The Carter administration is leaning toward an energy pricing policy that would make newly discovered natural gas the highest-priced fuel in the United States.
The aim of the Carter administration is to get large industrial users of natural gas to switch to cheaper fuels like oil and coal, not to price gas beyond the reach of residential users. The impact of such a policy would not be felt for at least five or six years, since it would take that long for large enough quanitties of new gas to move into the market-place.
The new policy would allow new gas to be sold at the heat equivalent of the estimated $13 a barrel charged for imported heating oil, which works out to about $2.25 a thousand cubic feet for gas. A premium of about 15 cents would also be allowed for the gas, meaning it would sell for about $2.40 a thousand cubic feet.
"This means we are not proposing deregulation," one highly placed source said yesterday. "What we're suggesting here is a policy that would always keep a lid on gas prices, though admittedly it would be a sliding lid pegged to import prices."
Placing an additional premium on the ceiling price, sources said, is a recognition that natural gas is the cleanest and easiest burning fuel available. What Carter energy aides hope the premium will do is to funnel natural gas away from the industrial boiler market and into the residential market where they feel it belongs.
A price of $2.40 for a thousand feet of natural gas would be 70 per cent higher than the $1.44 charged today for regulated gas piped into the interstate market. It would be 20 per cent above the $2 that gas producers are getting for unregulated gas being piped to the intrastate market.
Intrastate gas is produced and sold in the same state. Most intrastate gas is sold in Texas, Louisiana, California, Oklahoma, Kansas and New Mexico. Almost 70 per cent of the new gas discovered and produced in the United States last year was piped to the intrastate market, one reason why there was such a shortage of interstate gas this past winter.
Carter energy aides said they have not ruled out a windfall profits tax to go with the new gas pricing policy but conceded that such a tax was not likely. What they believe they will propose instead is an excise tax on the gas at the wellhead based on how the gas will be burned.
If the gas is sold to homes or schools, sources said, there would be no tax put on it. But if it is sold to factories to make heat or electric companies to generate power the excise tax would be imposed on the wellhead price.
Energy aides said it is impossible to tell what the impact of such a price change would be on the economy except that it would not be felt at once. New gas would be mixed in the interstate pipeline network with flowing gas, whose regulated price would tend to lower consumer prices.