The Carter administration's new natural gas pricing bill will cost consumers more this year than will the oil price increases announced in December by the oil cartel, a consumer activist said yesterday.
James Flug, head of Energy Action, told the Senate Governmental Affairs subcommittee that the natural gas bill signed into law last November will cost $4.6 billion directly and indirectly this year. By comparison, he said, the increases approved by the Organization of Petroleum Exporting Countries will raise consumers' costs by $3 billion.
Flug's figures do not take into account a series of increases announced recently by OPEC countries.
Meanwhile yesterday the Senate Energy Committee released a General Accounting Office study that said that the Iranian oil squeeze will trigger a 7 percent average oil price increase from the cartel members this year. The GAO's report, drawing on data that do not reflect up-to-date shifts in the Iranian oil situation, also says that a continued shutdown could raise inflation rates by 0.7 percent by the end of 1979.
The GAO report was critical of the Carter administration's proposed energy conservation measures. The congressional auditors also said that attempting to avoid heating oil shortages next winter by drawing on the strategic petroleum reserve would dnot be effective.
At the hearing on the natural gas bill, Charles Curtis, chairman of the Federal Energy Regulatory Commission, said that under the legislation that his agency administers, gas prices will rise from $2.11 per thousand cubic feet to roughly $4 by 1985. This "will not be without significant consumer impact," he said.
More significant, in the short term, Curtis told the committee that newly drilled gas that sold for $1.51 per thousand cubic feet before Carter signed the controversial bill into law, is now eligible to be sold at the $2.11 ceiling price, amounting to a 40 percent price increase.
George H. Lawrence, the president of the American Gas Association, acknowledged to the committee that prices would increase for some categories of natural gas, but that under the new law "average residential gas prices will rise by approximately 8.1 per cent a year -- on a nationwide basis -- between now and 1985."
AGA vigorously supported passage of the gas measure and has also estimated that during 1979, residential gas bills will increase by about $33.
Curtis told the committee, "Consumers will not be sheltered from it," adding that FERC is still uncertain how much new gas will be delivered to the market as a result of these higher prices.
William W. Winpisinger, president of the Citizen Labor Energy Coalition, said that one of the reasons there has been a surge of initial price impact of the new law is that producers are seeking the highest price possible under the regulations.
The gas bill "absolutely establishes floor prices instead of ceiling prices" Winpisinger said. "We think the intent of the law is systematically being violated."
The oil and gas pipeline companies take a different position, arguing they are simply claiming revenues they are entitled to under the law and producing-state regulations.
The pipeline rate filings since the bill was signed into law "are simply reflecting the effect of the permissible statutory rate structure," says Jerome J. McGrath, president of the Interstate Natural Gas Association.