Midland, MI - October 06, 2005

Andrew Liveris, president and chief executive officer of The Dow Chemical Company, testified today before the U.S. Senate Committee on Energy and Natural Resources - during a committee hearing in Washington, DC on the impact of Hurricanes Katrina and Rita on the nation's energy infrastructure.  Representing Dow and the American Chemistry Council, Liveris commented on the chemical industry's hurricane recovery efforts — and discussed the longer-term challenge of high and volatile U.S. natural gas prices.

During his oral testimony , Liveris noted that Dow has made great progress toward recovering from the recent hurricanes, remarking that Dow employees "came to work, kept our plants safe - and worked around the clock to bring them back online — to make products that are essential to restoring our communities."

However, he emphasized that while the disruption caused by the Hurricanes Katrina and Rita will be short-term for Dow and the U.S. chemical industry, the recent hurricanes emphasized the nation's tight natural gas supply/demand balance, which continues to contribute to extremely high and volatile prices and to threaten the global competitiveness of the U.S. chemical industry and the nation's manufacturing sector.

"A far greater threat to the U.S. chemical industry - and the entire U.S. manufacturing sector - is the serious vulnerability of the nation's energy supply," Liveris said.  "The U.S. is in a natural gas crisis.  The hurricanes have dramatically underscored this problem, but they did not cause it."  

Liveris commented that the price of U.S. natural gas, which was approximately $2 / million BTUs only six years ago, had exceeded $6 by February of this year, increased to $10 in the days just prior to Hurricane Katrina - and then jumped to $12 immediately after Katrina struck the U.S. Gulf Coast.  "The price of natural gas, once $2.00 per million BTUs, is now $14.00, which is the equivalent of $7.00 per gallon for the gas we put in our cars," Liveris said.  "This renders the U.S. chemical industry - which uses natural gas as both a fuel and a raw material — simply uncompetitive with the rest of the world."

Liveris added that Dow and other U.S. chemical manufacturers have been forced to take aggressive action to mitigate the impact of high and volatile energy and feedstock costs, including: implementing aggressive cost-cutting measures, focusing on energy efficiency & conservation, shutting down some inefficient plants in North America, and investing in regions of the world such as China and the Middle East, where energy is more affordable.

Liveris concluded his testimony by recommending specific actions that Congress can take to further address the U.S. natural gas crisis, including:

• Promoting environmentally responsible energy production in the Outer Continental Shelf -giving coastal states a greater role and sharing revenues from new production with them;
  
  
• Expediting leasing in the area of the Eastern Gulf of Mexico known as Lease Sale 181- for areas greater than 100 miles from the Florida coast;
  
  
• Declaring a national energy emergency right now — urging every American to save energy;
  
  
• Assuring that the most efficiently generated energy is dispatched to the power grid first.
  
  

Additional recommendations were included in a written testimony  submitted to the Committee.

"Congress can make American manufacturing competitive again," Liveris said.  "The Energy Policy Act of 2005 was a good start, and I commend (Congress) for it.  But more must be done." 

Dow is a leader in science and technology, providing innovative chemical, plastic and agricultural products and services to many essential consumer markets. With annual sales of $40 billion, Dow serves customers in 175 countries and a wide range of markets that are vital to human progress: food, transportation, health and medicine, personal and home care, and building and construction, among others. Committed to the principles of sustainable development, Dow and its 43,000 employees seek to balance economic, environmental and social responsibilities. Union Carbide Corporation is a wholly owned subsidiary of The Dow Chemical Company. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted.