Natural Gas Fight

On a TV talk show at the end of October, Phil Donahue, the earnest host of the syndicated Daily Talkfest, asked former General Motors president Edward Cole whether he thought the oil companies were profiteering by charging too high prices.
Cole looked unconvincing when he delivered the customary auto industry line on its fraternal petroleum counterparts.

No, he said, the oil industry needed the money for exploration. During the advertising break, he turned to me off camera and said, “The oil industry is getting a little greedy.”

Cole’s private candor is one of the year’s understatements, and the year is not over yet.

In the next six weeks, the oil industry’s most indentured public servants in the Congress and the White House will move to deregulate “new” interstate natural gas prices and stagger consumers with a whopping $10-billion-a-year increase. It is the next step in the oil industry’s own WIN program to fuel inflation now.

The first move in this multi-billion dollar energy chess game will come before the Senate in a few days, with an amendment by Sen. James Buckley (Rep.-N.Y.) to a trade bill. Sen. Buckley is part of the oil- and gas-rich Buckley family enterprises, and he wants to apply his expertise, as he puts it, to congressional natural gas policy.

For 20 years, interstate natural gas has been regulated by the Federal Power Commission. Under such “regulation” the industry has grown mightily to account for about one-third of total U.S. energy consumption.

It has also profited handsomely under the permissive price formulas of the FPC, which have allowed the companies a 200 percent increase for new gas prices since 1971.

This spiral has only whetted the oil industry’s appetite for ramming through Congress an end to “new” gas price controls, so that the giant oil corporations who control natural gas production in the U.S. can jack their prices up to the highest comparable price of foreign oil.

One quarter of the natural gas consumed in the country goes for residential gas users. These family residences will start paying an average of $64 a year. extra should the Buckley amendment pass the Senate and be accepted by Rep. Wilbur Mills (D-Ark.) in the House-Senate conference on the foreign trade bill.

The White House and oil industry arguments for the amendment are variously deceptive and phony.

First, although the lifting of price regulations ostensibly only applies to “new” gas delivered into interstate commerce after enactment, in reality the Buckley amendment amounts to a fountain of youth for “old” gas. As “old” gas contracts expire to be negotiated anew, “old” gas suddenly becomes “new” gas.

Many of the existing contracts are of the duration of a year or less. Such sleight of legislative hands will contribute to a tripling of natural gas prices within a year, according to David Schwartz, assistant chief of the economics division of the Federal Power Commission.

The oil industry, through the American Petroleum Institute, the American Gas Association and individual contacts by top oil company executives, are working intensively to line up a majority of the senators.

With liberal senators, the oil industry is talking about winter shortages and inadequate production incentives. Senators such as John Timmy and Alan Cranston, Democrats of California, and usually pro-consumer, are wavering under the beguiling briefings of slick lobbyists.

Having used the false shortage strategy to spectacular success last winter with gasoline and home fuel, the oil industry sees no reason wily it should not try again—this time with natural gas.

It refuses to allow full access to data and surveillance of large amounts of shut-in gas reserves.

Although in 1970 the industry was assuring the public that the nation had 70 times the annual consumption rate of natural gas in reserves, federal trade officials and some FTC economists recently have charged massive underreporting by gas producers of their reserves in order to set the stage of scarcity and stampede Congress.

As long as the oil industry thinks Congress will take the lid off natural gas prices, natural gas wells that could he producing will he held back from the market.

“Better wait and get triple the present price next year than sell it now” is the industry attitude.

As a Library of Congress study for Rep. John Moss (D-Cal.) recently concluded, sharply higher oil prices sufficient to “foster oil production from beneath the lunar surface” have not led to more domestic oil output.

The same shared monopolists that tried to hoodwink the public last year will do the same for the natural gas wing of their’ energy empire. Only a vigorous restructuring and breakup of these energy giants, under the old-fashioned federal antitrust laws, will permit the emergence of effective market and consumer control of price levels.

The coming Senate showdown over the Buckley amendment calls for the kind of courage and resistance that made Senators George Norris and Wayne Morse legends.

Who will take the lead? Preliminary soundings indicate that the consumer champions on this natural gas fight will be Senators Proxmire, Magnuson, Stevenson, Metzenbaum, Abourezk, Moss, McGovern, Nelson, Mondale, Eagleton, Church, Ribicoff and Hart.

But without an outpouring of consumer, farmer and labor support, from those very families who will be paying $64 more next year just for residential natural gas, these senators may not muster the stamina to go all out in this $10-billion-a-year fight against inflation.

Interested readers who want more information on natural gas prices and federal leasing and tax policies should send a self-addressed, stamped envelope to Public Citizen. P.O. Box 1538, Washington, D.C.