Gas industry battles over decontrol
Pressure is mounting for immediate federal decontrol of prices of natural gas produced in the United States. But, with the surge in gasoline and heating oil prices in the wake of domestic oil decontrol earlier this year in mind, analysts say congressional opposition is expected to be strong.
President Reagan had the power to decontrol oil by administrative fiat, but only Congress can decontrol natural gas.
"An Analysis of the Efficiency and Inflationary Impact of the Decontrol of Natural Gas Prices," described as the "opening volley" in the battle for gas decontrol, concludes that immediate decontrol would eventually result in a reduction of up to 3 million barrels of imported oil -- or an annual savings of up to $40 billion -- as well as pressure on OPEC to lower its prices.
The study was conducted by Glenn C. Loury, professor of economics at the University of Michigan, and sponsored by the Natural Gas Supply Association. The nation's Natural Gas Policy Act calls for gradual price decontrol, leading to full decontrol in 1985.
A relatively small but key segment of the natural gas industry is firmly opposed to immediate decontrol. It is led by the American Gas Association, which represents retail gas distributors. The AGA claims that under such price decontrol the amount households pay for natural gas would nearly double next winter.
In addition, the AGA contends that immediate decontrol of natural gas would raise the nation's rate of inflation by 2.4 percent.
The AGA's own stake in opposing Natural Gas Supply Association (NGSA) attempts in this regard is abudantly clear: the AGA wants to keep natural gas prices competitive with home heating oil prices. NGSA, meanwhile, represents producers of more than 95 percent of US domestic natural gas -- mostly oil companies.
In a policy statement issued earlier this year the NGSA said: "As producers of natural gas, we believe, as we have always believed, that total decontrol at the earliest possible date is the best, most efficient, and most economical way of eliciting maximum supplies and assuring conservation and balanced demand."
However, the AGA claims that if Congress passed a measure to immediately decontrol the price, the natural gas supply "would decline 10 percent relative to what it would have been otherwise in 1983."