Natural Gas Data Needs in a Changing Regulatory Environment (1985) / Chapter Skim
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OVERVIEW AND SUMMARY
OVERVIEW AND SUMMARY
Pages 1-16
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Can the bene f i t s of par ticular data plan s be quan tif ied so as to a l low order ing of data plans according to impor tance ? To prov ide an i ndependent evaluat ion of poss ible r esponses to such que st ions , EIA r eques ted that the Na tiona l Academy of Sciences ass is t i t by per forming a s tudy of needs for natural gas data in a der egulated env i ronment .
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The r ema inder of th is chapter descr ibes r ecent developments in the natu r a l gas industry , reviews the rat ionale for collect ing energy data , summar i zes the re s t of th is r epor t , and presents our pr inc ipal r ecom menda t ions . RECENT DEVELOPMENTS IN THE NATURAL GAS INDUSTRY Natural gas i s produced in comme r c ia l quan t i t ies in 3 1 states a l though two of them , Texas and Lou i s iana , accounted for 6 8 percent of the 1982 total ( Ene rgy Informat ion Administration , 1983 )
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Pipel ines str ugg led to r eta i n mar kets wh i le th e pr ices they pa id to produce r s continued to r i se becau se contract pro vis ions wer e unrelated to mar ket cond i t ions . Distr ibut ion compan ie s f ound that impor tant industr ial custome r s were tur n ing to alternat ive fue ls , but regulat ion pr evented them from mak ing competitive pr ice r eductions .
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In add ition , f ive character istics of energy supply and demand make data abou t it par t icular ly importan t for publ ic pol icy : ( 1 ) Energy use i s sub j ect to d i s r upt ion b y sudden changes i n supply , pr imar ily because o f instab i l ity o f inter nat iona l o i l mar kets .
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In an ideal , compe t i t ive economy a prog r am of gover nment dissemin a t ion of energy informat ion might not be necessar y . Once informat ion ex isted , i t could be tr ansmitted by a complete se t of mar kets in insur a nce and future contracts .
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Recog n i z ing these needs for data , and g iven the severe r esource constr a ints imposed on i t , EIA has done a f ine , profess ional j ob i n f ulf i l l ing i ts r espons ib i l i t ies . The agency has produced several stud ies of exce llent statistical qual i ty deal ing with spec i f ic issue s ; f or example , stud ies of contr acts between i nter state p ipe l ines and pro ducer s and betwee n interstate pipel ines and the i r custome r s ; of dr ill ing and pr oduct ion under T i tle I of the Natural Ga s Pol icy Act ; o f producer r evenues , pr ices , and concentr a t ion i n natural gas mar kets ; and of r ecent activities of ma jor inte r s tate p ipel ine compan ies .
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W i th in a f r amewor k of cur r ent and emerg ing i s sues and r e lated dec is ions tha t must be made by state and federal gover nment agenc ies , o i l and gas compan ies , pipelines , d i str ibutor s , and i ndustr ial and home consumer s , Chapte r s 4 , 5, 6 , and 7 suggest wha t data in what form ar e needed to suppor t i n formed public debate and public pol icy dec is ion mak i ng . SUMMARY OF THE ISSUES The re are some broad policy issues in these chapte r s that cut a cross all i ndustry segments : • Tr ans fer of wealth : Who g a ins and who loses when mar ket s tructur e and institut ional a r r angements and p r act ice change?
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From page 8... ...
Can pipel ines i n any reg ion exer t undue market powe r in gas purchas ing , e i the r through a f f i l iat ion w i th a gas produc ing company or by control of collect ion and trun kl ine capac i ty ? What ar e the compe t i t ive e f fects of spec ial mar ket ing programs and the compe tition between gas producer s , p ipel ines , or d i str ibutor s for spec i f ic mar kets (gas-on-gas compe ti tion )
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Whether or not to ma intain decontrol o f f ield pr ices or to r econtrol them depend s on cong ress ional and public opin ion abou t the pr esence o r absence of s ig n i f icant monopoly influences i n f ield mar kets . So do dec is ions abou t •pr udence of pur chase • : Did a purchaser exerc ise rea sonable j udgment i n l ight of all ava i lable information about cur r ent and futur e markets?
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As mar ket forces supplant r egulat ion a s the dominant pr ice set ting mechanism , mor e t imely pr ice informat ion becomes h ighly des i r a ble for a l l public and private decis ion maker s . E IA's cur r ent data collect ion and d i sseminat ion act ivities do not allow e i ther the public or f ederal and s tate r egulator s to assess the impor tance of new mar ket developments : for example , amounts and pr ices for gas sold under s pecial mar ket ing prog r ams1 spot pr ices compar ed w ith contr act pr ices ; •unbundling • of pipel ine services ; and new contracting behav ior .
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Among the data needed to f ill major g aps are: • a per iod ically updated descr ipt ion of gas user s by class , of the s tock o f bu ild ings and equ ipment of cur r ent gas user s , and of user s ' abi l i ty to swi tch fuels J • annual r epor t ing of gas consumpt ion and users' pr ices w i th in the r e s ident ial , commerc ial , e lectr ic u t i l i ty , and i ndus tr ial mar ket sector s 1 and • more f r equent data on industr ial sector energy consumpt ion and pr ices because inter fuel compe t i t ion is l ikely to prov ide pr ice-setting d isc ipl ine for natur al gas in a less-reg ulated future . Disr upt ions An impor tant concer n of federal energy pol icy is r educ ing the nat ion's vulnerab i l ity to energy d isrupt ions , in par t icular , o i l supply d i s r upt ions .
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( 2 ) Mon i tor ing the tr ans ition tak ing place i n natural gas mar kets from a r egulated to a mor e competit ive environment places spec ial , prob ably shor t-l ived , r equ ir ements on the Energy Informat ion Administration .
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6.4 The pane l recommends that the the Energy Informatio n Admin istrat ion i n i t iate a quar ter ly indus tr ial user sur vey to prov ide s tat i s t ically val id and t imely informat ion on pr ices and consumpt ion of gas and alternat ive ener gy forms by r egion a nd major industry sector . Data Manag ement E IA should emphas i ze the impor tance of f r equent contact be tween senior prog r am manag er s , respondents , and da ta user s , thus enhanc ing the i r abil i ty to mon i tor i ssues and dec i s ions on a cont inu ing bas is .
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From page 14... ...
A s tudy focused on natural g as stat ist ics i s not the appropr iate place to add r e s s the quest ion of whethe r the r ecent shr inkage in EIA ' s budge t has been g ood soc ial pol icy . Wh i le the scope of th is r epor t is r estr icted to examinat ion of nat ural gas industry data , it i s evident tha t many of the cur rent manage men t i ssues f aced by EIA in i ts e f for ts to improve the design and imple mentat ion of na tur al gas data collect ion and d isseminat ion are the same f or other E IA pr imary energy m ineral prog r ams .
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From page 15... ...
Nat ional Research Counc i l 1 985 A Review of the Annual Sur vey of Domes t ic O i l and Ga s Reserves Conducted by the Energy Informat ion Administration . wash ing ton , D .
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Extens ive use of gas as an industr ial f uel , however , had to awa i t the development of cheaper natural gas because manu factured gas wa s too expens ive for th i s lower -value use . Th e mar kets f or na tural g as , and the d i str ibut ion systems necessary to serve them , therefore , wer e cr eated and nur tured by integr ated c ity g a s companies that manu factur ed and del iver ed expens ive syn the t ic gas .
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