President Carter won an important though inconclusive victory yesterday as the House Commerce Committee cast a 22-to-21 test vote for this proposal to continue price controls on natural gas.
The effect of the vote was to place three alternatives before the committee for action today or after the 10-day Fourth of July recess that begins tonight. There is Carter's plan to continue controls but at a higher price, offered yesterday by energy subcommittee Chairman John D. Dingell (D-Mich.) There is the proposal approved 12 to 10 by Dingell's subcommittee to deregulate all new onshore natural gas. And there is a new proposal offered by Rep. Clarence J. Brown Jr. (R-Ohio) to deregulate new gas but with a couple of sweeteners that he hopes will pull a vote or two away from Dingell.
Billions of dollars are riding on Congress' decision on deregulation, which the gas industry has been trying to win for 23 years. The Carter administration says deregulation would cost consumers up to $86 billion in extra gas bills by 1985. Supporters say it would save consumers money because they would otherwise ultimately have to pay for more expensive imported fuels.
On another part of the energy bill before it; the committee also voted 18 to 5 yesterday to reject the mandatory home insulation program voted by Dingell's subcommittee. The idea of forcing a homeower to insulate his home before he could sell it had raised great controversy in the housing [LINE ILLEGIBLE] back off in favor of a program of [PARAGRAPH ILLEGIBLE]
The price of natural gas piped across state lines is now regulated by the Federal Power Commission with a present ceiling of $1.45 per thousand cubic feet (MCF), while gas consumed in the state where produced is unregulated. The result has been that producing states like Texas use great amounts of gas for low priority purposes such as industrial boiler fuel, while there was a shortage in consuming Northern states last winter.
Carter would elimate the distorted dual market by extending controls to cover intrastate gas but raise the ceiling for all new gas to $1.75. The administration contends this is enough to give producers an adequate profit. The other side says only deregulation will produce more gas.
Brown's proposal would deregulate new onshore gas now, but with two changes from the subcommittee bill. Brown would delete the protective wall erected around producing states by the subcommittee which would have prohibited interstate pipelines from bidding more than $1.45 per MCF for intrastate gas. With the market price for gas rising to $2 or more, this wouldn't have been an attractive price. Removal of the restriction presumably would send more gas north. Brown also added a provision intended to make industrial boiler users absorb price increases from deregulation and continue present prices to residential consumers.
But Dingell said this wouldn't work. Once the price to industry reaches a certain level, the higher prices would spill over onto home users. Dingell predicted that would come quickly because boilers consumed only 13 per cent of the gas used in 1975.
Dingell said that if the price of natural gas rose from the present $1.45 to $2.45 per mcf the average family's gas bill would increase by $116 a year.
The administration says its plan to keep controls but at a higher price would cost consumers an extra $15 billion by 1985 while deregulation would cost $86 billion. Rep. Robert Krueger (D-Tex.), leader of the deregulation forces, called administration claims of high cost of deregulation "unutterably false." He said the administration assumed his bill, which the subcommittee approved, would deregulate old gas now flowing under contract. Old gas would never be deregulated, said Krueger.
Brown borrowed his two amendments from Rep. Tomothy E. Wirth (D-Colo.), who said his purpose was to end the dual market, get more gas production, protect the residential consumer and encourage industrial conversion to coal.
Rep. John E. Moss (D-Calif.) said deregulation should be rejected to protect the consumer "who is tied to a single supplier" of gas.
On this first test vote on natural gas pricing, the President won with the support of 20 Democrats and two Republicans, Mathew J. Rinaldo (R-N.J.) and Marc L. Marks (R-Pa.). Twelve Republicans and nine Democrats voted against the President.
James Flug, director of Energy Action, called the vote "just the first step on a long treacherous road." Its closeness shows the "power and greed" of the gas industry, he said.
Carter, for his part, told reporters he was pleased, and hailed the vote as a victory for consumers. "This fight is not over, but I commend the members of the committee for their courage in the face of the strong lobbying pressure," he said.