are Strategy 774 facturers and the nation's leading grated monopoly," Sauder said. 9/25/774 petrochemical companies, who NATIONAL short of natural gas for feedstocks and JOURNAL support the Administration's deregulation bill as a way to encourage more supplies. REPORTS 1974 Nineteen petrochemical companies are supporting deregulation under the aegis of a "Petrochemical Energy Group" which is lobbying for the Administration bill. Participants include such companies as E. 1. du Pont de Nemours and Co., Monsanto Co. and the Goodyear Tire and Rubber Co. Support: A coalition of consumer groups, organized by the Consumer Federation of America, forms the core of outside support for the Stevenson bill. Leading members of the coalition include the Consumers Union of the U.S. Inc., Industrial Union Department of the AFL-CIO, United Auto Workers, National Farmers Union and the National League of CitiesU.S. Conference of Mayors. Common Cause, the citizens' lobby group, is supporting the bill but it has not joined the coalition. In addition, Stevenson has received support from some independent distributors who disagree with IPAA's position. For instance, the president of Spartan Oil Corp. of Lansing, Mich., distributors of gasoline for Bay Refining Division of Dow Chemical Co., wrote Committee Chairman Magnuson, who supports the bill but has permitted Stevenson, the original sponsor, to carry the ball for it: "The time has come to restore some measure of competition to this industry. This can most easily be done by divesting the majors of their marketing operations. This function can be restored to the small businessmen and individuals at the local level who have time and again demonstrated their superior efficiency in this area." "The majors have sold us out through their strong supporters in Washington," wrote E. W. Sauder, an independent oil producer in Emporia, Kan. Sauder said the majors had hurt independents by securing government approval to bend the foreign oil import quota system throughout the 1960s and early 1970s and bring in more foreign oil instead of letting domestic prices rise. "The major companies, such as Exxon, Continental, Marathon, Mobil and Phillips all show big profits because of their foreign operations and inte Deregulation advocates admit that they have only one hope in the Senate this year: to head off the Consumer Energy Act by beating it to the floor with some minor bill to which they can attach a deregulation amendment. In recent weeks, representatives of the Nixon Administration and the oil and gas industry have been meeting regularly with Sen. Buckley and other pro-deregulation Senators to map out strategy. Nose counts have not yet been taken, but one participant in the sessions. Sen. Dewey Bartlett, R-Okla., told NJR that the effort would not be made "unless we're sure we have the votes." Meantime, Bartlett and other gasand oil-state Senators have compiled figures to show Senators from the major consuming states how gas supplies might be jeopardized by passage of the Consumer Energy Act. But their effort has been slowed down in recent days because Bartlett and the others are unsure what sort of bill will emerge from the Commerce Committee, of which Bartlett is not a member. An aide to Buckley said that his Senator would again offer the deregulation amendment, as he did in December, provided the nose count was favorable. The aide said proponents of deregulation on several different Senate committees are scanning their panels agendas to determine whether any minor bills to which a deregulation amendment would be appropriate would be coming to the floor during the next several weeks. "If not, we'll have to wait for the Consumer Energy Act, but we prefer to move sooner. "the aide said. Industry lobbying on the issue has been intensive. To run its lobbying campaign the industry has hired Kenneth E. BeLieu, President Nixon's former chief Senate lobbyist BeLieu will direct lobby strategy from the post of executive vice president of the Natural Gas Supply Committee, a group supported by major and independent oil companies. For consumer advocates the strategy is a simple one: get the Consumer Energy Act to the floor before deregulation advocates can find a vehicle for their deregulation amend ment. But their job will not be easy Saw hill and other FEA officials have been meeting with aides to Stevenson and Magnuson in an effort to convince them that the bill has little chance to clear the committee and the Senate in its present form and that, if it does clear, it would worsen the nation's gas shortage. Congressional aides participating in the discussions said in interviews that it is now almost certain that the bill's sponsors will defer action on the provision for crude oil price regulation, at least until after the Senate acts on the gas provisions, but that they are standing fast for two other contro.crsial provisions that FEA wants dropped: the extension of natural gas price regulation to the intrastate market and retention of cost-based regulation FEA role: FEA, for its part, has assumed a posture th it is close to asking something for nothing. One participant in the negotiations, Patricia E. Starratt, a former energy analyst for the Senate Interior and Insular Affairs Committee who wrote a 1973 committee report advocating deregulation, said in an interview that her agency is not willing to give up its push for deregulation as a quid pro quo for a softening of the Stevenson bill. But Ms. Starratt, who is now executive assistant to FEA Assistani Administrator Duke R. Ligon, said the agency might be willing to accept as a fallback position a bill by Sen. Buckley (S 3040) to continue regulation for a three-year period under FEA jurisdiction, after which new gas would be deregulated and old gas prices could be renegotiated after existing contracts expire. In addition to the talks with Stevenson and Magnuson, Sawhill has put strong lobbying pressure on Senators from the New England region, a nonproducing area that has been particularly hard hit by gas shortages. In an April 9 letter to 12 northeastern Senators, Sawhill said: "Your consumers require no less than selective and phased deregulation of field prices for natural gas sold interstate. Without such legislation, the goal of domestic energy self-sufficiency cannot be achieved." Sawhill, in a May 14 letter to members of the Commerce Committee, also suggested that a "windfall" tax on gas profits, similar to the one that Congress is considering for oil profas would be preferable to continuation of cost-based regulation. Stevenson-Pearson talks: Yet another negotiation is going on between Stevenson and Sen James B Pearson, R-Kan.. who wants to provide a modified exemption frem FPC regulation of new gas sales and old gas rededicated to interstate commerce after an existing contract expires. Pearson would shift regulation of these categories of sales from the FPC to FEA and direct FEA to base its price ceilings on several other factors in addition to cost of service. the price of alternative fuels, the environmental superiority of gas over other fuels, the prices of liqued natural gas and synthetic gas, incentives for exploration and production and the current prices being paid for gas in sales by producers to non-affiliated purchasers. The FEA regulation would last for a mardatory 10-year period, after which the agency would retain discretion indefinitely to remove, adjust or reim the ceilings The Stevens n-Pearson negotiations are in an embryonic stage and congressional aides would not speculate on their outcome These negotiations eld become complicated by FLV pressure on Pearson to support a complete shift away from cost-based pric3. FEA's Starratt confirmed that she was urgi Pearson's office to make such a shift Outlook The difference between the dereguIn bilis and the Consumer Energy Act is likely to produce a standoff in Congress, at least for this year. Because the mood toward the big oil companies is more hostile now in the Senate than it was last December when Buckley's amendment narrowly failed, a modified version of the ConSer Energy Act would have a slight edge over deregulation legislation in the Serate. But if the bili comes to the floor with the provision for intrastate regulain intact it could provoke a hilihuster from Se Russell B Long. D-La., according to aides on the Comr crce Committee. The aides say that states' rights advocate Long, a member of the Commerce panel, will night the provision in committee but probably will not ceed in knocking it Paul A. MacAvoy be re-referred to the Senate Interior In case of a prolonged Senate im- In the House, supporters of deregu- "Deregulation breaks contracts all "This screaming about deregula- Macdonald id he is unenthusi astic about the Consumer Energy A.t. both be ause of - deregulation of mdependent proc and what he fe Torbert H. Macdonald is the questionable constitutionality Macdonald said he has an "open But Macdonald said he would not begin action on any sort of gas bill until the Senate acts. If the Senate passes a re-regulation bill. it would have a good chance of House passage this year if Macdonald is satisfied with the price levels that producers tell him they will seek from the FPC under the "re-regulation" scenario. But because of Macdonald's opposition, a deregulation bill or the Consumer Energy Act would probably be shelved in the House until next session. particularly if the chamber becomes bogged down in an impeachment proceeding Any delay probably would help consumer advocates because of the likelthood at a more liberal Congress will he elected in November of this year "We could be in real trouble f we don't get deregulation this year," said IPAA's Unsell. "Next year we could be up again a veto-prool Con NATURAL GAS SUPPLIES MONDAY, JULY 14, 1975 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 2123, Rayburn House Office Building, Hon. John E. Moss, chairman, presiding. Mr. Moss. The subcommittee will be in order. Today's hearing is directly related to four earlier hearings of this subcommittee on natural gas supplies and the reliability of informa tion received from the petroleum industry about those problems. Last winter, natural gas curtailments threatened numerous factories with closures and thousands of workers with layoffs. This year, serious questions have been raised regarding the ability and willingness of the Federal Power Commission to insure adequate supplies of natural gas to the public. I am deeply disturbed to see the FPC become a public proponent of deregulation and by the FPC's record of reversals in the Federal courts. For example, in Public Service Commission of New York v. Federal Power Commission (1975), the courts said that as long as the legislature prescribes a system of regulation by an agency subject to court review, the courts may not abandon their responsibility by "acquiescing in a charade or rubber stamping of nonregulation in agency trappings." This court decision should have been sufficient warning to the FPC to exercise its responsibility to regulate the natural gas industry, to protect the consumer, and to stay out of the political debate over decontrol. Apparently, it was not. FPC price decisions are also open to question as a result of a Federal Trade Commission investigation into the current system of reserve reporting. On June 9, at a hearing of this subcommittee, evidence that the natural gas industry system of reserve reporting was "tantamount to collusive price-rigging" was introduced into the public record. For the first time, we learned of the existence of companyproved reserve ledgers and internal company memorandum which contained reserve estimates substantially greater than the AGA reserve estimates submitted to the FPC. These discrepancies put the integrity of FPC decisions into considerable doubt. Although accurate reserve estimates are crucial to evaluating curtailment decisions and despite the fact that reserve additions are the single most important factor in the FPC's determination of wellhead price, there never has been. any independent verification of AGA reserve estimates by the FPC. (1007) |