Row Over Scarce Gas

Shortages of natural gas, each more serious than the last, each just barely coped with and then forgotten, have plagued the U.S. every winter since 1969. The scarcity threatened for the winter of 1975-76 could be the real thing. Estimates vary, but one made last week by Democratic Senator Ernest Rollings of South Carolina is as good as any. He predicts that supplies will fall 1.3 trillion cu. ft., or about 19%, below potential demand, producing a shortage 30% worse than the one last winter.

Since natural gas accounts for about a third of all the energy consumed in the U.S., the results would be severe. Hundreds of thousands of workers could be thrown out of their jobs as factories close for want of fuel, mainly in the Northeastern, Midwestern and Southern states (see box). Generally, gas companies unable to meet demand cut off service first to industry; this winter there is a slim possibility that some of the 55% of American homes heated by natural gas will go cold too. Some new homes may not even be able to hook up--a fact that poses another threat to the housing industry's fitful attempt to climb out of recession.

Rape or Redress? Against this chilling backdrop the Senate, after months of delay, last week took up the emotional subject of how much gas prices should be allowed to rise in order to coax more gas out of the ground and into pipelines to consuming states. At stake were billions of dollars that gas producers and pipeline operators might reap in higher prices, the jobs of workers in industries dependent upon gas, and the comfort of millions of home dwellers. Oklahoma Republican Dewey F. Bartlett warned that if the Democrats succeeded in keeping prices under tight control, gas producers would sue "to seek redress of grievances for confiscation of private property." Ohio Democrat John Glenn retorted for the pro-control side:

"Our objective is to prevent the people of this country from getting economically raped."

At present, the price of gas sold in the states in which it is produced--the most important are Texas, Louisiana, Kansas, Oklahoma and New Mexico --is unregulated and generally is $1.25 per 1,000 cu. ft. Gas piped across state lines is price-controlled by the Federal Power Commission at 520 per 1,000 cu. ft. That unrealistically low price, though it allows for a bare profit, has not only discouraged drilling but has prompted companies to sell a disproportionate share of what gas is produced close to the wells rather than piping it into states that have no gas. Everyone agrees that the price must be permitted to rise--but how much?

The Ford Administration, most Republicans, and politicians from producing states favor scrapping the controls and letting a free market set the price. Arizona Republican Paul Fannin last week offered an Administration-backed proposal for immediate decontrol; it lost, 57 to 31. Most Democrats, and politicians from consuming states, insist on maintaining some controls to protect gas users against too-abrupt price boosts.

To meet the immediate crisis, Senator Rollings has introduced a bill that would allow interstate pipeline operators to buy needed extra supplies of gas this winter at the intrastate price of $1.25 per 1,000 cu. ft. The authority would expire July 1. Administration supporters contend that there should be no ceiling. Liberals absolutely reject that idea, but one of the avenues they are exploring to cope with the coming winter crunch is trading their agreement on much higher gas prices in exchange for a rollback of oil prices.

Bitter Suspicions. Longer range, the Senate Interior Committee has reported a bill that would let the price of interstate gas rise over the next four years to around the $1.25 now charged for intrastate gas. The Administration favors lifting the controls entirely over that period. The committee estimates that its bill would cost consumers $1.8 billion in higher prices by 1980, while the Administration approach would raise prices $2.9 billion.

The debate is envenomed by bitter suspicions on both sides. Consumer advocates fear that the producers are callously prepared to cut off the consuming states if they cannot charge what the market will bear. Producer champions think that the Democrats, if they can pass the Rollings bill to meet the winter crisis, will forget about long-range legislation and plunge the producers back next June 30 into the situation they have been in for the past 20 years: selling gas interstate at an artificially low price, with the result that only a trickle of the nation's 234 trillion cu. ft. of gas reserves are being tapped. Says Louisiana's Russell Long: "Until that gas sells for what it is worth, it is going to stay in the ground, where it has been for the last 50 million years." The outlook is for a prolonged, angry battle while the chilling crisis draws ever closer.

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