The Senate voted 50 to 46 yesterday to free new natural gas from federal price controls starting two years from now, a step which the administration says would cost consumers $10 billion extra a year.
The vote ended a 14-day debate and filibuster on this most explosive part of President Carter's energy plan. The President wants to continue controls but at a higher level than now, and the House approved his plan.
The issue will now go to a House-Senate conference committee which must try to find a compromise both houses will accept between the opposing positions. This is the third time in four years the Senate has voted for deregulation. The House has never approved it.
Carter issued a statement in New York denouncing the Senate-passed bill as "unacceptable" and "an injustice to the working people of this country," and renewed his threat of two weeks ago to veto a deregulation bill if one reaches his desk.
The deregulation plan sponsored by Sens. James R. Pearson (R-Kan.) and Lloyd M. Bentsen (D-Tex.) would continue a price ceiling on newly discovered onshore gas of about $2.48 per thousand cubic feet (MCF) for two years and then let the price seek its own level. Offshore gas would be deregulated in five years. Old gas now flowing under contract would remain under controls.
To pick up support, Pearson and Bentsen modified their plan along the way to make big industrial users bear the cost of any gas price increase up to a certain point and to deny the higher "new" gas price to producers who have been sitting on capped wells waiting for a price increase.
In final speeches before yesterday's vote, Sen. Donald W. Riegle (D-Mich.) said deregulation would be "one of the greatest unarmed robberies of all time." Sen. Dale Bumpers (D-Ark.), who helped lead the fight against deregulation, said a vote for deregulation would be an "outrage, a breach of faith with people trying to keep body and soul togethere."
But Bentsen warned that if deregulation fails "you'll get the price but you won't get the product." This is the gas industry's argument - that only deregulation can reverse the downward trend of gas production and provide sufficient incentive for the industry to explore for many gas.
Sen. Henry M. Jackson (D-Wash.), floor manager of the President's bill, said he wasn't suprised by the outcome. He had said all along that the decisive stage would not be the Senate vote but the House-Senate conference. For two weeks he tried to get anti-deregulation filibusterers to stop talking with this argument, but it took a series of rulings by Vice President Mondale on Monday to hobble the filibuster and bring it to a halt.
Jackson and others said the filibuster probably changed no votes, but did bring the issue to public attention in a way no brief debate would have done. It also brought to the attention of the Senate that its cloture rule limiting debate needs changing. The filibuster started after debate-limiting cloture was invoked, using amendments rather than endless speeches. And cloture procedure proved a clumsy way to legislate because no new amendments could be offered except by unanimous consent.
Bentsen started protesting, even before he had won, against what he fears will be appointment of Senate conferees that will give way to the House position. Jackson and Majority Leader Robert C. Byrd (D-W. Va.), who will play key roles in choosing the conferees, both oppose deregulation. Jackson gave Bentsen no reassurance when asked about this on the Senate floor. He said a conference must consist of persons willing to compromise.
Later Jackson told reporters that "we won't buy deregulation - the administration won't buy deregulation."
"I am willing to make price adjustments to get hold of [regulated] intrastate gas which is more than 40 per cent of consumption," said Jackson. One of the gas industry's fiercest points of opposition to the Carter plan is that it would extend regulation to intrastate gas, which is consumed within the state where produced.
The multibillion-dollar fight over natural gas price controls has gone on since 1954 when the Supreme Court ruled that the government had the power to control the price of gas piped across lines. This has produced a distorted dual market, with northern consuming states suffering shortages last winter while there was a glut of gas in producing states such as Texas, where it was burned for such low priority uses as boiler fuel.
Carter proposed raising the new gas price ceiling from $1.46 per mcf to $1.75 and regulating both interstate and intrastate gas at the same level.The average price of intrastate gas is now about $1.84. Under the administration plan, the ceiling for new gas would be tied to the price of oil and would rise to $3.36 per mfc by 1985.
Jackson tried to head off Pearson-Bentsen with a compromise that would have raised the ceiling for new gas now to $2.03 and allowed more gas to qualify as "new" for the higher price. The Senate never voted on Jackson's proposal because it adopted Pearson-Bentsen which was a substitute for it.