The drive to decontrol the price of natural gas appears to be running out of steam, despite the Reagan administration's support of it.
Consumer-oriented groups have been resisting the drive, contending uncontrolled prices already permitted on certain supplies have been largely responsible for the sharp run-up in natural gas prices in recent years.
But now a major threat to decontrol is infighting among the producers, pipeline companies and distributors that make up the natural gas industry.
So far, the White House has remained on the sidelines of the push for decontrol, even though Reagan has listed decontrol as one of his goals since his election campaign.
Under the Natural Gas Policy Act, price controls on "new gas"--supplies from wells drilled after 1977--are scheduled to expire at the end of 1984, while restraints on "old gas"--drilled before 1977--are to remain.
Recently administration officials have suggested two preconditions for a White House push to speed up decontrol of new gas and to eliminate controls on old gas: an industry consensus on the issue, and an early start this year on legislation to remove controls.
But industry ranks are becoming increasingly fractured, making both conditions difficult to meet. At the same time, divisions in Congress also are sharp.
"If there were some reasonable prospect of success, the president should present a decontrol initiative to Congress," White House aides agreed, according to a working paper presented earlier this month to the Cabinet Council on Natural Resources and Environment.
The preferred option spelled out in the paper was "phased decontrol," which would end all controls by 1985 and modify some of the contracting practices that have been blamed for helping to boost prices. The administration "basically seeks to assemble a consensus for a gas decontrol bill by a package of specific changes to the current structure," the paper noted.
Falling short of consensus, the White House may limit its liability in the natural gas fight by presenting Congress with a laundry list of objectives to be met in a natural gas bill rather than a clear administration initiative, many Capitol Hill and industry observers believe.
"I think there's a 50-50 chance" of a bill from the White House, said Rep. Phil Sharp (D-Ind.), chairman of the House subcommittee that would handle such legislation. "Their seriousness will depend on whether they produce a bill, not just a set of principles."
Without a strong administration proposal, prompt congressional action on decontrol is doubtful.
"I don't see it being initiated here on Capitol Hill," said Rep. Tom Corcoran (R-Ill.), who likely will become the ranking Republican on the House fossil fuel subcommittee. "There isn't the leadership; there isn't the ability to mold a consensus in the Congress. The ball really is in the court of the White House," he said.
To get a decontrol bill enacted requires that it be close to mark-up by the end of February or early in March, according to Corcoran. "I predict that if we don't have a natural gas bill enacted into law in 1983, Ronald Reagan, one of the most conservative presidents we have ever had, will announce before the 1984 election that he will slap [all] controls back on, that he will make that a campaign pledge at some point," said Corcoran.
Energy Secretary Donald Paul Hodel and others have said they are counting on pressure for increased or extended controls to produce the needed industry consensus for a deregulation measure. But with time running out for a bill, contention seems more characteristic of the industry than consensus.
"It's not coming together--it's coming apart," noted a congressional committee staffer who backs decontrol.
"These are sort of testy times," said George Lawrence, president of the American Gas Association. The AGA represents a variety of natural gas industry interests but most of its members are distributors--the gas companies that send customers the bills and that are on the front lines facing irate consumers.
"I think there is not that consensus within all three segments of the industry, or among consumer groups," said Lawrence. "There is not that consensus on either side of the aisle on Capitol Hill, and I doubt there is consensus among advisers in the White House."
Last week at its board meeting, the AGA reversed its long-standing position that called for accelerating deregulation of new gas while leaving old gas under controls. Now the AGA prefers to let the Natural Gas Policy Act continue on course.
Meanwhile, one producer group recently blamed the high cost of natural gas on pipeline companies.
The Texas Independent Producers & Royalty Owners Association said a poll showed its 5,400 members overwhelmingly in favor of changes in the pipeline transportation system that would give consumers--industrial customers and distribution companies--and producers equal access to pipelines, essentially limiting the pipelines to serving as common carriers.
The Interstate Natural Gas Association of America, a pipeline group, was quick to respond. "In what many observers consider a 'broken wing ruse' to draw menacing public and political scrutiny away from its own offspring, the leadership of TIPRO has thrown the gauntlet at the natural gas pipelines," according to INGAA's Washington report.
At the same time supporters of decontrol are seeking consensus for more rapid movement, dramatic price increases for natural gas have resulted in calls for stricter and extended controls.
Prices are expected to increase this year by as much as 25 percent. "What distinguishes recent increases from those of past years is that they occurred in a period of surplus gas supplies," Federal Energy Regulatory Commission Chairman C. M. (Mike) Butler III noted recently.
As a result of the price rises, Congress is likely to take up the issue of natural gas in this session. But as some parts of the country are hit harder than others, its members are becoming increasingly divided along geographic rather than political lines. Furthermore, Congress is likely to deal with the problems of contracting practices that have grown up under the NGPA and that are viewed by many as exacerbating the price increases.
The most controversial contractual issues have been "take-or-pay" provisions and escalator clauses. "Take-or-pay" provisions, accepted by pipelines when gas supplies were tight in order to ensure deliveries from producers, require payment for a given amount of gas even if the pipeline doesn't need it. Escalator clauses build automatic price increases into contracts.
In Congress' lame duck session last year, numerous bills were introduced offering a multitude of solutions for pricing and contracting problems. This month the flurry began anew.
"I don't think there is any question; it's going to come up," said Ed Rothschild of the Citizen/Labor Energy Coalition, a group that has organized demonstrations and other actions to protest gas prices. "I think it's pretty clear that there won't be any decontrol legislation that can get through. It's also pretty clear that the House is more likely to pass pro-control legislation than the Senate. The Senate is where the decision is going to come down."
On the House side, Sharp said that among the questions to be resolved are: "What is the need to act? And will we end up with something better than the Natural Gas Policy Act ?" On the Senate side, Senate Energy and Natural Resources Committee Chairman Sen. James McClure (R-Idaho) is said to be interested--unless it appears a "kamikaze" mission--in playing a leadership role and seeking the elusive consensus for some change in gas price controls.
Meanwhile, the industry has not given up its effort to reach a consensus, and Hodel is actively trying to forge one.
"I do think there's a good chance of consensus emerging," said Bob Slaughter, director of congressional relations for the Natural Gas Supply Association, a producer group.
"There are and always have been a number of groups who support natural gas deregulation," he said. "We hope for a maximum amount of consensus, but I think we've got a pretty good base."