With the coldest months just ahead, families who use natural gas are facing winter heating bills as much as 26 percent higher than last year in the Washington area and a chilling 40 to 60 percent higher in some parts of the nation.
"When we get a good cold snap in January or February, people are going to get astonishing gas bills," a government natural gas specialist said.
The phenomenon of sharply rising natural gas prices at a time when the combination of recession and conservation has reduced demand and produced a gas glut is stirring so much outrage nationwide that it may become a surprise priority issue for the lame-duck session of Congress that starts today.
"I am receiving as many as 100 letters a day from Missourians, from all walks of life, demanding a halt to gas price increases," Sen. Thomas F. Eagleton (D-Mo.) said. "Many are elderly and depend on Social Security. Their message is that they are being forced literally to choose between heating and eating."
Eagleton said he feels Congress has "no business more urgent" in the lame-duck session than attempting to halt further gas price increases. He has notified the leadership that he is determined to push for "an interim emergency freeze for the 1982-83 heating season."
The Northeast-Midwest Congressional Coalition, made up of about 200 House members from 18 states, is preparing a separate bill that would take a different approach in attempting to bring consumers immediate price relief.
"We feel it is critical to do something about natural gas prices this winter," said Dave Merkowitz, a coalition spokesman. "Price increases in Peoria are 60 percent. You have 50 percent increases in parts of Indiana. And you are talking about states that have been hardest hit by unemployment."
The bill drafted by the coalition would strike to the heart of the immediate problem by forcing major gas pipelines to renegotiate "take or pay" contracts signed with certain producers.
These long-term contracts, which pipeline companies rushed to sign after the 1976-77 gas shortage as a way of ensuring adequate future supplies, locked them into taking a fixed amount of gas from these producers each year, or paying for it anyway.
These contracts also had "indefinite escalator" clauses that provided for unspecified increases in what the pipeline would pay the producer. In nearly all cases, the clauses permitted producers to window-shop among various formulas written into the Natural Gas Policy Act of 1978 and demand the "maximum rate" that could be computed.
"If there's a villain in the piece, it is the statute," said C. Michael Butler, chairman of the Federal Energy Regulatory Commission. "The Natural Gas Policy Act did serve to increase the supply of gas. But inexorable price increases are written into the law. There is no mechanism in the act which allows gas prices to be lowered."
Industry observers also feel that many of the pipeline companies, generally allowed by FERC to pass on to utilities such as Washington Gas Light Co. the higher prices paid producers, did not drive very shrewd bargains in their eagerness to assure themselves of long-term supplies.
"You have to understand that the people who produce the gas for the most part look and act like J.R. Ewing," an industry analyst said. "In negotiating these contracts, they ran circles around the old men who run the pipeline companies."
The companies thus found themselves in a particularly embarrassing position this year when a sharp drop in demand produced a natural gas glut that sent producer prices plummeting.
Because major pipelines were locked into long-term contracts that force them to buy large amounts of gas from certain producers, or pay for it anyway, these producers simply continued raising their prices by maximum legal amounts.
At the same time, natural gas being offered at distress prices by other producers went begging and, in some cases, was either burned off or vented into the air because with demand down, pipelines had no need for this additional gas, however cheap it might be.
This perversion of the normal rules of supply and demand came to light this fall when utilities began trying to explain that they were not to blame for the large prices increases in store for residential customers.
Washington Gas Light Co., granted permission by local utility commissions to raise the price of gas to its Maryland customers this fall by 26 percent and to its Virginia and District of Columbia customers by 21 percent, has taken pains to point out that "the major cause of these substantial increases lies in pipeline charges."
WGL obtains all of the natural gas it distributes to customers in the metropolitan area from Columbia Gas Transmission Corp., which supplies about 85 percent, and Transcontinental Gas Pipe Line Corp..
At one point, a small fraction of WGL's supply was imported from Algeria in the form of liquefied natural gas.
"But we're not getting any gas from Algeria at present, and I do not see a resumption of those purchases," said WGL executive vice president Richard C. Vierbuchen. "The Algerians want too much for the gas. It's far too expensive."
So WGL is wedded for its gas supplies to Columbia and Transco, under contracts that run into the 1990s.
Some government officials, such as Butler, feel the best way to correct the situation would be early passage by the next Congress of legislation immediately decontrolling gas prices.
President Reagan, who backed away earlier this year from pushing for such a change, recently said his administration remains "strongly committed" to removing gas price ceilings.
"Since gas prices already have gone way up the way some people thought they would with decontrol, immediate decontrol could begin to have a leveling effect on prices," FERC spokesman Rachelle Patterson said.
But several consumer groups remain openly skeptical of such claims.
"Decontrol means more inflation and higher heating bills for millions of families across the country," said Robert Brandon, executive director of the Citizen-Labor Energy Coalition.
The decontrol issue is not going to be tackled in the lame-duck session. But several observers, openly skeptical a few weeks ago that any gas legislation could be dealt with soon, believe soaring prices have created such a volatile issue that short-term steps could be taken.
"The desirable solution would be a legislative alleviation of these 'take or pay' obligations," said George H. Lawrence, president of the American Gas Association.
"An awful lot of members are interested in this," said Jon Clark, energy specialist for the Northeast-Midwest Congressional Coalition. "We're not talking about decontrol or trying to affect anybody's long-term approach to the natural gas market. What our members want is to lower gas prices this winter."