How Natural Gas Users Became Dues-paying Members of the Club

Have you heard about the Gas Research Institute? Few people have. But if you are a customer of natural gas in your home or business, you will be paying as a group almost $10 million this year and over $90 million a year by the early 80s to this institute. Your payment will be added on invisibly to your monthly gas bill–a private tax requested by the natural gas industry and recently approved by the Department of Energy’s Federal Energy Regulatory Commission in Washington.

The story of how the Gas Research Institute (GRI) was formed and funded illustrates how easily industries can use Washington to gouge consumers when there is no consumer protection agency in the federal government to watch out for consumers.

The American Gas Association (AGA) created the GRI in 1976 to be the natural gas industry’s research and development arm. Funds would come from the federal taxpayer (government grants and contracts) and from higher bills paid by natural gas consumers. The GRI would then contract with laboratories, companies and universities to conduct the research and demonstration projects relating to ways of producing, distributing, storing and using natural gas.

On March 22, 1978, the Federal Energy Regulatory Commission (FERC), led by Chairman Charles B. Curtis, approved GRI’s five-year research plan and first-year funding collected in advance from “consumers of natural gas.” FERC officials believe that it would be more administratively convenient to centralize such research in an industry-dominated appendage called GRI.

Of course FERC expressed all the proper intentions about the need for GRI to find ways to utilize natural gas more efficiently. And in one of its more naive assertions, FERC declared that the gas pipeline industry’s “interest in augmenting supplies at the lowest practicable cost would appear to coincide with the interests of consumers.”

What FERC did not explain was more interesting. What chance will individuals and small business have in acquiring government support for their technical ideas when they have to confront a mutually enveloped Department of Energy and GRI-AGA complex? Suppose one or more creative upstarts finds a way to reduce natural gas sales to benefit consumers–what is this complex likely to do? Already the DOE and the electric industry have formed a collusive front involving research contracts in that area. The contracting process there is highly centralized around a government industry buddy system that is quite formalized.

Wholesale delegation of government responsibilities to a group like GRI-AGA is detrimental to diverse and independent innovators whose proposals should be separately evaluated by an accountable government. GRI is little more than a gas industry research cartel animated by the same AGA narrowness that has kept conservation technology for natural gas off the market for years. Control of research, means control of what little competition remains in this industry.

Some cogent arguments were made to FERC by the municipally owned gas distributing companies about the anti-competitive thrust of the GRI concept. The commission dismissed such concern by assuring the municipals that the oversight duties of the Energy Department would handle such problems as may arise. This assurance would be merely trivial were it not so tragic. For the oil and gas barons’ grip on the DOE and the ex-industry officials running much of its daily operations is so firm as to make the rule of law a mockery.

Chairman Curtis needs to rethink his decision. If consumers are being forced to pay for this research cartel, why are they not given a larger role in participating in its determinations than a spot or two on a large advisory panel?

Even more challenging to Mr. Curtis’ former reputation as a consumer advocate would be to require the gas companies to carry a notice in their monthly billings inviting consumers to join their own consumer action groups that represent their interests directly.

Such proposals have been pending in several state legislatures with heavy utility industry opposition. If Mr. Curtis feels helpless to curb the gas industry’s power, let him give consumers a chance to form their own groups facilitated by a piggyback monthly notice in their gas bills.

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