IF THE SENATE approves the natural gas deregulation bill this week, as is expected, a lot of people are going to be very happy. Senators will have cleared their desks of a major legislative headache which has dawdled in the halls of the Capitol for the past 17 months. President Carter, fresh from a week of possible triumph at Camp David, will have won a major victory in his fight to establish a national energy policy. And our anxious European neighbors will be reassured that America is serious about streamlining its wasteful patterns of energy consumption, and shoring up the declining dollar.
All of which goes to show that in politics, appearances matter more than reality. The natural gas bill is not a panacea, or even a part of one, for American energy ills. All the bill will do is raise gas prices incrementally over a seven-year period, and then lift price controls entirely in 1985. Controlled interstate gas currently sells for $1.50 per thousand cubic feet (MCF), while unregulated interstate runs about $1.95 per MCF; in 1985, the price for all gas will be $4 per MCF.
Of course, proponents of the bill have been falling all over each other to extol its benefits since the President unveiled it as part of his National Energy Act in April, 1977. The Department of Energy, White House lobbyists, and senators like Majority Leader Robert C. Byrd (D-W.Va.) have all taken a hand at trying to force the bill through Congress. They claim that higher prices will promote development of new gas sources, and allow producers to extract already-discovered gas which is currently too expensive to bring up from the ground. New gas supplies will replace imported oil as a major energy resource, the argument runs, easing the U.S. balance of payments deficit and making Americans less dependent on foreign energy sources.
In their efforts to promote the bill, Administration backers have called it "the centerpiece of our national energy policy." Secretary of Energy James R. Schlesinger '50 has pushed the bill as a vital means of curbing America's voracious energy appetite. And President Carter, who promised our Western allies at Bonn this summer that the U.S. would curtail its oil consumption by 2 million barrels a day before 1985, obviously considers gas deregulation a primary means of keeping his promise.
Unfortunately, the arguments don't seem to wash. Gas deregulation will have many effects, but supplying Americans with a steady supply of reasonably-priced energy will not be one of them. For one thing, opponents of the bill argue, higher gas prices will actually increase our dependence on foreign energy imports by encouraging consumers to switch from gas to oil. And the burden borne by consumers who stick with gas will be tremendous: James Flug, head of a Washington-based consumer group called Energy Action, estimates that the bill will add $35 to $55 billion overall to the national energy price tag over a maddeningly vague period of time--and this does not even include inflation. The average cost of gas in 1985 will be 353 per cent of what it was in 1977, and 1608 per cent of the 1970 price, Flug says.
While the bare bones of the bill are unattractive, some important features added by a House-Senate conference committe this summer make it even more unsavory. The conference shifted the burdens of cost to weigh more heavily on residential users rather than on industry, raised incremental price levels for old gas which is already flowing, and put stringent limits on the amount of gas which can be allocated to home owners in an emergency shortage. none of these measures will help Americans to stop using oil or save energy; all of them were apparently inserted to placate feisty legislators from producing states, and hold together a fragile House-Senate compromise on the bill.
ONCE THE deregulation becomes law, Americans will wind up paying dramatically higher prices for their energy. And it is not even certain that there will be much more of this energy: some critics of the bill, like Sen. Edward M. Kennedy (D-Mass.), contend that the amount of new gas generated by higher prices will be marginal at best. Whether there is substantially more gas available or not, however, the fact remains that it will go only to those consumers who can afford to pay the higher prices. The bill is sure to compound consumer burdens to the breaking point, since energy costs and inflation already bite heavily into the family incomes of lower- and middle-class consumers.
Besides turning the screws on consumers, gas deregulation will also turn our already-confusing system of natural gas pricing into a legislative nightmare. The version of the bill hammered out this summer includes 23 separate catagories of gas, each governed by different regulations and pricing tiers. Even industry supporters of the bill admit that it will be at best difficult, and at worst impossible, to administer.
But despite these massive obstacles and difficulties, the gas deregulation bill is likely to become law. Jimmy Carter has staked what is left of his political reputation on deregulation, for one thing: having regained massive public approval for his handling of the Begin-Sadat summit last week, Carter would like nothing better than to solidify this support by coming up a winner on the domestic front, as well as in foreign policy matters. A White House victory on the natural gas bill would silence, at least for the moment, critics who charge that Carter has been inept in dealing with Congress. And White House insiders consider acceptance of the President's energy plans a crucial stepping-stone to re-election in 1980.
THE PRESIDENT should have nothing to worry about, since arm-twisting by Byrd and Sen. Henry M. Jackson (D-Wash.), floor leader of the bill, have beaten back efforts to kill it by a filibuster. For a time, it looked as though deregulation might be defeated by a coalition of consumer states, led by Sen. Howard R. Metzenbaum (D-Ohio) and Sen. James Abourezk (D-S.D.), and joined by right-wingers like Sen. Clifford Hansen (D-Wyo.) who want total deregulation or none at all. But eventually administration supporters garnered enough votes to invoke cloture and kill the kind of stalling tactics which Metzenbaum and Abourezk used to defeat deregulation a year ago. Pro-deregulation showed their muscle last week when they killed an attempt to recommit the bill to the House-Senate conference, 59-39.
Once it passes the Senate, the natural gas bill will pass blithely to the House, where the machinations of Speaker Thomas P. O'Neill, Jr. (D-Mass.) will virtually guarantee passage. O'Neill is on the side of the Administration again after a quarrel with Carter this summer. And anyway, a nervous election-year Congress, itching to go back and tell the home folks that it has done something about energy, is anxious to pass it and be done with the whole mess.
Unfortunately, this will leave the U.S. practically where it was before in terms of energy policy. We will still be importing 8.5 million barrels of oil per day, still driving our gas-guzzlers down the expressways at 70 miles per hour, still stalling in the developement of solar, geothermal, wind and other renewable forms of energy. Even if the other four parts of Carter's energy package--utility rate reform, conversion to more use of coal by industry, conservation measures, and crude oil taxes--are enacted, many serious measures will still be needed to create an effective national energy policy. Congress has considerably watered down the President's energy program, particularly in the areas of coal conversion and conservation, to avoid anything smacking of mandatory controls on energy use.
The U.S. can still forge a strong, coherent national energy policy which will encourage conservation, develop potentially economical energy technologies like solar and wind, and avoid excessive dependence on foreign imports or nuclear energy. But first political obstacles must be overcome: there will have to be less pork-barreling of useless energy projects in key states, less reliance on higher energy prices which pose equity and distribution problems, less resistance to use of alternative power sources. "We have some solutions within our grasp," a Senate staffer confided last week, "but they still need to be translated into political reality."
