How High for Decontrolled Gas?

No matter which proposal Congress finally accepts on natural gas, prices will almost certainly go up. How much, no one knows for sure. About half the homes and 40% of the industries in the U.S. use natural gas. The current federal price ceiling is $1.47 per thousand cubic feet (m.c.f.) for gas that is sold across state lines. Gas that is produced and sold within the same state is not subject to federal price controls and fetches anywhere fron $2.00 to $2.25 per m.c.f.

Two thirds of the retail price of natural gas covers the cost of piping it to customers. Utilities and other major users buy gas under long-term contracts, so the full weight of any price increase may not be felt for years.If the price of natural gas rises sharply enough, it may become cheaper to use oil, coal and other fuels. At $2.48, for instance, gas becomes as expensive as home heating oil. In that case, demand for gas may lessen, forcing prices to drop.

All things considered, household users will probably not be hit as hard as many of them fear by any of the proposals. According to a study by the non-partisan Congressional Budget Office, a typical U.S. family that now has a $40 monthly winter heating bill would be paying $42.80 next year under Carter's proposed $1.75-per-m.c.f. price ceiling. As the new, more expensive gas came into wider use, that monthly bill would rise to $47.20 by 1985.

If natural gas were decontrolled altogether, the congressional study estimates, the price would rise as high as $4 per m.c.f. before dropping back to $2.80 by 1985 as market forces came into eqilibrium. In this event, the homeowner's monthly winter bill would rise to $55.60 in 1978 and $70 in 1985. But no matter what the additional cost, industry lobbyists argue that only by decontrolling natural gas--and allowing the price to rise high enough to make it profitable to hunt for more--can the nation ensure an adequate supply (see ESSAY)

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