Off Peak

July 15, 2000

Gas Price Pains

By Regina R. Johnson

Didn't Congress fix this problem a decade ago?

Then:

"There are those who say this legislation will result in higher prices to consumers. These are the same people who said there would be a fly-up in gas prices on Jan. 1, 1985, when natural gas was partially decontrolled. In fact, since that time gas prices have actually declined as market forces have begun to play an increasingly important role. If anyone has any concerns about whether or not this legislation will increase our domestic energy supplies, they need only look at what happened when Congress decontrolled deep gas in the late '70s and early '80s....

"The future of natural gas as a major energy source is bright indeed. It is a clean fuel found in abundance in the United States. By removing the last remaining price controls on natural gas we will be giving our domestic independent energy producers the opportunity to do what they do best—find new sources of natural gas at the lowest possible cost....

"The American natural gas industry needs this bill. Natural gas decontrol will move the industry ever closer to true marketplace competition. And it is from competition that the consumer stands to benefit the most. "

—Congress, on passage of the Natural Gas Wellhead Decontrol Act,
June 14, 1989

Now:

June 7, 2000

Dear Secretary Richardson and Chairman Hoecker:

As president of the American Public Gas Association (APGA), I am compelled to write this letter to voice our alarm about the recent and dramatic price increases for natural gas. APGA requests that the Department of Energy and the Federal Energy Regulatory Commission undertake to determine why natural gas prices are at all-time highs.

For the first time in its history, a NYMEX contract recently closed above the $4.40 per MMBtu level. This is noteworthy not only because the price for natural gas is at the highest level ever for this time of year, but also because these are the highest monthly prices for natural gas experienced since deregulation in the late 1980s. We realize that many factors impact natural gas prices, and that absent market distortions, the marketplace will usually determine the proper price. However, the cause for the extreme 100 percent increase in just five months should raise concerns with regulators and policymakers in Washington.

Wholesale natural gas prices above the $4.00 level will cause significant economic harm to the American consumer and to our nation generally. With the increases and fluctuations we have experienced in the wholesale price for natural gas, APGA is very concerned for the citizens and the communities we serve. When the bills reflecting current gas prices are received by our customers (especially if such prices do not abate by winter), I expect the fallout will extend far beyond the local communities we serve.

The current issue of high oil and gasoline prices emanates from events that occurred over the past year. Whether or not the administration took the necessary and appropriate actions to alleviate the impact on American