Our Man in Washington: Natural Gas Shortage and Elections

A contributor examines the claims and assumptions surrounding a purported natural gas shortage in 1973, and also the prospects of environmental causes in Congress following the 1972 elections.
By Mike Kiernan
January/February 1973
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The existence of a natural gas shortage was a topic of debate in the early 1970s.
ILLUSTRATION: FOTOLIA/AUREMAR


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The Energy Crisis

Tired of hearing about the "energy crisis"? Confused by corporate graphs which show consumption skyrocketing and resources plummeting? Well, so are we. But the warnings seem to be based on irrefutable eco-logic: you can't keep taking things out of the ground without using them up eventually.

True enough, as far as it goes, but apparently too many Americans even sophisticated editorial writers are buying this line, advanced by the big industries, lock, stock and (excuse the pun) barrel . . . no questions asked.

Well, we have a few questions.

For starters, let's consider natural gas. The chief spokesman for the industry is the American Gas Association. This group is spending millions propagating the belief that there isn't enough incentive for companies to explore for more gas and that as a result we may soon be faced with a drastic shortage. The AGA is so convincing it has even converted its most skeptical critics.

No less a watchdog of the public trust than the Washington Post, for example, wrote in a recent editorial: "The present shortage of gas to residential customers has arisen largely because of obsolete and harmful price regulations imposed by the Federal government. Despite soaring demand, the price has been held far below the cost of competing fuels."

MOTHER'S Man in Washington begs to differ with the Washington Post. We've been doing some investigating of our own and have discovered a lot more questions than pat answers.

First some background: Unlike all other fuels, the price of gas at the source, or wellhead, is regulated by the Federal Power Commission. Gas is a premium fuel, relatively clean, and kept at a low cost to the consumer. Gas accounts for about a third of all the energy used in the country today. In the last ten years, consumption of gas has just about doubled.

Those are the facts. Now here are AGA's basic claims that we want to question.

CLAIM NO. 1: THERE IS A SHORTAGE OF GAS. This certainly seems to be the case. Right now at the FPC there are applications by companies to cut back on already promised gas. But, surprisingly enough, the shortage does not seem to be in the ground. The U.S. Geological Survey estimates that there is enough undiscovered but recoverable gas "under current technological conditions" for a hundred years . . . and three times that amount in total undiscovered gas. The AGA figures are much lower. But built into them is what they call "an economic factor" that the AGA has never publicly defined. This is the cost factor to the producer by which he determines if it is profitable to extract gas. If the AGA were using an unreasonably high figure, it would cause them to underestimate the amount of recoverable gas and make the shortage appear worse than it is.

CLAIM NO. 2: IF THE U.S. DEREGULATED THE PRICE OF GAS, PRODUCERS WOULD EXPLORE FOR MORE OF THE FUEL. This widely accepted argument overlooks a few points. First, the gas companies already receive a 15 percent rate of return, even at the current low wellhead price. And with a continually expanding market, their profits could skyrocket with deregulation.

Second, deregulation doesn't guarantee an increase in exploration. A couple of years ago, in what was known as the Southern Louisiana Case, the gas companies used this incentive argument to obtain a staggering $4.5 billion rate increase. The result: they received a lot of money which they invested in banks and insurance companies . . . and not much in the way of new gas.

CLAIM NO. 3: AGA FIGURES ARE ACCURATE. There's no way of telling. It so happens that AGA has just about the only data available on gas. The Federal Power Commission re lies almost entirely on AGA's figures and has been criticized by Congress for its blind faith in AGA statistics. In 1971, FPC staff studies uncovered by columnist Jack Anderson revealed that AGA percentage figures often were off by as much as 40 percent. Right now, the Federal Trade Commission is battling in court with AGA in an attempt to study AGA's basic data. This is something the FPC, which is supposed to regulate the industry, has never done.

CLAIM NO.4: ONLY AGA AND THE HUGE CONGLOMERATES BEHIND IT CAN RAISE THE VAST SUMS NECESSARY TO EXPLORE FOR GAS AND SOLVE THE ENERGY CRISIS. This is apparently true, but unfortunately it means new justifications for monopolistic practices. Already a handful of big companies own: 84 percent of the country's oil and refining capacity; 72 percent of the natural gas reserves and production; 30 percent of the coal reserves and 20 percent of production; 50 percent of the uranium reserves and 25 percent of the milling capacity. Eight companies alone control almost 40 percent of the coal market.

CLAIM NO. 5: WHAT'S GOOD FOR AGA IS GOOD FOR THE AVERAGE AMERICAN. Not necessarily so. The AGA, in fact, is noted for not responding to consumer needs. Here are two examples:

The National Commission on Product Safety discovered in 1969 that as many as 60,000 children per year were being seriously burned by walking or crawling into the hot grills of gas floor furnaces. The AGA aware of the problem for more than a decade said it could find no solution. But the Commission paid a consulting firm $800 on a non-profit contract and the company came up with several simple ways to eliminate the problem. The best method devised was to attach a fiberglass mat over the grill.

More recently, Ken Fisher a young reporter on Jack Anderson's staff discovered that the AGA was keeping off the market a piece of equipment which could cut homeowners' fuel bills as much as 30 percent. The device still unavailable to consumers is an automatic damper which fits on the flue of a gas furnace. The invention was submitted in 1968 to the AGA which tested it and gave it partial approval. But the AGA claimed new general standards needed to be set, before giving the device full approval. Three years later the AGA finally authorized a committee to draw up the new standards.

Another year slipped by, and the committee was reauthorized, but no meetings had been held. Not until after the Anderson column appeared did the AGA committee finally begin considering new standards appropriate for the damper. AGA estimates the job will take at least another two years. Asked about the delays, an AGA spokesman explained: "You can't have everything on the front burner at the same time."

Will Congress explore AGA's claims in detail during the next session of Congress? Probably not. AGA is currently lobbying hard to deregulate the price of gas and break the back of the Federal Power Commission's already weak controls. And all indications now are that AGA will succeed.

Election Obit

Environmental activists, lean and hungry after a year of poor fund raising, face the 93rd Congress with mixed feelings. Despite the Nixon landslide, several powerful friends to the eco cause will return to Congress this month, most notably Senator Lee Metcalf (D-Mont.) and Rep. Pet McCloskey (R-Calif.) . . . And several powerful foes won't be back.

Environmental folks are still dancing on the political grave of Rep. Wayne Aspinall who lost in a Colorado primary last September. Aspinall, chairman of the House Interior Committee, was considered the Dirtiest of the Dirty Dozen, the target list of 12 Congressmen with allegedly the filthiest records in the House on environmental matters . . . but in all, eight of the Dirty Dozen will return this year as opposed to 1970 when only four were reelected.

In gubernatorial races environmentalists suffered two serious setbacks. Governor Russell Peterson lost in Delaware and Jay Rockefeller was defeated in West Virginia. Peterson the first governor in the country to ban heavy industry from his state's coastline fell prey to state tax entanglements, and lost in a close race. Rockefeller promised to ban strip mining in West Virginia, but the dapper multimillionaire never managed to overcome his carpetbagger image.

Meanwhile, environmentalists expect shake-ups in two key House committees Interior and Public Works to lead to more productive hearings and legislation. There are 12 newly assigned Congressmen in the House Interior Committee and seven in the House Public Works Committee.


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