Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-16
PIPE LINES KEEPING
RATES ON GAS HIGH
Communities Expecting Low
er Costs for Natural Prod
uct Face Disappointment.
BY GEORGE z. DOYING.

Expectations of materially lower gas
rates in communities to which long dis
lance pipe lines are being constructed
for the transportation Of natural gas are
believed here to be generally doomed to
disappointment.
While downward tendency In gas
rates may be expected with some rea-
son, the reduction as a rule will be due
to increased consumption rather than
directly to the introduction of natural
gas. Few of the communities to which
pipe lines are being constructed will be
served with straight natural gas, but
that product will be mixed with manu-
featured gas, and leading gas company
officials will not admit that this will
enable them to sell gas at lower rate,
except as reductions may be possible
through the building UP of consumption
by heating installations and by other
means.
Cost of Production"
At least one of the reasons why no
great cut is possible is said to be the
price paid by local distributing COM
panies TO the transporting companies
The latter, being interstate carriers, are
not subject to regulation. They make
contracts with distributing companies,
which often are allied through stock
ownership, for a fixed price at the "city
gate" and the distributing companies
base their rates on this price as the cost
OF production. Although the State reg
ulatory commissions have jurisdiction in
most instances over the rates of the dis
tributing companies, the commissions
are more or less bound to accept the
same cost of production"
The States of Ohio, Kansas and Ok
lahoma, particularly, are attempting to
exercise some degree of control over
this cost price, but so far without much
success. Added impetus to this move
ment is foreseen in the prospective early
delivery of natural gas to Chicago. A
new pipe line from Texas is now near
ing completion across Illinois and the
Chicago gas utility already has been
authorized by the State Commission to
base its gas rates on the "therm" basis,
which Is a measure of heating value
Although it is stated that the Chicago
company can buy natural gas 10 per
cent cheaper than it can manufacture
gas. officials Of the company decline to
discuss the question Of reduction to
consumers.
May Fight for Better Rates.
It is anticipated that if no adjust
ment in rates is made soon after the in
PRODUCTION Of natural gas In Chicago, the
city Will promptly begin action before
the State Commission for lower rates.
In addition to extending natural gas
to many new communities for heating
and cooking purposes, other methods
Of using the vast supplies are being dee
veloped, according to the United States
Bureau of Mines. Quantities of natural
gas, which under present conditions are
lost in the atmosphere, may be utilized
in the production of chemical products
such as motor fuels, synthetic rubber
and other substances If laboratory meth
DDS Of cracking" the gas are brought to
the point of commercial operation.
The cost of development of gas and
| oil wells mas increased enormously in
the last 10 years, due in large measure
to the greater number of wells sunk, of
which considerable proportion are dry.
Obviously. If three wells are sunk at a
cost of $4,000 each and enc of them is
dry, the two producers may reasonably
be recorded as having cost $37, 500 each.
Copyright. l931)