Texas has taken steps to limit natural gas production to prevent a temporary gas glut from forcing downward pressure on natural gas prices within the Framed as a conservation measure, the Texas Railroad Commission's decision goes into effect Feb. 1. The commission regulates natural gas and oil in the country's leading producing state.
The Railroad Commission's decision to fend off downward pressure on natural gas prices within "he state comes at a time while Senate and House conferees are trying to end a deadlock on the natural gas deregulation issue.
Oil and gas industry executives such as the Natural Gas Supply Committee's David Foster say they do not expect the Railroad Commission's decision to prorate production will have an impact on the conferees' effort to get a compromise on the deregulation.
"I don't think there is any connection between the two," said Foster, who heads the industry's Washington lobbying effort to press for deregulation.
Critics of deregulation who support the House-based bill proposed by President Carter, which would continue gas price controls and extend them to the unregulated intrastate market, however, have argued in private that the softening of intrastate prices in Texas indicate that gas prices there are already too high.
One oilman, however, who has expressed concern over the so-called gas glut in the intrastate market, is John Buckely, vice president of Northeast Petroleum.
Buckley, whose company sells residual oil and other oil products, says the oil industry and major natural gas users such as utilities have overcompensated in the face of shortages by spurring production efforts and taking conservation measures.
He says that while the United States will likely continue to have lingering spot shortages of natural gas. "If the conferees don't get a ceiling price on natural gas pretty soon - they could end up with a floor price, because the market is dropping off."
Currently 87 percent of the new gas supplies discovered in the United States never leaves the intrastate market because of the higher profits oilmen earn in the unregulated market. New gas in the intrstate market now sells for $1.47 per thousand cubic feet, compared with an average price of about $1.95 per thousand cubic feet in the intrastate market. Deregulation, oilmen say, would raise new gas prices to the intrastate level.
The commission's decision thus far has been well-received by oilmen in Texas, who recently have become concerned about gas prices in the intrastate market.
"It is an attempt to balance supply and demand, and it's working," said Don Newquist of Lo Vaca Gathering Corp., a Houston based gas wholesale sales company.
Yesterday Sen Henry M. Jackson (D-Wash.) met with Democratic Senate members of the conference committee, though no compromise position has been reached.
Rep. Harley O. Staggers (D-W. Va.), the conference chairman, said he would reconvene the conferees as soon as the Senate has a compromise offer in hand. Earlier, the conference was expected to reconvene today.
Meanwhile, Energy Secretary James R. Schlesinger Jr. said at a news conference that he was "cautiously optimistic" that a compromise on gas could be reached in the next 10 days. Without it, he said, gas will continue to be a "vexatious problem."