Big Boost for Gas
About this time every year, officials in Government and industry begin wondering aloud whether the nation will have enough natural gas to make it through the winter. The speculations invariably revive the suggestion that there would be more of the clean, cheap fuel to go around if gas cost more and was more profitable to look for and produce. Last week the Federal Power Commission decided to put that perennial hypothesis to the test. By a 3-to-1 vote, the commissioners sharply jacked up the price of much of the natural gas that is now piped across state lines. If the decision holds up in court, the tab for consumers will swell by $1.5 billion over the next year alone.
The FPC has jurisdiction only over gas transported from state to state. Intrastate gas is not price controlled at all and averages $1.54 per thousand cu. ft. Since interstate gas is priced at either 29.5-c- per thousand cu. ft. (for gas discovered before 1973) or 52-c- (for "new" gas discovered since then), producers are inclined to sell their gas within the state in which it was found. To make interstate sales more profitable--and dampen consumption at the same time--the FPC lifted the price of new gas to $1.01 per thousand cu. ft. for gas found in 1973 and 1974 and $1.42 for gas newer than that. To encourage gas companies to shift their production to the interstate market, the commission added that any intrastate gas can be sold out of state at the highest new-gas price.
Court Action. The new gas affected by the FPC ruling accounts for only 25% of all interstate gas. As more and more new gas is found, the price of interstate natural gas will continue to rise. But even in the first year, the average consumer will be paying 6% more for gas. In a warm state like Florida, the added annual burden will only be about $5.20, by the FPC's estimate, but citizens of chillier Ohio can expect to spend an additional $23. Only 20% of the price boost, noted the commission, would add to the gas companies' profits; 55% would go to federal taxes, and 25% would cover increased production costs.
The FPC's action cut right through the old and stagnant debate between the Administration and congressional liberals over the decontrol of interstate gas. Indeed, immediately after the decision was announced, a coalition composed of consumer groups, labor unions, anti-industry lobbies and the state of Minnesota charged in federal court that the commission had usurped congressional authority by de facto removing price controls on gas. The court issued a temporary stay of the FPC'S order, and lengthy litigation is certain. The delay is good news for consumers, no matter who wins the case: each day of postponement saves gas users $4.1 million.
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