Politically sensitive natural gas bill finds few ardent backers
President Reagan's proposal to lift price controls from natural gas faces olympic-sized hurdles on Capitol Hill. Since its arrival this week, it has generated little enthusiasm, even in the President's party.
About the highest compliment paid the decontrol plan is that it is a ''good starting point.'' Sen. James A. McCLure, chairman of the Senate Energy Committee , introduced the bill for the administration, but the Idaho Republican has not issued a ringing endorsement.
Sen. Bennett Johnston, the top Democrat on the energy committee, cited ''serious problems'' in the proposal, although his state of Louisiana produces gas and could benefit from decontrol.
Most lawmakers are simply laying low, saying little about the bill.
Meanwhile, a group of about 20 representatives, most of them Democrats, launched on Thursday a natural gas proposal that is almost the exact opposite of the President's plan. Led by Rep. Richard A. Gephardt (D) of Missouri, this group would clamp down tighter price controls on natural gas, not lift them.
Congressional caution about the Reagan plan stems from the fact that natural gas is so politically sensitive. More than 40 million American households use it for heating. Thousands of factories and chemical manufacturers use it for fuel and as a raw material.
During the 1950s the federal government imposed price controls on natural gas which held it at relatively low prices until 1977 when Congress passed a law that gradually lifted some of the controls. Since then, natural gas prices have been shooting up by 20 percent a year.
Secretary of Energy Donald P. Hodel argues that the President's decontrol plan would create a free market and cause natural gas prices to drop. Opponents charge that the result would be price increases.
Making any prediction on natural gas pricing is risky because the market is a maze of contracts, business conglomerates, price controls, and even foreign treaties. The President's plan would affect most of those factors:
* Many gas pipelines are locked into long-term contracts with gas suppliers. During the gas shortage of the 1970s, pipeline companies were so desperate to have a stable supply that they signed contracts for gas at $8 per 1,000 cubic feet and more. Some small suppliers are now offering gas at $3, but they can't find a taker.
The President's plan would permit pipeline companies to renegotiate those contracts. and after 1985, it would allow these companies to back out of the agreements altogether. The Gephardt plan would cut the contract obligations by 50 percent.
* More than half of the nation's natural gas supplies are controlled by major oil and energy companies, limiting competition. Moreover, pipeline companies are sometimes natural gas producers, so they have little incentive to set low gas prices.
''Consumer protection'' provisions of the Reagan plan would require pipelines to win approval from the Federal Energy Regulatory Commission (FERC) for increases above inflation for three years. In 1986 pipelines would have no controls.
The Gephardt plan, which has the support of consumer and labor groups, would require the FERC to ensure that all rate hikes are ''just and reasonable.''
* Current price controls include a complex formula of ''old gas'' (found in wells drilled before 1977), ''new gas'' (from newer wells), and hard-to-get gas. As an incentive to drillers to explore, Congress in 1977 allowed producers to charge more for new and hard-to-get gas.
The administration's plan would lift all price controls after 1986, while the Gephardt proposal would keep controls on old gas and extend controls on new gas.
* US pipeline companies have contracts for extremely high-priced natural gas from foreign countries. Expensive Algerian gas is cited as a main cause for high prices in the Northeast. The President's plan has no provision for dealing with these contracts, and the Gephardt plan would cap Algerian prices.
As the Reagan proposal goes to Senate hearings next week and House hearings soon after, the only agreement is that the natural gas market has a big problem.
As a result, it is possible that the House will pass a bill, similar to the Gephardt plan, to tighten controls, while the Senate votes a bill somewhat like the President's decontrol proposal. Then the two Houses could try to reach a compromise. A similar mismatch produced the last natural gas price law in 1977.