Evening star., 1950-04-16

The teri OF President Tru-
mans message to the House yes
terday uetoino the Kerr natural
gas bill tolloiDs:
I return herewith, without my
approval. HR. 1883. a bill to amend
the Natural Gas Act approved
June 81. 1898. as amended.
This bill would preclude the
Federal Power Commission from
regulating sales of natural gas to
interstate pipe line companies. for
resale in interstate commerce. by
producers and gatherers who are
not afiiliated with the buyers. Aft
er careful analysis and full con-
sideration. / believe that such an
action would not be in the national
interest.
I believe that authority to reg
ulate such sales is necessary in
the public interest because of the
inherent characteristics of the
process Of moving gas from the
field to the consumer. Unlike
purchasers Of coal and oil. pur-
chasers of natural gas cannot
easily move from one producer to
another in search of lower prices.
Natural gas is transported to con-
sumers by pipe lines. and is dis
tributed in a given consuming
market by a single company. The
pipe line companies. and in turn
the consumers of natural gas. are
bound to the producers and gath
ererS in a given field by the physi-
cal location of their pipe lines,
which represent large investments
Of funds, and cannot readily be
moved to other fields in search of
a better price.
Sellers Not United.
These characteristics of the
natural gas business impose nat
ural limitations upon effective
competition among sellers. Com
petition is further limited by the
degree of concentration of own
ership of natural gas reserves.
While there are a large number of
producers and gatherers, a rela-
lively small number of them own
a substantial majority of the gas
reserves. Furthermore. the de-
mand for natural gas has been
growing phenonominally in re-
cent years, and its natural ad-
vantages as a fuel, coupled with
its present price advantage, indi-
cate that demand may soon be
pressing hard upon total supplies.
Under these circumstances, there
is a clear possibility that compe-
tition will not be effective, at least
in some cases, in holding prices to
reasonable levels. Accordingly, to
remove the authority to regulate,
as this bill would do. does not
seem to me to be wise public
policy.
Has Faith In Commission.
1t is argued that regulation of
sales Of natural gas to pipe line
companies would discourage pro-
ducers and gatherers from selling
this gas in interstate commerce,
and would discourage expIora-
ton and development of new wells.
This claim rests primarily on the
assumption that the Federal Pow
er Commission would apply stand
ards OF regulation which did not
take account of the peculiar cir
cumstances Of natural gas produc-
tion-such as the cost of explora-
ton and development, including
the drilling of dry holes. I do not
believe this assumption is we'll
founded. On the contrary, l am
confident that the commission will
apply standards properly suited to
the special risks and circumstances
Of independent natural gas pro-
ducers and gatherers.
My confidence in this outcome
is supported by the fact that.
until recently. the commission
has not found it necessary to
undertake to regulate the prices
charged by independent gas pro-