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Politics : Moderate Forum -- Ignore unavailable to you. Want to Upgrade?

To: blue red who wrote (8326)	3/14/2004 12:25:41 AM
From: Brumar89	Read Replies (2) \| Respond to of 20773

Your memory re. natural gas prices is faulty. Deregulation of natural gas DID lead to a glut (known in the industry as a bubble, but that led to LOWER prices. Don't take my word for it: There were gas shortages in the 1970's that signaled a need for change in the way the government was interacting with the gas industry. Throughout the 1980's and early 1990's the industry moved away from price regulation, with exciting results. Gas supply went up, and prices fell approximately 50% from 1985 to 1991. Competition in the market place has led to innovation and a dynamic industry. Advances in technology have enhanced our ability to find, extract, and transport natural gas with greater efficiency and less cost. www.sunmachinery.com/history.html The real wellhead price of natural gas in 1995 was more than 40% below its 1980 level; the price delivered to electric generators had declined by nearly 56%. .... The most important forces driving the decline in gas prices were deregulation and competition. Ironically, the federal government had regulated the wellhead price of natural gas in order to protect consumers against rising costs.5 Price controls undoubtedly did limit the price paid by many consumers initially, but they also reduced and distorted production incentives. By the mid-1970's, these controls had created natural gas shortages in some regions. Partly in response to the shortages, the Natural Gas Policy Act of 1978 raised price ceilings for most gas supplies and created a mechanism for their gradual elimination. The deregulation of wellhead prices was formally completed in 1992. Well before that date, however, price ceilings had lost their practical relevance. Market forces rather than regulation established the price at which producers sold their gas, and the administrative allocation of scarce supplies had been replaced by competition to sell a supply of natural gas that soon exceeded market demand. ..... Deregulation and multiple gas merchants made the sale of natural gas a highly competitive business. To survive, producers streamlined their operations and embraced new technologies. Some producers nevertheless failed, but the rest sold gas profitably at prices that previously would have caused a loss. solstice.crest.org While demand dropped further during the recession of 1982, the higher wellhead prices did encourage the development of new supplies of natural gas. The combination of the lower demand and the new supplies produced a "Gas Bubble" in the 1980s that benefited consumers and the national economy, with low to moderate natural gas prices through the remainder of the decade and through the 1990s. ipaa.org