HERE IN WASHINGTON, and in a good many other cities, the retail price of natural gas is about to rise dramatically. For consumers, the price will go up 20 to 25 percent over the next six months. That might strike you as peculiar, since demand for gas is falling and, as a result, some of the producers' prices are falling as well. There's an explanation, but it isn't likely to make you feel much better.
Remember the gas shortages of 1976 and 1977, when schools and factories were being closed because there wasn't the fuel to heat them? That was the fault of the gas price controls. Congress tried to end the shortages by rewriting the law in 1978 and providing much higher price ceilings for many categories of gas. In 1979 and 1980, in the midst of a worldwide oil crisis, with the price of oil doubling and many homeowners switching to gas, the big gas pipelines -- like Columbia Gas Transmission, which serves this region -- rushed out to the oil and gas fields to sign up as much future supply as they could get. They signed at the very high prices that the new law allowed, and they signed for unconditional purchase -- "take or pay."
And then, to everybody's great surprise, in late 1981, gas sales began to fall. It was partly conservation, partly recession and partly lower oil prices. The pipelines were stuck with their contracts for large volumes at very high prices. That is why Columbia is currently paying $8 and more per thousand cubic feet of gas, while it refuses to buy gas offered at $3.
We are happy to print on this page a letter from William W. Ferrell, chairman of the board of the Columbia Gas Transmission Corp., in response to this newspaper's earlier news story by Howie Kurtz. We have reexamined that story and, unlike Mr. Ferrell, we consider it to be a model of accuracy and fairness. A close reading of Mr. Ferrell's explanation may perhaps suggest to readers that the differences of fact are not large.
The real question is, as usual, who pays for the large errors of judgment that have been committed. The pipelines agreed to buy very expensive gas that they do not now need, but must take. The pipelines' view is that, error or not, the law entitles them to push this unnecessarily expensive gas along to their customers. But does it not seem monumentally unjust that, while the Reagan administration lathers up every energy issue in the rhetoric of the free market, the pipelines are cozily protected from the consequences of their own mistakes?