Gas: Enough for Now

In each of the past five years, federal and industry officials have frightened the nation with dire predictions of severe winter shortages of natural gas, and each time the actual shortfall has turned out to be manageable. The 1975 forecasts, however, sounded alarmingly convincing. Last July, President Ford himself warned that plant shutdowns caused by gas shortages "will mean substantially less jobs" during the winter of 1975-76 and "could interfere with economic recovery," while a gas-company official spoke of "the industry's Pearl Harbor." From there the script got more familiar: as the heating season approached, the warnings were toned down until, in the closing days of the year, Federal Energy Administrator Frank Zarb predicted that the shortage once more would cause only inconvenience, not disaster.

The FEA announced that gas supplies would come closer to meeting demand than it had anticipated in October. The revised prediction estimates that potential demand will exceed supply by 21% rather than the previously forecast 23%. Though the 2% difference seems small, it is crucial--just enough to remove the threat of supply cutoffs to industrial plants that can use only natural gas as a fuel. Barring abnormally cold weather, Zarb now says, the only factories and utilities likely to have their gas supplies interrupted are those that can switch to alternative fuels like oil; the clear implication is that gas shortages will not cause any loss of jobs. Home owners, who have top priority on gas deliveries, never did face a threat of cutoffs.

Two factors have postponed doomsday at least one more year. They are 1) unseasonably mild weather over most of the nation during November and early December, and 2) a Federal Power Commission rule change last fall that permits interstate pipelines this winter to buy gas for shipment to industrial customers at the prices charged within the producing states rather than the unrealistically low ones formerly mandated on interstate shipments. The price of the unregulated intrastate gas ranges from $ 1 to $2 per 1,000 cu. ft.

The backdown on forecasts of disaster may embarrass the Administration, which has been using the threat of drastic shortages as the main argument for a bill to decontrol prices of newly drilled natural gas rapidly and permanently. Last week the FPC granted rate increases that by July will raise the price of "old" gas in production before 1973 by 6-c-, to 29 1/2-c- per 1,000 cu. ft. "New" gas from recently developed wells is going up 1-c-, to 52-c- per 1,000 cu. ft. But the Administration contends that these rises are insufficient to spur production of natural gas, which even at the highest price sells for less than half as much as the equivalent amount of oil.

The Senate has already passed the White House bill, and the House will debate a similar measure within a few weeks. The Administration's logic is compelling: gas consumption has outrun new discoveries for the past seven years, and U.S. proven reserves have shrunk. The nation can ill afford to let the bill be voted down in a cynical reaction to the penchant of Government and industry officials for overstating the immediate shortage threat. If the bill fails, in some future winter the forecasts of a disastrous shortage, like the proverbial cry of wolf, are likely to come true.

This file is automatically generated by a robot program, so viewer discretion is required.