The story of the U.S. natural gas industry offers useful instruction to anyone confused about this week's general elections.
By all accounts, voters will give an unusually large number of incumbent lawmakers the chance to pursue new opportunities. The assault on incumbency may be strong enough to give Republicans control of the Senate, possibly even the House.
The popular explanation for this is antigovernment cynicism. It's certainly easy to find Americans cynical about government. But the analysis doesn't go far enough.
Many of the Americans so casually dismissed as cynical just want government to acknowledge the limits of its realm. They want it to question propriety of its involvement in their affairs-not to mention bank accounts-before it acts.
GAS OBSERVATIONS
It's not necessary to be cynical to want these things, just observant. Too frequently in recent history, the federal government has lurched from high-mindedness to fiasco.
It certainly did so with natural gas. Until Congress laid wellhead price controls to rest in 1989 and the Federal Energy Regulatory Commission mostly liberated transportation and related services 3 years later, the government seemed determined to ruin gas as a fuel and industry.
Reasons for federal gas regulation were usually noble: antitrust concerns, consumer protection, resource conservation. But they led to disastrous policies: price controls at the wellhead, incentives for uneconomic sources of supply, prohibition of gas use in unfavored markets, to name a few.
The administrative problems of price regulation spawned area rates, which became a national area rate, which gave way to vintaging--none of which worked. Concentration of supply in the unregulated intrastate market created shortages in the overregulated interstate market, which pushed Congress to pass the Natural Gas Policy Act of 1978.
And so it went. One mistake followed another. And the biggest mistake of all was regulation's founding principle, the assertion of a role for government in determinations of gas price, supply, and demand. Doubts about the propriety of such meddling did not become manifest in policy until Congress passed NGPA-40 years after it subjected gas to federal regulation with the Natural Gas Act. Even with NGPA, Congress acted tentatively and incrementally-high-mindedness never gives up-and created a new set of problems.
Now markets influence gas prices, supplies, and consumption patterns more than government does. The main problem, government activism in markets, has been solved. Free of most federal regulation, gas, the gas industry, and gas consumers face a brighter future than ever before.
But the gas story must never be forgotten. Whenever lawmakers feel the urge to broaden federal activity, they should consider the proposition that natural gas, fuel consumers, and the national economy would be better off today if government had never blundered into gas regulation.
PROBLEMS AND COSTS
Gas is just one example of an activist government creating more problems than solutions. From welfare to Social Security to Superfund to savings and loans, unbridled government, government that seldom questions itself or the propriety of its reach into private affairs, has created problems and unnecessary costs for Americans.
If predictions come true, Americans on Tuesday will show how strongly they want to break this pattern. Some will disparage the results as antigovernment cynicism. Others will welcome them as the fruits of democracy at work.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
Issue date: 11/07/94
