The people's voice., 1957-01-25
Industry Hopes For Solid
Front On Gas Measure

| discussions are on an informal, area
by-area basis rather than through the
old committees. Heyke said he was
optimistic about a compromise being
| reached.
Helping to push the industry toward
an agreement is the fear by municipal
gas companies that producers will stop
selling gas for interstate commerce
rather than put up with the current
type of federal regulations.
The philosophy behind the unified
approach to the bill was typified in a
recent speech by James F. Oates, Jr.,
chairman of the Peoples Gas Light and
Coke Co. of Chicago, at the Independ-
ent Petroleum Association of America
convention. After declaring that COM
plete exemption of gas producers from
federal regulation "can not reasonably
be expected" Oates said sit is far
more realistic to seek through cooper
ative effort to develop a satisfactory
amendment under which all segments
of the industry can cO-eXist at peace
and with economic well-being."
SEDIMENTS OF INDUSTRY
The segments of the natural gas in
dustry are Cd producers who get the
gas out of the ground; (2) pipeliners
who pipe the gas from the well field
often across several states-tO the CD
distributors who send gas into private
homes. Each group wants certain
things in any new bill before it will
support it.
Producers contend extracting gas
should be regarded the same under the
law as mining coal. But the Supreme
Court ruled June 7, 1854, that prOduc-
ers selling to interstate pipeliners were
subject to federal public utility regula-
tiOns. The producers want Congress to
reverse the Court through a special
bill. They contend competition in drill
ing for gas is adequate protection for
the consumer against unfair prices.
Pipeliners do not contest their public
utility regulation. But several pipeline
companies have affiliates that produce
gas. The pipeliners want their own
producers treated the same as inde-
pendent ones when it comes to fixing
the prices of gas.
Distributors want protection against
sudden hikes in the price of gas they
buy. They fear exorbitant gas prices
would drive their customers to con-
verting to electric stoves or to oil or
coal furnaces.
Compromise recommendations circu-
lating within the industry center on
oscillation clauses and deciding how
the Federal Power Commission should
arrive at a reasonable price for gas in
the well fields.
Oscillation clauses permit the pro-
ducer to raise the price above the
amount the buyer agreed to pay when
the contract was signed. The vetoed
bill put all but two types of oscillation
clauses under Federal Power Com
mission supervision. Step-ups and tax
increase clauses. The step-up clause
authorizes the producer to raise his
price at specific intervals while the
tax increase clause gives him the
right to add cost of new taxes to the
contract price.
One compromise under wide conSid-
GRAFTON would outlaw all types of eca-
lation clauses but allow the seller and
buyer to agree on a contract price in
dependent of the FPC. Where the
seller and buyer could not agree on a
price, the FPC would step in and de-
termine the reasonable market price.
The FPC standards for determining
the price would treat gas as a commOd-
ity instead of a public utility.