Reagan makes two-front drive toward natural gas deregulation
As winter winds blow blizzards and record-breaking cold through much of the country, a snowed-in Washington is bracing for another kind of storm -- one over decontrol of natural gas.
Congress, soon to return for its 1982 session and keenly aware that this is an election year, is warily watching a two-front movement to lift natural gas price ceilings. At stake are possible increases in the heating bills for more than half of American homes, as well as jobs in industries of the Northeast and Midwest that use natural gas.
On one front, the Reagan administration is circulating a proposal for boosting natural gas prices almost immediately and lifting all controls by 1985. A US Department of Energy memorandum, which spells out the details of the plan, calls for sending the legislation to Capitol Hill by February.
The outlook for passing such a law is cloudy at best. If passed, it has the potential for almost doubling a home-owner's heating bill. Increased gas costs for industry could result in layoffs.And it is seen as having little chance of passing unless attached to some form of a windfall profits tax on gas companies, a tax the President has staunchly rejected.
Mr. Reagan, who has long promised to let the free market prevail for natural gas, has had more success on a second front, however.The Federal Energy Regulatory Commission (FERC), with Reagan appointee Charles M. Butler III as chairman, has already begun to lift controls.
In a major rule change, the FERC proposed earlier this month that supply companies be allowed to charge a premium price for gas brought up from new wells that are 10,000 to 15,000 feet deep. A consumer group estimates that the new ceilings, if made final, will cost each household $185 to $275 over the next three years.
Edwin Rothschild, spokesman for the Citizen/Labor Energy Coalition, sees such FERC actions as the main thrust of the Reagan deregulation effort. If Mr. Reagan does introduce his natural gas package on Capitol Hill next month, ''it may be just symbolism,'' he says. ''I don't think there is a very high probability that any legislation is coming out.'' So he is focusing his opposition on the FERC.
Some members of Congress are also turning a critical eye on the federal commission. Toby Moffett, (D) of Connecticut, chairman of the House environmental affairs and energy subcommittee, has called a hearing next week in Philadelphia on effects of FERC actions. More congressional investigations are in the works.
Supporters of decontrol of natural gas argue that lifting controls would mean more domestic gas production and less dependence on foreign oil. They say that vast supplies of natural gas are in the ground and that companies will drill for it if they can charge more for the gas. Moreover, they complain that the price of natural gas has fallen far behind that of fuel oil, which has no controls.
David Foster, president of the Natural Gas Supply Association and a chief proponent of decontrol, says that in the long-haul consumers will benefit, especially since a 1977 law has already slated removal of many price controls by 1985. ''They're going to pay more anyway, so why don't they get (increased) supply benefits and the benefits of an orderly market?'' says Mr. Foster.
While Foster would prefer a law that would speed up and eventually end all price controls, he applauds the FERC actions so far. FERC could raise ceilings on more categories of newly drilled gas, he says.