Should Uncle Sam get out of the natural-gas pricing business?
Controlling prices of natural gas amounts to ''price supports'' that are pushing up consumers' bills, says C.M. (Mike) Butler III, chairman of the Federal Energy Regulatory Commission (FERC).
As chief enforcer of natural-gas regulation, he has called repeatedly on Congress to drop controls of wellhead prices. Appointed to the FERC in 1981, the Texas-born attorney is among the Reagan anti-regulators assigned to oversee regulation and has gained a reputation among critics for being industry's friend.
But the FERC chairman, who is stepping down from his post next month, has few flattering words for the industry's performance in the current gas market.
The record of the major oil companies, the independent producers, the pipeline companies, and the distribution companies in working for the public interest is ''just abysmally poor,'' charges Mr. Butler. ''You've got a bunch of people up there running around beating their drums for their own narrow little personal point of view.''
Nonetheless, he maintains that the public would be best served if Congress passes a Reagan administration plan to drop natural-gas controls. The following are exerpts from an interview.
What would happen to natural-gas prices if the government does not control them?
I think that you would find on average that prices would decline. You'd find that prices would go up to some pipeline customers; you'd find that prices would go down to other customers. It just depends on what the particular attributes of a specific pipeline are.
Why are you so adamantly in favor of decontrol?
What we have right now is a policy in which the government attempts to make judgments about the price of a commodity, given the fact that our responses are relatively rigid and inflexible and can't follow occurrences in the market.
The result is you wind up with prices that are either too high or too low, for the most part. You virtually never wind up with a price that is at a market-clearing level. You wind up either with surpluses or with shortages.
It just doesn't work. If it's broken; it ought to be fixed.
Why are natural-gas prices so high now?
The most important thing about understanding why prices are high even though you have a surplus is understanding that there are a bunch of contracts (between gas suppliers and gas pipeline companies) out there that are geared to a bill (the Natural Gas Policy Act of 1978) that keeps prices too high.
And the people who have opposed the administration's response to the problem, I think, . . . they want to blame it on the oil companies or somebody like that, basically because it just fits their political pistol.
Big oil companies are easy to beat on.
But it is true that big oil companies own most of the ''old gas'' (now the most stringently controlled) and would benefit from decontrol.
Personally, I think it's irrelevant. The thing is that I'm not really interested in who the winners and losers are. What I'm interested in seeing is a system that wins. When you get right down to it, that means the consumer wins. A rational pricing and supply system means the consumer wins.
Now, if the fat get fatter in the process, as long as it's not at the inordinate expense of the consumers or competitors in the marketplace, I don't care.
What do you think of a bill proposed by some members of Congress to extend controls on natural gas?
It's a prescription for disaster in natural gas. You'd wind up with supply shortages, which we're probably going to have anyway.
What happens to supplies if the Reagan deregulation plan passes?
They (supplies) have a better chance.
That bill comes closer than anything else to matching a real market system. And the odds in favor of more realistic supply response.