Natural gas decontrol moves to front burner
Natural gas price control - a potentially explosive political issue that has been submerged under other headlines for many months - is once again surfacing with a bang.Skip to next paragraph
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The Reagan administration is moving swiftly to speed up the decontrol of natural gas, as Mr. Reagan promised during his presidential campaign. But the decontrol is taking place through administrative means rather than legislation, officials confirm.
Consumer advocates, federal lawmakers, and others who oppose accelerated decontrol have concluded that the primary reason for steering the issue away from Congress is to avoid a major battle there in an election year.
Charles M. Butler III, chairman of the Federal Energy Regulatory Commission (FERC), will announce March 10 a proposed rule change aimed at speeding up decontrol of so-called ''old gas.'' This gas comes primarily from wells in production before April 20, 1977.
Although estimates vary, this old gas is widely considered to be at least a third of the total US supply. The proposed rule is by far the most controversial that FERC is considering. Currently, the Natural Gas Policy Act of 1978 specifies different prices for old gas and new gas (which comes from wells producing since April 20, 1977), and basically says that all gas except old gas will be decontrolled in 1985. The old gas would continue to remain under controls until it runs out.
Already a new storm of opposition has risen.
The Consumer Federation of America, representing some 220 consumer groups with a membership of 30 million, says it is pulling out all stops to defeat accelerated decontrol. The American Gas Association, an industry trade group representing natural gas distributors who oppose stepped-up decontrol, is beginning to muster industry opposition to the administration's proposals. And even some natural gas producers say privately they are not entirely convinced that the fight developing over decontrol is worth the political toll it may have on the Reagan administration.
In Congress, Rep. John D. Dingell (D) of Michigan, chairman of the Energy Committee, and a number of other key Democrats introduced a nonbinding resolution Feb. 24 calling on the administration to delay plans to speed up decontrol. The resolution states that this would hurt ''major sectors of the economy'' and business and consumers would be paying billions of dollars more for gas.
But the ink was hardly dry on the Dingell resolution before an industry group attacked it and praised the FERC plans. At the same time, they said, FERC was actually not doing enough to decontrol natural gas prices.
Kye Trout Jr., chairman of the Independent Petroleum Association of America, denounced the House resolution designed to prevent administrative decontrol through FERC as ''nothing but a straw man designed to mislead the American people. . . . This resolution alleges that decontrol would result in the loss of thousands of jobs and cost consumers tens of billions of dollars. That's blatantly false.''
Similarly, the American Petroleum Institute, representing the ''major'' oil and gas producers, says natural gas decontrol will in the long run help keep the lid on prices by, among other things, increasing the financial incentive to drill for more gas.
But Ann K. Lower, an energy specialist with the Consumer Federation, contends that the FERC proposal for deregulating natural gas would cost businesses and consumers ''up to $30 billion'' more than what they would pay if the Natural Gas Policy Act of 1978 were left alone.
Disagreement and widely contradictory forecasts about the ultimate cost of accelerated decontrol are not new. But Mr. Butler hopes that hearings on FERC's proposed rules changes will show that basic revisions in the Natural Gas Policy Act - such as decontrol of old gas - are needed to offset the relative financial hardship imposed on businesses and consumers who will not have access to the old natural gas in 1985.
On the other hand, groups such as the Consumer Federation hope to document at the hearings - and in court, if necessary - the economic ''bonanza'' they say FERC's actions will bring to many major gas producers, as well as detrimental effects on consumers.