In an era
of weapons of mass destruction, this mutual dependence is probably good for both sides. Sticky power did
not prevent World War I, but economic interdependence runs deeper now; as a result, the "inevitable" U.S.-
Chinese conflict is less likely to occur.Sticky power, then, is important to U.S. hegemony for two reasons:
It helps prevent war, and, if war comes, it helps the United States win.
30
Internal Link – Hits All Businesses

Rising prices hit every business in the US
Rising gas prices also increase electricity costs, hurting profit margins of every U.S. business. Because of
environmental restrictions, natural gas—a clean-burning fuel—powers 90 percent of all recently built
electric generation plants. In New England, where gas fuels 40 percent of electricity plants, average power
prices hit 30 cents per kilowatt hour in mid-January 2004—a 600-percent increase over normal prices. Why
the price shock? An eighth of the region's power generators shut down because they lacked gas or they sold
their gas to residential heating markets instead of producing electricity.
31
Internal Link – Recession

Natural gas crisis will cause recession
IECA 2003 – Industrial Energy Consumers of America
http://www.ieca-us.com/downloads/natgas/15_Naturalgas-tter1-16-03.doc, 1-16
Every major energy crisis since 1973 was followed by an economic recession. The recent energy crisis of
2000-2001 was no different. The link between affordable supplies of energy and our economic well-being
is no coincidence. Industrial energy-consuming companies were devastated by high energy costs that
resulted in plant closures, plant idling, worker layoffs, and the transfer of production to offshore facilities.
This same story is being repeated again, only from a lower number of manufacturing plants and jobs that
may never return.
Since 1998 the manufacturing sector in the U.S. has lost about 2 million jobs. High energy costs and
government initiatives that would cause electric utilities to switch to natural gas will only exacerbate the
loss of jobs.
For the first time, U.S. natural gas prices are now being sustained at high levels relative to our major global
competitors. The U.S. North East Transco Zone 6 city gate price is currently $7.435 per million Btu, and
the recent European Zebruugge hub price is $3.20 per million Btu, and the Shanghai City Gate price is
$4.70 per million Btu in energy deficient China.
32
Terminal Econ Impacts

Global war
Mead 2004 (Foreign Policy, March/April)
Similarly, in the last 60 years, as foreigners have acquired a greater value in the United States-government
and private bonds, direct and portfolio private investments-more and more of them have acquired an
interest in maintaining the strength of the U.S.-led system. A collapse of the U.S. economy and the ruin of
the dollar would do more than dent the prosperity of the United States. Without their best customer,
countries including China and Japan would fall into depressions. The financial strength of every
country would be severely shaken should the United States collapse. Under those circumstances, debt
becomes a strength, not a weakness, and other countries fear to break with the United States because they
need its market and own its securities. Of course, pressed too far, a large national debt can turn from a
source of strength to a crippling liability, and the United States must continue to justify other countries'
faith by maintaining its long-term record of meeting its financial obligations. But, like Samson in the
temple of the Philistines, a collapsing U.S. economy would inflict enormous, unacceptable damage on
the rest of the world. That is sticky power with a vengeance.THE SUM OF all POWERS?The United
States' global economic might is therefore not simply, to use Nye's formulations, hard power that compels
others or soft power that attracts the rest of the world. Certainly, the U.S. economic system provides the
United States with the prosperity needed to underwrite its security strategy, but it also encourages other
countries to accept U.S. leadership. U.S. economic might is sticky power. How will sticky power help the
United States address today's challenges? One pressing need is to ensure that Iraq's econome reconstruction
integrates the nation more firmly in the global economy. Countries with open economies develop powerful
trade-oriented businesses; the leaders of these businesses can promote economic policies that respect
property rights, democracy, and the rule of law. Such leaders also lobby governments to avoid the isolation
that characterized Iraq and Libya under economic sanctions. And looking beyond Iraq, the allure of access
to Western capital and global markets is one of the few forces protecting the rule of law from even further
erosion in Russia.China's rise to global prominence will offer a key test case for sticky power. As China
develops economically, it should gain wealth that could support a military rivaling that of the United States;
China is also gaining political influence in the world. Some analysts in both China and the United States
believe that the laws of history mean that Chinese power will someday clash with the reigning U.S.
power.Sticky power offers a way out. China benefits from participating in the U.S. economic system and
integrating itself into the global economy. Between 1970 and 2003, China's gross domestic product grew
from an estimated $106 billion to more than $1.3 trillion. By 2003, an estimated $450 billion of foreign
money had flowed into the Chinese economy. Moreover, China is becoming increasingly dependent on
both imports and exports to keep its economy (and its military machine) going. Hostilities between the
United States and China would cripple China's industry, and cut off supplies of oil and other key
commodities Sticky power works both ways, though. If China cannot afford war with the United States, the
United States will have an increasingly hard time breaking off commercial relations with China. In an era
of weapons of mass destruction, this mutual dependence is probably good for both sides. Sticky power did
not prevent World War I, but economic interdependence runs deeper now; as a result, the "inevitable" U.S.-
Chinese conflict is less likely to occur.Sticky power, then, is important to U.S. hegemony for two reasons:
It helps prevent war, and, if war comes, it helps the United States win.
33
Terminal Econ Impacts
Nuclear war
Chris H. Lewis in his book "The Coming Age of Scarcity" p. 56 1998
Most critics would argue, probably correctly, that instead of allowing underdeveloped countries to
withdraw from the global economy and undermine the economies of the developed world, the United
States, Europe, and Japan and others will fight neocolonial wars to force these countries to remain within
this collapsing global economy. These neocolonial wars will result in mass death, suffering, and even
regional nuclear wars. If first world countries choose military confrontation and political repression to
maintain the global economy, then we may see mass death and genocide on a global scale that will make
the deaths of World War II pale in comparison. However, these neocolonial wars, fought to maintain the
developed nations' economic and political hegemony, will cause the final collapse of our global industrial
civilization. These wars will so damage the complex economic and trading networks and squander
material, biological and energy resources that they will undermine the global economy and its ability to
support the earth's 6 to 8 billion people. This would be the worst case scenario for the collapse of global
civilization
The impact turns the case and causes global instability

Silk, Professor at Pace University, 1996 (Leonard, Making Capitalism Work, p. 27-28)
Theoretically there was no reason why this had to be so. In a rational world, the improved prospects for
peace should have led to greater spending on consumer goods and productivity raising investment. But that
happens only when workers can be shifted to new jobs--and financial resources reallocated to create those
jobs. In the absence of sufficient shifts of human and capital resources to expanding civilian industries,
there were strong economic pressures on arms-producing nations to maintain high levels of military
production and to sell weapons--conventional as well as dual-use nuclear technology--wherever buyers
could be found. Without a revival of national economies and of the global economy, the production and
proliferation of weapons would continue, creating more Iraqs, Cambodias, Yugoslavias, and Somalias-or
worse.
Like the Great Depression, the economic slump of the early 1990s fanned the fires of nationalist,
ethnic, and religious hatred around the world. Economic hardship was not the only cause of these social
and political pathologies, but it aggravated all of them, and in turn they fed back upon economic
development. They also undermined efforts to deal with such global programs as environmental
pollution, the production and trafficking of drugs, crime, sickness, famine, AIDS, and other plauges.
Economic growth would not solve all those problems. But growth--and growth alone--creates the
additional resources that make it possible to achieve such fundamental goals as higher living standards,
national and collective security, a healthier environment, and more open economies and societies.
34
_____________________________________________
***CHEMICAL INDUSTRY IMPACTS – EXTERNAL
35
1NC/2NC – Chemical Industry Impact

1 – Natural gas is key to the chemical industry and the production of a laundry list of valuable inputs
into the economy and energy
The current price of natural gas is the chemical industry's number one economic issue. Natural gas is the
lifeblood of the chemistry business in the U.S. Not only do we use natural gas as a fuel in our
manufacturing processes, much like other industries, but we also use it as an ingredient, or feedstock, for
many of the products we make.
Natural gas and natural gas liquids contain hydrocarbon molecules that are split apart during processing and
then recombined into useful chemical products. These products include life-saving medicines, health
improvement products, technology-enhanced agricultural products, more protective packaging materials,
synthetic fibers and permanent press-clothing, longer-lasting paints, stronger adhesives, faster
microprocessors, more durable and safer tires, lightweight automobile parts, and stronger composite
materials for aircraft and spacecraft. The business of chemistry also makes many of the products that help
save energy throughout the entire economy, including insulation, house wraps, lubricants, and high-
strength light-weight materials, enabling American industries and consumers to be more energy efficient.
The business of chemistry is the only part of the economy that adds value to these hydrocarbon molecules
rather than combusting them for energy.
2 – Chemical industry key to the economy

The $460 billion business of chemistry is a key element of the nation's economy, providing the building
block materials that the rest of the U.S. economy relies upon. It is the country's largest exporter,
accounting for ten cents out of every dollar in U.S. exports. Chemistry companies invest more in research
and development than any other business sector. Safety and security have always been primary concerns of ACC
members, and they have intensified their efforts, working closely with government agencies to improve security and to defend against
any threat to the nation's critical infrastructure. SUMMARY OF TESTIMONY A hearing on enhancing the nation's energy security
could not come at a better time. The nation is facing an energy crisis caused by runaway prices for natural gas. Unless Congress acts
to increase domestic natural gas supplies our economy will continue to struggle and we will fall short of our goals for a cleaner
environment. A crisis of this magnitude poses a grave threat to America's economic and national security. Current energy prices are
making it impossible for the US chemical industry, and other critical industries, to compete in global markets. Because the
business of chemistry produces the building block materials that the rest of our modern economy relies
upon, we are somewhat of a "canary in the coalmine." As we go, so goes the rest of the nation.
36
1NC/2NC – Chemical Industry Impact

3 – The impact is extinction and turns the case
Chemical and Engineering News 1999 Vol. 77, No. 49. pp. Pp.46-47. http://pubs.acs.org/sci-
bin/bottomframe.sci?hotartcl/cenear/991206/7749spintro2
The pace of change in today's world is truly incomprehensible. Science is advancing on all fronts, particularly chemistry and biology working together as they never have before to
understand life in general and human beings in particular at a breathtaking pace. Technology ranging from computers and the Internet to medical devices to genetic engineering to
nanotechnology is transforming our world and our existence in it. It is, in fact, a fool's mission to predict where science and technology will take us in the coming decade, let alone
the coming century. We can say with finality only this: We don't know. We do know, however, that we face enormous challenges, we 6 billion
humans who now inhabit Earth. In its 1998 revision of world population estimates and projections, the United Nations anticipates a world population in 2050
of 7.3 billion to 10.7 billion, with a "medium-fertility projection," considered the most likely, indicating a world population of 8.9 billion people in 2050. According to the UN,
fertility now stands at 2.7 births per woman, down from 5 births per woman in the early 1950s. And fertility rates are declining in all regions of the world. That's good news. But
people are living a lot longer. That is certainly good news for the individuals who are living longer, but it also poses challenges for health care and social services the world over.
The 1998 UN report estimates for the first time the number of octogenarians, nonagenarians, and centenarians living today and projected for 2050. The numbers are startling. In
1998, 66 million people were aged 80 or older, about one of every 100 persons. That number is expected to increase sixfold by 2050 to reach 370 million people, or one in every
24 persons. By 2050, more than 2.2 million people will be 100 years old or older! Here is the fundamental challenge we face: The world's growing and aging population must be
fed and clothed and housed and transported in ways that do not perpetuate the environmental devastation wrought by the first waves of industrialization of the 19th and 20th
. As we increase our output of goods and services, as we increase our consumption of energy, as we
centuries
meet the imperative of raising the standard of living for the poorest among us, we must learn to carry out
our economic activities sustainably. There are optimists out there, C&EN readers among them, who believe that the history of civilization is a long string
of technological triumphs of humans over the limits of nature. In this view, the idea of a "carrying capacity" for Earth—a limit to the number of humans Earth's resources can
support—is a fiction because technological advances will continuously obviate previously perceived limits. This view has historical merit. Dire predictions made in the 1960s
about the exhaustion of resources ranging from petroleum to chromium to fresh water by the end of the 1980s or 1990s have proven utterly wrong.
While I do not count myself as one of the technological pessimists who see technology as a mixed blessing at best and an unmitigated evil at worst, I do not count myself among
the technological optimists either. There are environmental challenges of transcendent complexity that I fear may overcome us and our Earth before technological progress can
come to our rescue. Global climate change, the accelerating destruction of terrestrial and oceanic habitats, the catastrophic loss of species across the plant and animal kingdoms—
these are problems that are not obviously amenable to straightforward technological solutions. But I know this, too: Science and technology have brought us to where we are, and
only science and technology, coupled with innovative social and economic thinking, can take us to where we need to be in the coming millennium. Chemists, chemistry, and the
chemical industry—what we at C&EN call the chemical enterprise—will play central roles in addressing
these challenges. The first section of this Special Report is a series called "Millennial Musings" in which a wide variety of representatives from the chemical enterprise
share their thoughts about the future of our science and industry. The five essays that follow explore the contributions the chemical enterprise is making right now to ensure that we
will successfully meet the challenges of the 21st century. The essays do not attempt to predict the future. Taken as a whole, they do not pretend to be a comprehensive examination
of the efforts of our science and our industry to tackle the challenges I've outlined above. Rather, they paint, in broad brush strokes, a portrait of scientists, engineers, and business
managers struggling to make a vital contribution to humanity's future. The first essay, by Senior Editor Marc S. Reisch, is a case study of the chemical industry's ongoing
transformation to sustainable production. Although it is not well known to the general public, the chemical industry is at the forefront of corporate efforts to reduce waste from
production streams to zero. Industry giants DuPont and Dow Chemical are taking major strides worldwide to manufacture chemicals while minimizing the environmental
"footprint" of their facilities. This is an ethic that starts at the top of corporate structure. Indeed, Reisch quotes Dow President and Chief Executive Officer William S.
Stavropolous: "We must integrate elements that historically have been seen as at odds with one another: the triple bottom line of sustainability—economic and social and
environmental needs." DuPont Chairman and CEO Charles (Chad) O. Holliday envisions a future in which "biological processes use renewable resources as feedstocks, use solar
energy to drive growth, absorb carbon dioxide from the atmosphere, use low-temperature and low-pressure processes, and produce waste that is less toxic." But sustainability is
more than just a philosophy at these two chemical companies. Reisch describes ongoing Dow and DuPont initiatives that are making sustainability a reality at Dow facilities in
Michigan and Germany and at DuPont's massive plant site near Richmond, Va. Another manifestation of the chemical industry's evolution is its embrace of life sciences. Genetic
engineering is a revolutionary technology. In the 1970s, research advances fundamentally shifted our perception of DNA. While it had always been clear that deoxyribonucleic
acid was a chemical, it was not a chemical that could be manipulated like other chemicals—clipped precisely, altered, stitched back together again into a functioning molecule.
Recombinant DNA techniques began the transformation of DNA into just such a chemical, and the reverberations of that change are likely to be felt well into the next century.
Genetic engineering has entered the fabric of modern science and technology. It is one of the basic
tools chemists and biologists use to understand life at the molecular level. It provides new avenues to
pharmaceuticals and new approaches to treat disease. It expands enormously agronomists' ability to
introduce traits into crops, a capability seized on by numerous chemical companies. There is no doubt
that this powerful new tool will play a major role in feeding the world's population in the coming century, but its
adoption has hit some bumps in the road. In the second essay, Editor-at-Large Michael Heylin examines how the promise of agricultural biotechnology has gotten tangled up in
real public fear of genetic manipulation and corporate control over food. The third essay, by Senior Editor Mairin B. Brennan, looks at chemists embarking on what is perhaps the
greatest intellectual quest in the history of science—humans' attempt to understand the detailed chemistry of the human brain, and with it, human consciousness. While this quest
is, at one level, basic research at its most pure, it also has enormous practical significance. Brennan focuses on one such practical aspect: the effort to understand neurodegenerative
diseases like Alzheimer's disease and Parkinson's disease that predominantly plague older humans and are likely to become increasingly difficult public health problems among an
aging population. Science and technology are always two-edged swords. They bestow the power to create and the power to destroy. In addition to its enormous potential for health
and agriculture, genetic engineering conceivably could be used to create horrific biological warfare agents. In the fourth essay of this Millennium Special Report, Senior
Correspondent Lois R. Ember examines the challenge of developing methods to counter the threat of such biological weapons. "Science and technology will eventually produce
sensors able to detect the presence or release of biological agents, or devices that aid in forecasting, remediating, and ameliorating bioattacks," Ember writes. Finally, Contributing
Editor Wil Lepkowski discusses the most mundane, the most marvelous, and the most essential molecule on Earth, H2O. Providing clean water to Earth's population is already
difficult—and tragically, not always accomplished. Lepkowski looks in depth at the situation in Bangladesh—where a well-meaning UN program to deliver clean water from wells
has poisoned millions with arsenic. Chemists are working to develop better ways to detect arsenic in drinking water at meaningful concentrations and ways to remove it that will
work in a poor, developing country. And he explores the evolving water management philosophy, and the science that underpins it, that will be needed to provide adequate water
for all its vital uses. In the past two centuries, our science has transformed the world. Chemistry is a wondrous tool that has allowed us to understand the structure of matter and
gives us the ability to manipulate that structure to suit our own purposes. It allows us to dissect the molecules of life to see what makes them, and us, tick. It is providing a glimpse
we
into workings of what may be the most complex structure in the universe, the human brain, and with it hints about what constitutes consciousness. In the coming decades,
will use chemistry to delve ever deeper into these mysteries and provide for humanity's basic and not-so-
basic needs.
37
High Prices Kill Chemical Industry
Chemical industry can’t switch away from natural gas profitably

Natural gas accounts for nearly thirty-nine percent of all energy consumption by the business of chemistry.
Natural gas liquids that are derived from natural gas or refinery operations account for another twenty-three
percent. In total, more than half of the U.S. business of chemistry's energy needs come from natural gas.
The U.S. business of chemistry has invested billions of dollars in facilities that make chemical products
from natural gas and natural gas components. These facilities do not have the ability to switch to other
inputs and produce these products. This infrastructure was built based on the competitive advantage the
U.S. offered through its natural gas supply.
Chemistry’s reliance on natural gas for power and products means that inflated prices have a
uniquely devastating impact
Because of our industry's duel use of natural gas, as well as our significant presence in the U.S., the
business of chemistry today accounts for eleven percent of domestic natural gas consumption, second only
to electric utilities. As a result, changes in the natural gas market, such as constricted supply and inflated
prices, have a particularly severe impact. In order for the domestic business of chemistry to remain
competitive in the global marketplace and to be able to continue to provide employment and other benefits
here at home, it is essential that measures be taken to increase natural gas supplies and to make these
supplies available at reasonable prices.
38
High Prices Kill Chemical Industry
High prices kill profitability

High natural gas prices significantly cut into our industry's profitability. For every one-dollar increase in
the price of natural gas, over the course of a year, our industry incurs approximately $4.2 billion in
additional costs. Yet, because we compete in a global market, U.S. companies are unable to pass these
added costs for natural gas along to their customers if our products are to remain competitively priced with
those produced by our foreign competitors. In 1999, when the price of natural gas averaged $2.27, the
operating margin for basic chemical companies was 6.8%. In 2001, when the price of natural gas rose to an
average of $4.27, the operating margin dropped to 0.6%.
High prices kill chemical industry competitiveness

Restricted supplies and high prices for natural gas severely limit the ability of U.S. chemical manufacturers
to remain competitive with foreign competitors. The business of chemistry in the U.S. is concentrated in
the Gulf Coast region largely because of the region's proximity to a traditionally abundant, low cost supply
of natural gas resources. While about seventy percent of U.S. petrochemicals production uses natural gas
as a feedstock, the same percentage of producers in Western Europe and Asia use naphtha, a crude oil
derivative. Unlike crude oil, the price of which is set by the global market, natural gas is not as broadly
traded, with the result that price increases for natural gas in North America are felt only in North
America. For many years, the U.S. business of chemistry enjoyed the benefit of relatively low cost
feedstocks relative to our foreign competitors, enabling the industry to become the global leader in
chemical products. A tightened natural gas market and soaring natural gas prices, however, put this
position in jeopardy. For the business of chemistry, experience shows that, although this number fluctuates
depending on the price of crude oil, the price for natural gas at which we become unable to compete in
global markets is between $3.25 and $4.00. Current prices are hovering around $6.00.
39
________________________________________________
***MANUFACTURING SHIFT IMPACTS – EXTERNAL
40
1NC/2NC – Manufacturing Shift Impact

1 – High natural gas prices cause manufacturing to shift overseas, devastating the US economy
12-3, http://www.ieca-us.com/downloads/natgas/$111bilion.doc
The impact of high energy costs on manufacturing is significant and it contributed greatly to reduce
manufacturing after-tax profits during the 41 month natural gas crisis. According to Bureau of Census
data, manufacturing profits fell 47.7 % during the time period of the natural gas crisis versus the previous
41 months. Manufacturing plays an important role in the economic health of our country and we must
recognize that affordable energy, including natural gas, is essential. In the past, the affordability of U.S.
energy was a key factor in manufacturing building their factories here. Now, the non-globally competitive
price of natural gas and natural gas feedstock is forcing manufacturing companies to produce their products
elsewhere. According to the National Association of Manufacturers, manufacturing accounts for 22 % of
GDP growth, contributes one-third of the economy’s productivity growth, creates more business activity
and jobs in other sectors than any other industry, performs 62 % of U.S. private sector R&D, pays the
highest wages –18 % higher than the national average and makes two-thirds of all U.S. exports.
2 – Overseas manufacturing shift devastates the US economy and global leadership

Choate 2002, Pat Choate, director of the Manufacturing Policy Project and Edward Miller, president of
DSI, former economic treaty negotiator, 2002 ,
http://www.uscc.gov/researchpapers/2000_2003/reports/analysis.htm
For two centuries, industrial and military self-sufficiency was America’s policy. It succeeded brilliantly. It
protected against European adventurism in the 19th century. It enabled the nation to become the richest,
most industrialized country in the world. And it allowed America to be the arsenal of democracy in the 20th
century. Even when America disarmed following World War I and again after World War II, it still had the
industrial capacity -- the potential -- to re-arm quickly if a threat emerged. And when one did, America’s factories
quickly converted to war production, allowing the Allied forces to out produce and ultimately overwhelm the Axis powers in the 1940s and hold off the
enemy during the Korean War. Following the Korean War, the U.S. defense industrial base was repeatedly modernized, again enabling the USA to cope
And self-sufficiency was taken a step further during the Cold War as the
with any foreign threat.
United States actively led Europe, Japan and others in denying the Soviet Union the
technologies, machinery, skills, and research they needed to keep apace — economically
and militarily. That policy of strength and containment succeeded, too. The Soviet Union could not match the West, its people grew weary, and
that empire broke into pieces. But with the collapse of the Soviet Union, America seems to have quickly forgotten the older lessons and policies that long
served it well. In a very real way, the mood of America in these first days of the 21st century is akin to that of America in the 1920s. Then, the "war to
With the
end wars" had ended. The threat was gone. America could return to the business of America, which was perceived to be business.
collapse of the Soviet Union, America remains the sole super power. Americans are generally
prosperous. And while as recently as the 1980s, the global competitiveness of domestic industries was a top concern of national leaders, their successors
now focus on assuring stockholders higher share prices and American consumers a steady flow of inexpensively produced goods, regardless of where
they are made. Once again, the business of America seems to be business. Today, a smaller, simpler, more trusting, view dominates. Terrorists are seen as
the principal threat to national security. The emergence of China -- a one-party, repressive, Communist state — as an economic and military power is
mainly seen not as a danger, but as a business opportunity. And global economics is treated as something analogous to celestial mechanics -- a self-
driven, self-correcting system in which markets balance supply and demand, assuring ever more growth and development. But there is also something
different about what America is doing now from what it did after World War I and World War II. Then, the United States shifted military production
back to civilian uses and even though military expenditures were cut, the U.S. industrial base remained in America. The long-held policy of self-
, now that the Cold War is over, the U.S. industrial base
sufficiency was not disturbed. Unlike in the past, however
is being taken apart, piece-by-piece, and relocated to other nations. In the process, much
of American’s industrial and military production base is being sold to foreign interests,
and more important a significant portion of it is being physically relocated into other
nations, including our most likely strategic rival — China.
41
1NC/2NC – Manufacturing Shift Impact
3 – Nuclear war
Zalmay Khalilzad, RAND, The Washington Quarterly, Spring 1995
Under the third option, the United States would seek to retain global leadership and to preclude the rise of a
global rival or a return to multipolarity for the indefinite future. On balance, this is the best long-term
guiding principle and vision. Such a vision is desirable not as an end in itself, but because a world in which
the United States exercises leadership would have tremendous advantages. First, the global environment
would be more open and more receptive to American values -- democracy, free markets, and the rule of
law. Second, such a world would have a better chance of dealing cooperatively with the world's major
problems, such as nuclear proliferation, threats of regional hegemony by renegade states, and low-level
conflicts. Finally, U.S. leadership would help preclude the rise of another hostile global rival, enabling the
United States and the world to avoid another global cold or hot war and all the attendant dangers, including
a global nuclear exchange. U.S. leadership would therefore be more conducive to global stability than a
bipolar or a multipolar balance of power system.
42
High Prices Cause Manufacturing Shift
High natural gas prices cause manufacturing to shift overseas, devastating the US economy
12-3, http://www.ieca-us.com/downloads/natgas/$111bilion.doc
The impact of high energy costs on manufacturing is significant and it contributed greatly to reduce
manufacturing after-tax profits during the 41 month natural gas crisis. According to Bureau of Census
data, manufacturing profits fell 47.7 % during the time period of the natural gas crisis versus the previous
41 months. Manufacturing plays an important role in the economic health of our country and we must
recognize that affordable energy, including natural gas, is essential. In the past, the affordability of U.S.
energy was a key factor in manufacturing building their factories here. Now, the non-globally competitive
price of natural gas and natural gas feedstock is forcing manufacturing companies to produce their products
elsewhere. According to the National Association of Manufacturers, manufacturing accounts for 22 % of
GDP growth, contributes one-third of the economy’s productivity growth, creates more business activity
and jobs in other sectors than any other industry, performs 62 % of U.S. private sector R&D, pays the
highest wages –18 % higher than the national average and makes two-thirds of all U.S. exports.
High prices devastate manufacturing competitiveness

http://www.ieca-us.com/downloads/natgas/15_Naturalgas-tter1-16-03.doc, 1-16
As of January 16, 2003, the Henry Hub wholesale price of natural gas was over $5.00 per million Btu and
is more than twice the average price of $1.97 per million Btu from 1991 to 1998. U.S. natural gas
production has fallen for three straight quarters. Prices in Europe, Brazil and China are less than in the
United States. Industrial energy consumers, already weakened by a fragile economy, are threatened with
further loss of global competitiveness placing good jobs at risk. Leadership is needed by the U.S. Congress
and the states to put our country on the road to an affordable and reliable energy supply.
43
High Prices Cause Manufacturing Shift
High natural gas prices cause wholesale shift of US manufacturing base overseas
U.S. firms cannot survive when costs triple. Companies using gas for feedstock, such as nitrogen fertilizer
producers, have been among the first to feel financial pain. High gas prices, which account for up to 90
percent of fertilizer costs, have forced nine nitrogen fertilizer plants to close or cease operations since
January 2001. The remaining facilities have only operated at 50 percent capacity. Where are farmers
getting their fertilizers? According to the U.S. Government Accounting Office, the 25 percent decline in
U.S. fertilizer sales has been accompanied by a 43 percent increase in imports and a 7 percent decrease in
agricultural consumption.
Job losses follow plant closures. Russell Gold, staff reporter for The Wall Street Journal, recently wrote,
"U.S. chemical makers have lost an estimated 78,000 jobs since natural gas prices began to rise in 2000."
Theo H. Walthie, business group president, Hydrocarbons and Energy and EO-EG at The Dow Chemical
Company, recently confirmed this pessimistic statistic when he spoke at the February 2004 CERAWEEK
conference. According to Walthie, sustained high natural gas prices forced Dow to shutter U.S. plants, and
focus investments overseas, accounting for some of the 3,500 jobs Dow lost globally in 2003. Walthie said
more U.S. manufacturing jobs are at risk unless U.S. natural gas prices become globally competitive in the
near-term. Where are the jobs and investments going? Companies like Dow Chemical are relying more on
their joint-venture facilities in Malaysia and Kuwait, where natural gas prices are lower than in the United
States. New plant additions by Asian-owned companies are also on the drawing board in Taiwan and
China, positioning these companies to supply growing regional markets that turn basic chemicals into
plastic parts. Higher Gas Costs Means Higher Beef Prices—and More Natural gas use is widespread. This
raw material accounts for 38 percent of industrial energy use, 15 percent of commercial building use, and
16 percent of electric generation use. Increases in gas prices ripple throughout the economy. For example,
as average gas prices rose by 303 percent at the end of 2000, fertilizer prices increased by 144 percent.
Without offsetting cost savings from other farming expenses, farmers would have curtailed production to
boost corn prices to recoup expenses. Higher corn prices lead to higher prices for corn syrup and grain feed,
ultimately forcing up prices for hundreds of consumer products such as soft drinks, breakfast cereals,
burgers, and ethanol used in gasoline. Rising gas prices also increase electricity costs, hurting profit
margins of every U.S. business. Because of environmental restrictions, natural gas—a clean-burning fuel—
powers 90 percent of all recently built electric generation plants. In New England, where gas fuels 40
percent of electricity plants, average power prices hit 30 cents per kilowatt hour in mid-January 2004—a
600-percent increase over normal prices. Why the price shock? An eighth of the region's power generators
shut down because they lacked gas or they sold their gas to residential heating markets instead of producing
electricity. The past decade's construction of gas-fired power plants is the major factor increasing gas
demand. Most states regulate retail electricity prices—passing increased wholesale power costs through to
retail customers. Manufacturers, however, face global competitors, and cannot pass energy cost increases
through to consumers. The result is that power generators can outspend manufacturers for natural gas—
forcing manufacturers to go offshore to find cheap gas supplies.
44
Manufacturing Shift Key to Economy / Heg

Overseas manufacturing shift devastates the US economy and global leadership
Choate 2002, Pat Choate, director of the Manufacturing Policy Project and Edward Miller, president of
DSI, former economic treaty negotiator, 2002 ,
http://www.uscc.gov/researchpapers/2000_2003/reports/analysis.htm
For two centuries, industrial and military self-sufficiency was America’s policy. It succeeded brilliantly. It
protected against European adventurism in the 19th century. It enabled the nation to become the richest,
most industrialized country in the world. And it allowed America to be the arsenal of democracy in the 20th
century.
Even when America disarmed following World War I and again after World War II, it still had the
industrial capacity -- the potential -- to re-arm quickly if a threat emerged. And when one did, America’s
factories quickly converted to war production, allowing the Allied forces to out produce and ultimately
overwhelm the Axis powers in the 1940s and hold off the enemy during the Korean War.
Following the Korean War, the U.S. defense industrial base was repeatedly modernized, again enabling the
USA to cope with any foreign threat. And self-sufficiency was taken a step further during the Cold War as
the United States actively led Europe, Japan and others in denying the Soviet Union the technologies,
machinery, skills, and research they needed to keep apace — economically and militarily. That policy of
strength and containment succeeded, too. The Soviet Union could not match the West, its people grew
weary, and that empire broke into pieces.
But with the collapse of the Soviet Union, America seems to have quickly forgotten the older lessons and
policies that long served it well. In a very real way, the mood of America in these first days of the 21st
century is akin to that of America in the 1920s. Then, the "war to end wars" had ended. The threat was
gone. America could return to the business of America, which was perceived to be business.
With the collapse of the Soviet Union, America remains the sole super power. Americans are generally
prosperous. And while as recently as the 1980s, the global competitiveness of domestic industries was a top
concern of national leaders, their successors now focus on assuring stockholders higher share prices and
American consumers a steady flow of inexpensively produced goods, regardless of where they are made.
Once again, the business of America seems to be business.
Today, a smaller, simpler, more trusting, view dominates. Terrorists are seen as the principal threat to
national security. The emergence of China -- a one-party, repressive, Communist state — as an economic
and military power is mainly seen not as a danger, but as a business opportunity. And global economics is
treated as something analogous to celestial mechanics -- a self-driven, self-correcting system in which
markets balance supply and demand, assuring ever more growth and development.
But there is also something different about what America is doing now from what it did after World War I
and World War II. Then, the United States shifted military production back to civilian uses and even
though military expenditures were cut, the U.S. industrial base remained in America. The long-held policy
of self-sufficiency was not disturbed.
Unlike in the past, however, now that the Cold War is over, the U.S. industrial base is being taken apart,
piece-by-piece, and relocated to other nations. In the process, much of American’s industrial and military
production base is being sold to foreign interests, and more important a significant portion of it is being
physically relocated into other nations, including our most likely strategic rival — China.
45
Manufacturing Shift Key to Hegemony
US technological dominance is key to hegemony

Khalilzad, 1995 (Washington Quarterly, lexis)
The United States is unlikely to preserve its military and technological dominance if the U.S. economy
declines seriously. In such an environment, the domestic economic and political base for global leadership
would diminish and the United States would probably incrementally withdraw from the world, become
inward-looking, and abandon more and more of its external interests. As the United States weakened,
others would try to fill the Vacuum.
To sustain and improve its economic strength, the United States must maintain its technological lead
in the economic realm. Its success will depend on the choices it makes. In the past, developments such as
the agricultural and industrial revolutions produced fundamental changes positively affecting the relative
position of those who were able to take advantage of them and negatively affecting those who did not.
Some argue that the world may be at the beginning of another such transformation, which will shift the
sources of wealth and the relative position of classes and nations. If the United States fails to recognize
the change and adapt its institutions, its relative position will necessarily worsen.
46
_______________________________________________
***MANUFACTURING SHIFT IMPACTS – TURNS THE
CASE
47
Manufacturing Shift Impact – Turns Oil
Manufacturing shift turns their oil dependency impacts

As more and more U.S. manufacturers shut down and production moves overseas, not only does our nation
lose those jobs, but we also become increasingly reliant upon other nations for the materials upon which we
have built our modern economy, our agricultural base and our national defense.
48
________________________________________
***NATURAL GAS DISAD AFF ANSWERS
49
_____________________
***NONUNIQUENESS
50
2AC NU – High Prices Now
AFF – NU – NATURAL GAS PRICES AT ASTRONOMICAL LEVELS

GULF NEWS 4-29-2008
Already consumers are starting to feel the pinch as natural gas follows oil skyward.
Even before Sunday's strike, consumers in some parts of Canada are expecting prices to jump 55 per cent
over the prices of May 2007.
As one analyst said, he once would have pegged $12 per Btu natural gas as astronomical, but no one saw
$120 per barrel crude oil either.
As of Monday, prices are hovering in the $11 range, which is a two-year high for natural gas.
AFF – NU – SHORT TERM SUMMER PRICES WILL REMAIN HIGH DUE TO TIGHT
PRODUCTION SCHEDULES
Nonetheless, for this summer, the U.S. natural gas market "looks tight," with working gas storage levels
expected to be 142 Bcf lower by October, when compared to last year. Although U.S. natural gas
production is expected to be up 1.5 Bcf/d (2.8%), Canadian production and liquefied natural gas (LNG)
imports will be down 0.5Bcf/d and 1.5 Bcf/d, respectively. Lower gas demand in the electric power sector
due to improved hydroelectricity and nuclear generation could trigger a drop of 0.1 Bcf/d in gas deliveries
to the sector this year. A greater decrease will come from the U.S. industrial sector - with a 0.4 Bcf/d
decrease (or a 2.1% decrease).
Demand for natural gas will outpace production for many reasons absent the plan
North American Natural Gas Vision 2005, January,
http://www.pi.energy.gov/pdf/library/NAEWGGasVision2005.pdf, North American Energy Working
Group Experts Group on Natural Gas Trade and Interconnections
Continued North American cooperation in natural gas production, storage, and delivery will be even more
important over the next decade. For all three countries, the demand for natural gas is expected to increase,
at a faster rate than production growth. The increased demand for natural gas will be driven by many
factors, including population growth, industry consumption, and the environmental benefits of natural gas
(compared to other fuels). This increased demand is expected to be between 15 and 25 percent for Canada
and the U.S. and over 90 percent for Mexico during the ten year
period (2002 to 2012).
51
1AR NU – AT New Supply
New sources of supply will fail to stop rapidly rising prices in the status quo
Domenici 2005 – Senator, New Mexico
The Hill, 2-17
The United States faces a natural-gas crisis that will have a crippling effect on our economy by 2020 if we
don't act now.
Many thought we fixed the problem by approving construction of the Alaska natural-gas pipeline, but that
pipeline will provide only enough gas to take the edge off our expanding energy appetite. But by 2025, the
pipeline's estimated 2.2 trillion cubic feet (tcf) will equal only 7 percent of what the United States is
expected to consume annually.
Today, we consume 22 tcf of gas each year. By 2025, consumption will reach 31 tcf -- an increase of more
than 40 percent. But by 2025, the United States will only be producing 21.8 tcf -- just 70 percent of
expected demand.
What's driving that demand? Nearly half of the new electricity generation expected to come on line in the
next 20 years will require natural gas, according to a new study by the American Gas Foundation. That's
because natural gas is clean and was, until recently, abundant and affordable. Even with today's tight
supplies and rising prices, it's easier to site and build a gas-fired plant than a plant fired by coal or nuclear
power, the two other abundant sources of electricity.
We have thought we could make up the shortfall between production and consumption by importing liquid
natural gas (LNG). But energy companies are having trouble getting the ports built that are needed for
importing LNG. Companies have filed plans for some 40 LNG ship terminals on the East and West coasts,
but local resistance to proposed terminals has stalled permitting and prevented construction. In recent
months, LNG developers have run into local opposition in Eureka, Calif.; Harpswell, Minn.; La Joya, Baja
California, Mexico; Mobile, Ala.; Vallejo, Calif., Searsport, Minn.; and Fall River, Mass.
Given such resistance, it is unlikely that the United States will be able to build enough terminals in the next
20 years to facilitate the import of 30 percent of its gas even if we thought such reliance on foreign fuel was
a good idea.
Studies prove US natural gas production has peaked

California Energy Commission 2005 Natural Gas Assessment Update, February,
www.energy.ca.gov/2005publications/ CEC-600-2005-003/CEC-600-2005-003.PDF
U.S. Natural Gas Production Has Flattened
U.S. natural gas production has been relatively flat since 1990, staying below 20 trillion cubic feet per year
even though the number of wells drilled has increased approximately 80 percent (Figure 16). Natural gas
reserve depletion may be contributing to the apparent flattening of U.S. production. Depletion accompanies
all nonrenewable resource development. As natural gas-producing areas are depleted, production falls
below economic levels and new fields must be tapped to replace mature ones. These new fields, however,
are usually smaller and more costly to develop. Thus, as time progresses, more effort is required to produce
the same amount of gas. Advances in drilling technology have enabled producers to increase a well’s first-
year performance, but by extracting the gas more quickly, the well’s annual production declines more
rapidly in subsequent years.
52
1AR NU – AT New Tech / Supply

Prices will continue to increase despite new technology and sources
Contra Costa Times 3-2-2005
Natural gas prices in California and throughout the United States have doubled since July 2001, the
California Energy Commission said in a recent report. The expense of additional drilling required to find
natural gas in mature fields will continue to boost prices, the report warned.
While conservation, new extraction technology, drilling in undeveloped regions and imports of liquefied
natural gas from overseas could provide some relief, pipelines to new production basins will take at least
10 years to build and ports to unload LNG tankers have yet to be built on the West Coast, the report noted.
53
1AR NU – AT LNG Solves
AFF – NU – LNG DECLINES PUSH PRICES UP

THE OKLAHOMAN 4-25-2008
What might happen? Analysts worry that an extremely warm summer will siphon natural gas normally
headed to storage but instead will operate power plants, Say said.
Also, while the nation historically has bought significant amounts of liquid natural gas at this time of year,
that's not happening this year because producers are getting better prices for the product in Europe, he said.
LNG won’t solve high prices

Natural Gas Week 2-28-2005
The USpower industry should not fall victim to a false sense of security based on assumptions that LNG
will be able to support the growing role of natural gas use for power generation, according to an industry
expert.
Natural gas has been the fuel of choice for new peaking and intermediate power plants, creating an almost
40% demand increase for natural gas between 1997, at about 4.06 Tcf, and 2003, at about 5.67 Tcf,
according to the Department of Energy. Government data has projected that electricity consumption will
grow 1.8% per year from 2003 to 2025.
Larry Makovich, senior director of North American power at the Cambridge Energy Research Associates
(Cera), spoke to the press in Houstonrecently at the 24th annual CERAWeek. Makovich said the timing and
magnitude of LNG supply additions to the US, compounded by the power sector's increased reliance on
natural gas creates an unprecedented set of risky alternatives for the sector.
LNG supplies will likely not be available to meet the emerging natural gas supply shortfall seen amid
production declines and increasing demand, Cera said, because of production/liquefaction constraints
caused by apparent reluctance to make costly, long-term infrastructure commitments, as well as slippage in
schedules and contracts.
Cera forecasts that natural gas demand for electricity will expand between 14% and 36% by 2020.
Makovich said social, political and technological developments could lead to higher costs, demand for new
gas supplies and diversity on generation construction.
54
____________________________
***LINK DEFENSE AND TURNS
55
2AC – NO IL – PREDICTION UNCERTAINTY
AFF – NO IL – GAS PRICE PREDICTIONS ARE TOO UNCERTAIN

Actually, Denhardt acknowledged, long-term forecasts "are typically not even close" to reality. "Planning
requires more creative approaches than what is typically used today and is not as helpful as many are led to
believe," he said. For example, a study from 1996 - by the world's largest consulting firm - was "totally off
the mark" when it predicted that Henry Hub prices in 2010 would be $3.00 (nominal). Another study
predicted that coal would be the major source of new generation, but as gas prices fell, environmental
regulations tightened and the efficiency of natural gas-fired combined-cycle generating plants improved,
and gas plants ended up "taking over" the generation market.
56
2AC – MUST READ

Turn – all their links are based on incorrect assumptions about baseline emissions, the plan’s
incentive for efficiency and renewables, and a tight natural gas market
Pew Center for Global Climate Change, June 2004
http://www.pewclimate.org/policy_center/analyses/neweia.cfm
The Pew Center on Global Climate Change has examined EIA’s analysis of SA.2028 and finds it to be
consistent with its earlier approach. However, it is still primarily driven by the underlying key assumptions
that result in unrealistically high cost projections.
These key underlying assumptions are:
1. High growth of emissions in the baseline case: The high baseline case is the single most important
element in explaining EIA’s high cost projections. EIA’s baseline case assumes high growth in:
· petroleum use in transport: +46% by 2025;
· coal-fired electricity generation: +35% by 2025; and
· the non-CO2 greenhouse gases (GHG), including a 440% increase in emissions of industrial high-GWP
gases (HFCs, PFCs, and SF6) by 2025 despite a production slow-down in recent years and considerable
uncertainty over future industry-specific trends.
Furthermore, EIA assumes no relevant policies will be enacted over the next twenty years:
· there will be no further federal or state requirements for criteria air pollutants, and therefore less incentive
to rely on cleaner fuels and technologies – even though, for example, President Bush has proposed tougher
standards for powerplants through the Clear Skies Act;
· natural gas prices will remain very high despite proposed policies to increase supply;
· individual states will do nothing to address GHG emissions – even though the northeastern states are
actively developing a program to impose CO2 caps on their powerplants, California is about to impose CO2
tailpipe standards, additional states are developing renewable portfolio standards, and other states are
considering similar initiatives; and
· the federal government will do nothing to address climate change – it will not even implement President
Bush’s voluntary GHG intensity reduction target or technology programs.
EIA’s assumptions result in an high baseline case which widens the apparent gap that must be closed to
comply with SA 2028, and thereby increases EIA’s cost projection.
2. Limited opportunities to increase efficiency and reduce consumption: EIA still assumes that covered
entities in the transportation, building and industrial sectors will do very little to increase their efficiency or
reduce consumption under SA 2028. For example, EIA forecasts only a very modest increase in
automobile efficiency, from 26.4 mpg to 27.2 mpg by 2025. These assumptions are made despite the fact
that the GHG cap-and-trade program established by SA 2028 would create a sustained price signal,
which should spur technology improvements, and the diffusion of these technologies into the
marketplace.
3. Limited opportunities to reduce non-CO2 GHG emissions: EIA still assumes there are limited opportunities for covered entities to
reduce their emissions of the non-CO2 GHGs (methane [CH4], nitrous oxide [N2O], and the industrial high GWP gases [HFCs, PFCs,
SF6]). Under this assumption, EIA projects that overall emissions of non-CO2 GHGs from covered sectors would actually increase by
around 70% under SA 2028 (note that EIA projects an increase of 230% in the baseline case). In contrast, the MIT analysis (see
below) finds that overall non-CO2 GHG emissions would be reduced by around 45%. Particular examples that the MIT model finds
for cost-effective reduction opportunities in the non-CO2 GHGs include the industrial high-GWP GHGs (HFCs, PFCs, and SF6) in the
semiconductor, magnesium and aluminum sectors, and reducing methane emissions from coal and oil production facilities, landfills
and natural gas pipelines.
4. Limited available offsets: EIA assumes that there is only a limited amount of cost-effective offsets available. For example, on
domestic sequestration, EIA projects only 112 MTC at under $100/TC will be available; however, a forthcoming report from the Pew
Center by Robert Stavins of Harvard University indicates an availability of 300 MTC at under $50/TC. EIA also takes a restrictive
view of available international offsets, assuming that trading will only take place with the EU-15 through 2025. This ignores the fact
that access to mitigation opportunities in other developed countries and, particularly, in developing countries would greatly increase
the supply of inexpensive international credits.
5. Tight natural gas supply: EIA still assumes a very tight supply of natural gas. This assumption would
limit one key option for a smooth transition away from highly carbon intensive energy use. However, as
shown by EIA’s own evaluation of past reference cases, natural gas has been the fuel with the least
accurate forecasts of production, consumption and prices.
57
2AC – Permits Key Efficiency / Renewables
CO2 caps reduce natural gas demand – EPA and DOE studies prove carbon cap key to create
incentives for efficiency and renewables
Hawkins 2001 – Director, NRDC Climate Center
FDCH, 11-15, Testimony Senate Environment and Public Works
The other feature of the climate problem is that energy systems cannot turn on a dime. While some may use
this fact to argue against S.556, the opposite is true. To establish the market signals needed to promote
cleaner and smarter energy technologies we need to adopt policies now to limit CO2 emissions. As long
CO2 can be dumped for free, the market will discourage the investments needed to modernize our energy
technologies. Let me give an example of how the status quo distorts decisions away from climate friendly
actions. In the US today, there is much talk about the need for energy security. While energy efficiency will
give us the largest, most secure additional domestic supply, investments in efficiency continue to be
undervalued, in large part because there is no value assigned to the pollution that efficiency prevents,
particularly carbon emissions. As I discuss below, investments in energy efficiency make it possible to
implement S.556 while saving consumers money. But it is unlikely the market will spur adequate efficiency
programs as long as carbon emissions are ignored in calculating the value of efficiency improvements.
Adopting the CO2 caps in S.556 would change the incentives and promote investments in efficiency,
renewable energy and CO2 capture and avoidance measures. But the Administration says it would cost
consumers too much, with Mr. Holmstead's testimony claiming that the bill would cause a 30-50 percent
increase in electricity prices. This Committee heard similar claims in the 1980's when industry and the
Reagan Administration claimed that enacting acid rain controls would raise electric rates by 30 percent or
more. Of course, nothing like that happened, nor will it under S.556. Two assumptions affect forecasted
costs of S.556 more than any others: what is the predicted growth in electricity and natural gas demand,
and will Congress adopt revenue recycling provisions to prevent windfall profits to electric generating
companies? One can calculate high costs for controlling carbon emissions only if one assumes little is done
to improve energy efficiency and use of renewable energy and if one assumes that Congress will let electric
generators retain $50-100 billion in windfall profits. Mr. Holmstead's testimony makes both these
assumptions in predicting large price rises for electricity. However, according to the full EPA study of
S.556, U.S. gross domestic product would actually be higher under S.556 than under business-as-usual as a
result of the stimulus-producing programs for energy efficiency and renewable energy promoted by the bill.
As for natural gas dependence, the S.556 program of efficiency and renewable energy would actually
reduce natural gas use for electricity generation compared to the Administration's energy plan. With the
S.556 emission controls and advanced energy efficiency and renewable energy programs implemented,
58
2AC – Permits Key Efficiency / Renewables

expenditures on electricity generation would actually be $3 billion per year less in 2015 than under the
Administration's energy plan. The Role of Energy Efficiency and Renewable Energy EPA's underlying
report documents the power of the integrated strategy of emission caps, improved efficiency, and greater
renewable energy sources that is called for in S.556. By improving efficiency and increasing the share of
renewable energy sources, we can reduce the rate of growth in demand for electricity and for natural gas,
thereby allowing the emission reductions required by S.556 to be achieved without diminishing economic
growth. The tools to accomplish this smarter energy future have been documented in the November 2000
report by the Department of Energy's principle research labs. "Scenarios for a Clean Energy Future" shows
that an integrated program of efficiency and renewable energy policies can save consumers money and help
achieve reduced emissions, including CO2 emissions at much lower costs. The Energy Information Administration (EIA) has
criticized the Clean Energy Futures (CEF) policies as not being realistically achievable. But EIA has not supported its criticism with any real analysis -
rather EIA merely asserts that this rapid deployment of energy efficiency and renewable power technology is unlikely It is important to understand the
relative competencies of these two different institutions within DOE. EIA's expertise is in retrospective analysis of energy market statistics, so it is not
surprising that its projections forward are heavily colored by its familiarity with the past trends. In contrast, the National Energy Labs that prepared the
CEF report are expert in the engineering and economics of conventional and advanced energy efficiency and renewable energy technologies. The CEF
experts have prepared a rebuttal to EIA's criticism that adds further support to the CEF report's findings. I have attached this to my testimony and ask that
we have a
it be included in the record. An examination of the CEF report demonstrates the reasonableness of the National Energy Labs' view that
large untapped potential to improve efficiency and save money. The measures called for in the CEF report
are not dream technologies, waiting to be invented; they are common-sense initiatives designed to increase the use of technologies that already exist. The
CEF measures include improved appliance efficiency, through labeling, standards, and financial incentive programs. They include similar measures for
buildings, calling for less wasteful heating, cooling and lighting systems and weatherization and rebate programs to reduce gas and electric use in existing
in only six months,
buildings. EIA claims the CEF's projected rate of deployment for these technologies is unreasonable. But
Californians were able to reduce their electricity consumption by 6% during the summer
of 2001, with no deprivation. This experience should encourage us not to sell short our ability to be smarter about energy use, given
the appropriate policy support. The Administration asserts the goal of its energy plan is to reduce demand and greenhouse gas emissions to levels well
below EIA's business as usual (BAU) forecasts. These are laudable goals but the Administration's use of BAU forecasts to critique S.556 is inconsistent
with those goals. The Administration needs to frame specific policies to achieve appropriately ambitious goals for energy efficiency and renewable
When policies to promote
energy. When it does so, it will conclude, as DOE's experts have, that S.556 will help, not hurt consumers.
efficiency and renewables are combined with emission caps the cost of meeting S.556's
pollution targets is dramatically reduced compared to BAU assumptions. Under BAU, EPA calculates S.556 would increase
costs of electric generation by $17 billion per year in 2015; with very modest efficiency efforts the cost drops to under $13 billion; with the CEF
moderate policies the costs drop to $500 million; and with the CEF advanced policies called for in S.556 there is a savings of $3 billion a year in electric
generation costs. We can clean up power plants and save consumers money through smart policies to reduce waste and increase renewable energy
supplies.
59
1AR – Efficiency / Renewables

Permit market causes efficiency and tech improvements that prevent fuel switching – empirically
proven and the EIA’s model is flawed
Pew Center for Global Climate Change, June 2004
http://www.pewclimate.org/policy_center/analyses/neweia.cfm
Pathway towards emissions reductions Because EIA assumes limited availability of cost-effective
efficiency improvements and limited reduction opportunities for non-CO2 gases, the great majority (88%)
of required emissions reductions would come from fuel switching in the electricity sector. As any sizeable
transition to natural gas would be limited according to EIA’s predicted tight supply, the EIA model predicts
the electricity sector would comply by using expensive renewable and nuclear technologies together with
premature retirement of some existing coal plants. Such a large-scale and unplanned shift of capital assets
would be expensive. This overall story is the same for the amended SA.2028 as for the original S.139 bill,
with the only real change from the relaxed cap being a lower requirement for new nuclear units and some
greater retention of existing coal plants (in 2010 coal use is up 7% from 2001 levels, falling to 79% of
current levels by 2020). In addition, EIA's analysis is very conservative in its assumptions regarding the
diffusion of those high efficiency technologies that already exist. Among other things, EIA assumes there
will be less use of combined heat and power and distributed generation technologies under SA 2028 than in
the baseline case. EIA is also pessimistic on the market penetration of new technologies – assuming, for
example, that by 2025 no hydrogen and no coal-fired IGCC with sequestration plants would be operational
despite these being principal objectives of federal energy R&D. The actual experience of companies on the
Pew Center’s Business Environmental Leadership Council that have elected to take on a GHG reduction
target is that low-cost, or cost-saving opportunities are often available – even for much more ambitious
targets than proposed in the bill. For example, BP set a target of reducing GHG emissions by 10% from
1990 levels by 2010. By instituting an emissions trading program, BP met its target 8 years ahead of time
and achieved $650 million of savings over three years for an estimated outlay of $20 million. DuPont has
met its target to reduce GHG emissions by 65% between 1990 and 2010 and managed to use 9% less total
energy in 2002 than it did in 1990, despite an almost 30% increase in production. Compared to a linear
increase in energy with production, this achievement resulted in $2 billion in cumulative energy savings.
EIA’s model shares the weakness of many computable general equilibrium (CGE) or “top-down” economic
models – it tends not to recognize these opportunities and, as a result, overstates projected costs.
60
1AR – Efficiency / Renewables
The warrant for fuel switching proves that the plan key to create incentives for natural gas efficiency
Sander et al 1999 – CEO Environmental Financial Prospects, PhD
Natural Gas, June 6, http://www.envifi.com/Bios/natgas.htm
As the market for greenhouse gas emissions continues to evolve, switching to less carbon-intensive fuels
will be an important means to reduce carbon emissions. Natural gas is the least carbon-intensive fossil fuel.
Per unit of energy, combustion of natural gas results in 42 percent less carbon dioxide emissions than coal
and 29 percent less than residual fuel oil. Significant reductions in carbon dioxide emissions could be made
through fuel switching, for example, from residual fuel oil to natural gas. The value of carbon emission
reductions resulting from a trading and regulatory regime will also favor cofiring of natural gas with coal
and might lead to an early retirement of coal-fired boilers or a repowering to use natural gas. When the
value of carbon reductions is added to the value of SO2 and NOx reductions that also result from a switch
to natural gas, the financial premium associated with the environmental benefits of the switch will be even
greater. The market in carbon reductions will motivate technological improvements to reduce emissions.
For example, if price signals provide incentives for increased use of natural gas, the market would respond
with new technologies. Price incentives will encourage technologies that produce, distribute, and
combust natural gas more efficiently and effectively.
Cap doesn’t increase natural gas usage due to efficiency and renewables
The Role of Natural Gas The Administration also claims that S.556 will endanger energy security by
requiring too much natural gas for electric generation. But large increases in natural gas use do not occur
if the integrated CEF efficiency and renewable policies called for in S.556 are implemented. Under either
the moderate or advanced CEF policy programs, EPA's study confirms that natural gas use in electric
generators will be less than under BAU growth with no emission controls.[5] There is no reason to oppose
limits on carbon pollution in order to avoid excessive dependence on natural gas or any other single fuel
for electricity generation. Smart policies that harness the largely untapped potential of efficiency and
renewable energy do a better job of promoting fuel diversity and attack the problem of global warming at
the same time.
61
2AC – Auctioning Solves Link
Industry data and comprehensive study proves that revenue recycling from auctioned permits offset
the effects on business from short-term run ups in energy prices
Redefining Progress 2001, Accurate Price Issue Brief, November, “The Price Scare Will be a False
Alarm,” www.rprogress.org/newpubs/2001/etrsummary.pdf
Using data from the National Bureau of Economic Research’s Manufacturing Productivity database, Gale
and Hassett empirically analyze the effect of an energy price increase on U.S. business investment in
equipment and structures. They find that carefully designed revenue recycling policies are likely to more
than offset a short-run decrease in investment following increases in energy prices. Because increased
capital accumulation is associated with increased productivity and total output, they conclude that a tax
shift could exert a positive influence on the macroeconomy and wages.
Auctioning permits allows revenue recycling which solves the short term impacts of higher prices on
energy intensive industries and causes incentives for clean energy which lowers prices in the long
term
Redefining Progress 1999, Backgrounder No. 1, September, “Fair and Low-Cost Climate Protection”
www.rprogress.org/newpubs/1999/dga_backgrounder1.pdf
Instead, it would be more direct and simple to chare polluters for their carbon emissions, then return the
revenue to citizens and businesses through tax cuts or rebates. For example, one proposal for early action
would stabilize greenhouse gas emissions in 2002 at 1990 levels, which could yield over $33 billion
annually from pollution charges. The revenue would then cut existing payroll taxes, giving workers an
extra $285 per year: increase funding for health care or education; reduce the deficit; or just give every
citizen $120 rebate every year, thus offsetting most, if not all, of a household’s energy price increase.
Extremely pessimistic economic studies, which many believe contain highly unrealistic assumptions,
estimated that emissions permit prices would be very high, raising about $300 billion each year by 2010
(WEFA 1998). If returned as a lump-sum rebate, each citizen would receive slightly more than $1,000 per
year. Fortunately, the higher the estimated cost to the economy, the more revenue would be raised to offset
higher energy prices. In the long term, the economy will widely adopt clean-energy technologies, thus
driving energy prices back down; revenues will decrease, as will the need for revenues to offset price
increases.
In addition to returning the revenue to the economy, some revenue should also be used to compensate
displaced workers and firms in energy-intensive industries, such as coal mining, and protect low-income
consumers who may be temporarily harmed by price increases resulting from greenhouse gas reductions.
The revenue could easily take care of the most vulnerable industries, workers, and consumers, while
leaving plenty to distribute more widely through rebates or tax reductions.
62
2AC – Permits Key Natural Gas Industry
Turn – the plan increases income and asset values for the natural gas industry and permit market
solves the impact to price volatility
Sander et al 1999 – CEO Environmental Financial Prospects, PhD
Natural Gas, June 6, http://www.envifi.com/Bios/natgas.htm
Carbon trading is not only feasible, it is emerging even in the absence of government regulation. New
investments are being made in technologies and research needed to monitor and standardize carbon
measurement. Active trading of carbon could prove an inexpensive insurance policy against the unknown,
but potentially catastrophic, problems that may emerge because of the rapid increase in global carbon
emissions. An effective and efficient market-based solution will become even more important as
governments around the world tighten restrictions on carbon emissions. The U.S. natural gas industry is
well-positioned to help in reducing carbon dioxide emissions. While helping to clean up the air, the benefits
to the industry could be substantial. Income and asset values should both increase. All the while, carbon
trading could also make the natural gas industry more resilient to other forces that have persistently
created business cycles in the energy sector.
63
_____________________
***IMPACT ANSWERS
64
2AC – Warming Outweighs
Warming outweighs natural gas – delaying carbon caps ensures devastating warming and causes
worse costs later on
Assistant Administrator Holmstead set forth the Administration's reasons for its opposition to any
requirement to control CO2 from power plants. The Administration claims that CO2 controls will cost
consumers too much and make generation too dependent on natural gas. The Administration also asserts
that decisions to control CO2 should be made as part of broad climate change policy.
Contrary to the Administration's claims, S.556 will save consumers money, will reduce growth in
consumption of natural gas and will lay the groundwork for broader efforts to combat climate change.
The Costs of Delay
The Administration states that it takes the issue of climate change very seriously. But its opposition to
controlling power plant CO2 is a serious mistake. This past weekend, the world's other industrialized
countries agreed to take steps to significantly limit global warming pollution over the coming decade. In
response, the President's spokesman is quoted as saying the President "agrees with the need to reduce
greenhouse gas emissions. His Cabinet review is under way, to determine a way that can be done without
forcing America into a deep recession."
The fact is that the October 31 analysis of S.556 submitted by Mr. Holmstead for the Administration
demonstrates that controlling CO2 from power plants will help the economy, not harm it. That analysis
concludes that US gross domestic product would be higher under S.556, not lower.
To take climate change seriously, one must look at the costs of delay in taking action. The assumption of
many is that by delaying action to limit global warming pollution we will reduce costs. That assumption is
wrong and ignores the nature of the global warming problem. Today's atmospheric concentrations of CO2
are 30 percent above pre-industrial levels, higher than they have been in over 400,000 years. They have
reached that level in a geological blink of an eye due to our burning of fossil fuels. By burning these fuels
we are returning to the atmosphere heat- trapping gases that were isolated over a period of about 75 million
years. The speed at which we are reversing the earth's geologic history is astounding: each year we put
back into the atmosphere an amount of CO2 that took 100,000 years to store in fossil fuels. CO2 stays in
the atmosphere hundreds of years once it is released, so each year we allow CO2 emissions to grow, we are
committing many generations to the consequences of the resulting change in climate.
The only way to limit the extent of the climate change we inflict on future generations and ourselves is to
limit, or stabilize, atmospheric CO2 concentrations and to do that we must act to reduce emissions. The
longer we wait to start, the more expensive we make it to achieve any particular stabilization target. To
stabilize CO2 levels in the atmosphere, we must limit the total cumulative tons of CO2 we release. For
example, to limit the atmospheric buildup of CO2 to a level about 60 percent higher than pre-industrial
levels (today it's 30 percent higher), cumulative global manmade carbon emissions up to the year 2100
must be kept below 950 billion metric tons. We have already released about one-third of this budget. But
the real problem lies immediately ahead: at current emission rates we will consume half of the remaining
budget in less than 30 years.
Imagine you are on a supertanker so close to a reef that you will cover half the remaining distance in the
next 20 minutes. There is time to avoid the reef only if the tanker alters course immediately. Our economy
can grow without increasing carbon emissions but only if Congress acts now to signal the market that these
emissions can no longer be dumped for free. Unless we act now to lower the business as usual growth in
CO2 emissions, we will eliminate our ability to stabilize concentrations at more protective levels or force
later action that is wrenching and expensive, requiring extremely rapid reductions in these gases.
65
2AC – Oil Peak Outweighs

AFF – LINK – OIL PRICES ARE MORE LINKED TO NATURAL GAS THAN THE IMPACT OF
ENVIRONMENTAL REGULATIONS
Longer term, U.S. dependency on imported LNG will increase, as Canadian imports decline sharply.
Alaskan gas is expected to come online by 2021. Also, the price of long-term gas probably will more
closely follow the price of oil. The relationship between oil and gas "is much more important [on the
price of natural gas] than the impact of environmental regulations, with gas-to-liquids, feedstock,
hydrogen, and fuel switching keeping fuel prices linked," Denhardt believes. He also pondered the
future effect of coal-to-liquids entering the market, suggesting the possibility that supply competition
of coal-to-liquids in the energy market would "put a ceiling on oil prices."
66
2AC – Chemicals Impact

Non unique—current high natural gas prices will devastate the economy
Gupta, Chairman and CEO, Rohm and Haas Co, 2003 (FDCH, 5/19, lexis)
A hearing on enhancing the nation's energy security could not come at a better time. The nation is facing an
energy crisis caused by runaway prices for natural gas. Unless Congress acts to increase domestic
natural gas supplies our economy will continue to struggle and we will fall short of our goals for a
cleaner environment.
A crisis of this magnitude poses a grave threat to America's economic and national security. Current
energy prices are making it impossible for the US chemical industry, and other critical industries, to
compete in global markets. Because the business of chemistry produces the building block materials that
the rest of our modern economy relies upon, we are somewhat of a "canary in the coalmine." As we go, so
goes the rest of the nation.
In particular, the US chemical industry's economic survival depends on having access to an abundant and
affordable supply of natural gas. Natural gas is almost exclusively a domestic energy source, yet we all
must operate in a global marketplace. We compete with producers from Asia, Europe, and the Middle East.
Current natural gas prices have turned the US chemical industry into the world's high-cost
producer. From our perspective, it is not an exaggeration to say that an economic disaster is unfolding in
this nation because of dangerously volatile prices in natural gas markets. Critical infrastructures like the
chemical industry are extremely sensitive to wild swings in energy prices. Without a secure supply of
energy, the industries that contribute to the nation's economic and national security are deeply
compromised.
What we are facing is not a seasonal disturbance, but a fundamental structural imbalance in supply and
demand for natural gas. America has developed a tremendous thirst for natural gas. It is clean. It is
efficient. And until recently, it was abundant and cheap.
Consumers love it for heating their homes. Environmentalists love it because it is clean burning. Industries,
including the chemical industry, love it because it is an excellent raw material that makes its way into
thousands of products that everyone one of use, every day.
Because we love it, America is using more and more gas. Natural gas used to generate electricity has
increased by 35 percent in the past five years and will nearly double in the next decade. Almost all new
power generating capacity coming on line in the US is gas fired. Half of new homes are now heated by gas.
America is becoming an economy that runs on natural gas.
Unfortunately, the nation's current natural gas supply is running low. Production today is below where it
was 30 years ago when Americans were consuming far less.
The paradox is that America has adequate reserves to meet current and future needs. Unfortunately, we
can't access those reserves. The most promising -- and desperately needed -- sources are currently off-limits
to development. Some of the most promising supply sources are in areas like the eastern Gulf of Mexico,
the northern Rocky Mountains, and off the coasts of North Carolina and California.
In the final analysis, the natural gas crisis is a domestic political and public policy problem. Environmental
policies are driving new demand for gas to generate electricity and heat homes. Other policies keep
critically needed supplies out of reach. As a nation, we can't have it both ways. We can't crave more and
make less.
Appropriate federal policies are needed to ensure a better balance between the supply of and demand for
natural gas, and to keep prices at a reasonable level.
67

Chemical industry has been through worse and empirically bounces back
Chemical and Engineering News, 2001 (12/24, http://pubs.acs.org/cen/topstory/7952/7952bus1.html)
To call 2001 merely a difficult year for the chemical industry downplays the severity of events that
eventually influenced general economic, business, political, and social circumstances. The repercussions of
terrorist attacks late in the year only made a tough situation worse. The industry was already in a downturn
at its start. This spawned an increasing number of job reductions, production cutbacks, business
divestitures, and company mergers in the days that followed. For the first time in several years, a handful of
companies declared outright bankruptcy, failing to find a way to survive the hard times. High energy and
raw material prices were significant factors early on, only to come full circle and end the year at
dramatically lower levels. Weakening international economies, slackening demand, overcapacity, the
strong dollar, and a squeeze on prices and margins contributed to some of the poorest financial results in
years. Chemical sales and earnings continued to decline. Mergers and acquisitions created some entirely
new companies and others with new focuses. In the end, the Top 50 global chemical producers got shuffled
and mixed, with a few new behemoths emerging. The decisions of government regulators had considerable
consequences in these transactions, as well as in environmental and trade policies. The chemical industry
has faced added challenges since the terrorist attacks on Sept. 11. Concerns about energy prices shifted to
ones about production and supply security. Pharmaceutical producers were drawn into discussions about
ensuring the supply of antibiotics and vaccines. And site security--long a key consideration for employee,
community, and environmental safety--has been heightened as chemical plants and refineries are feared to
be potential targets. On a positive note, advances in sequencing the human genome brought excitement to
pharmaceutical discovery. Chemical companies advanced new production technologies and planned to slightly increase their
investment in R&D. They also moved ahead with expansion plans around the world, while shutting down older, less efficient plants.
The Internet continued to bring changes in how the industry conducts business, with many companies asserting themselves in the
online world.
Top CHEMICAL ECONOMY. Even in a lackluster year, the state of the economy is news, but given the precipitous declines of
2001, this year it is big news. Declining growth rates and contraction of gross domestic product in the U.S.,
exacerbated by many other negative factors, put enormous pressure on the U.S. chemical industry. Similar
circumstances played out around the world, especially in Europe and Asia. The strong dollar made U.S.
chemicals less attractive to foreign customers. For the first nine months of 2001, the latest data available, U.S.
producers exported $60.8 billion in chemicals, a slight increase of 2.7% over the same period last year. At the same time, the U.S.
became the place for foreign producers to sell to, with chemical imports into the U.S. up 9.0% to $59.4 billion. This caused the
chemical trade surplus, long a point of pride in the industry, to fall 70% to just $1.4 billion.
The trade situation also affected chemical shipments. Imports supplied some U.S. demand, but the U.S. recession had an even greater
impact--shipments of chemicals through October contracted by about 3% to a total of $359.6 billion for the year to date, according to
Commerce Department data. Of even greater concern has been the increase in inventories relative to shipments as the economy
slowed throughout this year. Although chemical inventories have actually declined somewhat, the sell-off has not kept pace with the
drop in shipments and has produced a high inventories-to-shipments ratio of about 1.50, which represents 1.5 months of demand. In
December of last year, the ratio was 1.39. This inventory overhang has impacted both production and prices throughout the year,
especially among commodity chemicals. After reaching an all-time high in February as producers tried to offset the high energy and
feedstock costs, the government's producer price index for industrial chemicals has fallen 8.4%. Production of industrial chemicals
and synthetics, based on government data, declined about 9% from last year. The downward spiral of the
chemical economy this year has of course put tremendous pressure on sales, earnings, and profitability. For
the first nine months of 2001, aggregate results for the 25 chemical companies regularly tracked by C&EN show year-to-year declines
of 6% in sales and 44% for earnings. The aggregate profit margin for the group fell to 4.6% from 7.9% in the first nine months of last
year.
Economic conditions forced Borden Chemicals & Plastics to file for bankruptcy in April and Sterling Chemicals to file in July. Penn
Specialty Chemicals also filed in July, and its assets were sold off in December. During the year, W.R. Grace also filed for
bankruptcy, but to protect itself from asbestos liability litigation. However, Pioneer Cos., which filed in August, has reorganized and
expects to emerge from bankruptcy by the end of December. After selling and closing some its businesses,
LaRoche Industries emerged from bankruptcy in October. With earnings and profitability declines, one
might think that Wall Street would be less than keen on chemical company stocks. However, stocks of
chemical companies, as well as those in many other "old economy" industries, have actually benefited this
year from the highly publicized technology meltdown as investors looked for safer havens for their money.
Despite the ups and downs of the stock market throughout the year, by mid-December C&EN's stock
index--based on the same 25 companies used for earnings--was down just 3% from where it closed in 2000.
At the same time, the Dow Jones industrial average was off 8%.
68

No impact to chemical industry – higher prices for natural gas can be diffused due to increased
commodity demand
Purchasing 1-13-2005
"The fortunes of the industry began to turn around in the last quarter of 2003 and that accelerated through
2004," says Swift. "Demand, production and operating rates are up, and, at that point, pricing power shifts
from the buyer to the producer."
Chemicals producers are not only passing on the increased natural gas and feedstock costs to buyers, but
they are going well beyond it, in some cases, to improve their profit margins. In a recent update, Merrill
Lynch analyst Donald Carson feels that pricing power is accelerating for many commodity chemicals
producers. "Pricing power has decisively shifted from buyers to sellers in commodity chemicals. Polymer
buyers have begun to recognize that supply has tightened, and in many cases [they] have become more
concerned about reliable supply than price."
For example, Dow Chemical Chairman William Stavropoulos said recently that his company is raising
prices faster than the increasing costs of gas and oil. Dow Chemical's prices in its plastics unit rose 31% in
the third quarter and profits increased a whopping 86%. "The chemical industry is now in a strengthening
volume and price environment, and Dow continues to see improvements in product supply-demand
balances across most businesses and in all geographic areas," said CFO J. Pedro Reinhard in a statement.
"Elevated and extremely volatile feedstock and energy costs continue to give cause for concern within Dow
both in relation to the immediate impact on margins and the long-term toll on consumer confidence."
The price increases are hitting buyers hard. Buyers in Purchasing magazine's monthly business survey
report that "prices in resins have risen the past few months due to the price of gas," according to one
industrial commodities buyer, while many others report higher resin prices without specifically citing
natural gas costs as the culprit. "Business is strong but price pressures on plastic resin are of great concern,"
is the way a buyer at one Midwest manufacturer puts it.
GE Advanced Materials, maker of high-performance plastics, recently said increased demand and prices for
plastic resin may boost operating profit for the unit by 25% in the fourth quarter. Chemicals giant BASF, in
its third-quarter earnings statement, said "high oil prices allowed the company to pass on some necessary
price increases to the market." Westlake Chemical said in its third-quarter earnings statement that increased
sales volumes and prices outpaced higher feedstock and energy prices. And Neville Chemical cited
"continued escalation of petrochemical related feedstock" for its decision to raise prices on its resins
between 3¢ and 4¢/pound in November.
69
1AR – High Prices Kill Chemicals Now
High energy prices now killing the chemical industry

Investor’s Chronicle, 12/22/2004 (lexis)
Meanwhile, higher energy prices remain a problem. The Chemical Industries Association (CIA) claims that
unsustainable price hikes are putting the sector under severe pressure, and it's calling on the government to
review what it sees as a serious threat to the industry. "A competitively-priced and secure supply of energy
is a key element to the sustainable future of the UK chemical industry," says CIA director general Judith
Hackett. "The present position leaves business unable to plan for either the short term or long term."
In October, the House of Commons' Trade and Industry Select Committee began an enquiry into the recent
increases in gas and electricity prices. In the meantime, the CIA claims that companies will be paying up to
40 per cent more for gas than European counterparts.
Chemical industry losing now

The Advocate, 2004 (10/12, lexis)
Despite oil prices of more than $50 per barrel, exploration and production activity in the Gulf of Mexico
has lagged, and the state as a whole has not seen economic activity on par with some of the other oil-
producing states such as Texas and Oklahoma.
Revette said his office will be looking into the reason for the lag.
High energy prices also have been hurting the chemical industry, which uses natural gas as a fuel and
feedstock to make its products.
The industry has been shutting down production and indicated the bulk of its expansion and capital
investment will go overseas, where prices are cheaper.
70
1AR – High Prices Don’t Impact Chemicals
No impact to price volatility on chemical industry- they’ll bounce back

Mitsch, Fulcrum Global Analyst, 2/7/2005 (Fortune, lexis)
But isn't the prospect of rising natural gas and crude oil prices a real threat to the profitability of chemical
companies--and ultimately to the stocks?
Obviously those are very important input costs for the chemical companies. But one of the things that I
think is a bit of a fallacy is that high energy prices in and of themselves mean low profits for the
manufacturers buying at those high prices. I believe that profitability is more a function of operating rates
than it is of input costs. So you may get a very near-term hit if for some reason oil or natural gas prices
spike up. But over a medium-term time frame, the chemical companies will be able to price accordingly
and pass it through. Let me give you one example of why I believe that the power has shifted to the
chemical companies rather than to their customers: Between October and December, the price of crude oil
dropped from $ 55 a barrel to the low 40s. During that same time frame the spot price of ethylene, which is
a bellwether chemical, went from 32 cents a pound to 47 cents a pound. It just shows you that there's a
shortage here.
71
1AR – High Prices Increase Chemical Revenues

Higher prices translate into increased revenues for chemical companies due to strong capacity
utilization
Deseret Morning News 2-12-2005
Peter Huntsman said he remains optimistic about the future of the chemical industry, which in recent years
has been plagued by overcapacity and volatile prices of oil and natural gas, used as feedstocks for the
production of many chemicals.
"Our capacity rates are operating for the most part across the board around the world in excess of 90
percent," Huntsman said. "And there is very little new capacity coming on almost any of our products for
some years to come. Typically anything above 90 percent capacity utilization means that producers have
pricing leverage over customers."
72
73

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CNDI 2008 CAMP STARTER SET

NATURAL GAS DISAD AFF / NEG

NATURAL GAS DISAD – CNDI 1/2

Manufacturing Shift Impact – Turns Oil........................................................................................................48

NATURAL GAS DISAD – 1NC

NATURAL GAS DISAD – 1NC

NATURAL GAS DISAD – 1NC

2 – Chemical industry key to the economy

NATURAL GAS DISAD – 1NC

3 – The impact is extinction and turns the case

NATURAL GAS DISAD – 1NC

U – SHORT TERM / AT OIL PRICES

U – AT OIL PRICES – NATURAL GAS MARKET FUNDAMENTALS REMAIN STRONG

AT OIL PRICES – TURN – OIL INDUCED PRICE STRENGTH LEADS TO INCREASED

AT OIL – OIL’S EFFECT IS OVERSTATED – NATURAL GAS IS NOT INTERCHANGEABLE

U – LONG TERM PRICES ARE BELOW HIGH END PREDICTIONS

INCREASED LNG INTEGRATION WILL MAINTAIN PRICE STABILITY IN NATURAL

U – SUPPLIES FOR NATURAL GAS KEEPING UP WITH DEMAND – MARKET IS STABLE IN

U – UNCONVENTIONAL SUPPLIES – FORECASTS DON’T TAKE INTO ACCOUNT

MORE EV – UNCONVENTIONAL GAS

MORE EV – RENEWABLE GAS

supply is still 10 to 20 years off and would require the

U – AT VOLATILITY / PRICES HIGH

U – AT VOLATILITY / PRICES HIGH

Links – CO2 Cap

Any regulation of CO2 causes a crisis for natural gas

Permits cause a shift to natural gas due to fears of carbon tax

Cap and trade increases natural gas demand

Best studies prove permits increase natural gas prices by 13%

Links – High Oil Prices

Links – AT Turns (Efficiency / Renewables)

Links – AT Turns (Efficiency / Renewables)

Increased costs tradeoff with renewable investment

Links – AT Turns (Efficiency / Renewables)

Low Prices Key Oil Peak

1NC/2NC – Economy Impact

High gas prices ripple through the entire economy

1NC/2NC – Economy Impact

Internal Link – Hits All Businesses

Internal Link – Recession

Terminal Econ Impacts

Terminal Econ Impacts

The impact turns the case and causes global instability

1NC/2NC – Chemical Industry Impact

2 – Chemical industry key to the economy

1NC/2NC – Chemical Industry Impact

High Prices Kill Chemical Industry

Chemical industry can’t switch away from natural gas profitably

High Prices Kill Chemical Industry

High prices kill profitability

High prices kill chemical industry competitiveness

1NC/2NC – Manufacturing Shift Impact

2 – Overseas manufacturing shift devastates the US economy and global leadership

1NC/2NC – Manufacturing Shift Impact

High Prices Cause Manufacturing Shift

High prices devastate manufacturing competitiveness

High Prices Cause Manufacturing Shift

Manufacturing Shift Key to Economy / Heg

Manufacturing Shift Key to Hegemony

US technological dominance is key to hegemony

Manufacturing Shift Impact – Turns Oil

Manufacturing shift turns their oil dependency impacts

2AC NU – High Prices Now

AFF – NU – NATURAL GAS PRICES AT ASTRONOMICAL LEVELS