Natural Gas Data Needs in a Changing Regulatory Environment (1985) / Chapter Skim
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THE NATURAL GAS INDUSTRY
THE NATURAL GAS INDUSTRY
Pages 17-28
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From page 17... ...
A 1 , 2 7 5-mile p ipel ine from the Gul f Coast to East Coast mar kets was bu i l t as par t of the war t ime energy effor t , and following the war , two major war t ime o i l pipel ines wer e conver ted to g as service from the Texas oilf ields to the Nor theast . Thereafter , an extens ive prog ram of long d i stance p ipel ine construct ion cont inued into the 1 9 6 0 s , r esult ing i n today ' s nat ionwide g a s trunkl ine system .
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From page 18... ...
Producer s of natural gas vary widely and r ang e from small , pr ivately f inanced i ndependent producer s who are exclus ively in the gas bus iness to the largest internat ional o i l compan ies . Pipel ine compan ies ar e f requently subs id iar ies of mor e d iver se corporate g iants that might also include gas and oil product ion af f i l iates , distr ibut ion compan ies , p roducer s of other energy forms , and totally unrelated enterpr ises .
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From page 19... ...
In the major gas-produc ing states , many intrastate pipel ine compan ies also are i nvolved i n gas explorat ion and development . Distr ibutor s Th e d istr ibut ion segment of the g as industry i s char acter ized by numerous and d i spar ate ent i t ies .
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From page 20... ...
Some i nvestor -owned gas or comb inat ion gas and e lectr ic d istr ibution compan ies are very large corporat ions in the i r own r ight and may al so o per ate extens ive intr astate gas p ipel ine systems . At the other end of the scale are numerous small , munic ipally owned ent i t ies , many with l ess than ten employees and annual g ross r evenues of a few hundr ed thousand dollars .
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From page 21... ...
S ector 1981 1982 19 8 3 Res idential 4.5 4.6 4.5 COmme rcial 2.5 2.6 2.5 Industr ial 8. 1 6.9 6.5 Electr ic Generation 3.6 3.2 2.9 Tr anspor tat ion __!
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From page 22... ...
In sum , then , FERC r egulates some of the pr ices producer s may charge for gas at the we llhead and all of the rates that inter state pipeline s may charge for transmiss ion and sale of natural gas . I t a lso r egulates construct ion of interstate pipel ine fac i l i t ies and l ique f ied natur al g as terminals , and curta i lment plans for shor tage s i tuat ions and pro posals by inter s tate pipel ines to add or abandon service .
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From page 23... ...
S tate Regulation State r egulat ion of the natural gas industry is mor e d i f f icult to c haracter ize . The economic r egulation of d istr ibut ion compan ies i s mos t of ten the funct ion of a statewide regulatory body , although some s tates do not r egulate mun ic ipally owned u t i l i t ies .
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From page 24... ...
Pol icy maker s , alarmed at the prospects of shr ink ing reserves and c hron ic threats of serv ice cur ta i lment , began to respond , f i r s t w i th regulatory increases in cost-based wellhead pr ices and f inally with the Na tural Ga s Pol icy Act enacted in 1 9 7 8 . The NGPA extended f ederal pr ice controls to gas sold into the intrastate mar ket and substi tuted an e labor ate set of s tatutory pr ice formulas for the prev ious cost-based determinat ion of wellhead gas pr ices .
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From page 25... ...
In add i t ion to h igh pr ices and nonpr ice contr act provi s ions , con tracts frequently prov ided for pr ice escalat ion upon deregulat ion i n antic ipat ion of eventual pr ice decontrol . Some e scalator c lauses k eyed the pr ice of gas upon dereg ulat ion to the then-current pr ice of o i l products , some cont inued the escalat ion formulas wr i tten into cur rent law J and many adopted so-called •most-favor ed-nat ion • provi s ions .
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From page 26... ...
In response to th is new mar ket phenomenon , the industry and the regulatory commun i ty began exper imenting with procedures to improve th e f lexibil ity of pr ic ing r eac t ions to mar ket s ignals . A var iety of spec ial mar ket ing prog rams were proposed by pipel ines and producer s and approved by r egulator s to accommodate shor t-term sales to industr ial gas user s at incent ive pr ices .
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From page 27... ...
Th e r apid i ty o f changes i n the natural gas i ndustry and mar kets suggests tha t a s ignif icant e f for t should be made to mon i tor evolv ing n atural gas i s sues and to evaluate how chang ing cond i t ions a f fect s ta t i s t ical needs . It also suggests the need for an ongoing broad data base that can be mod i f ied in the event of unfor eseen developments .
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From page 28... ...
The 1 9 7 6 Nat ional Research Counc i l repor t Setting Stati s t ical Pr ior i ties arg ued that s tatistical budgets should no t be exempt f rom quant i tat ive analys is , that in pr inc iple the tool s o f cos t-bene f i t analys is could b e appl ied t o s tatistical budgets as to any other budget , and tha t incr eased resources should be devoted to s uch quantitat ive analys i s of s tatistical budget dec is ions . Th i s pane l has concluded tha t the pr esumpt ion tha t sta t i s t ical bud g et dec is ions are in pr inciple r educ ible to quantitat ive compa r i sons of cos ts and benef its and that agenc ies should seek steady prog r ess toward t h i s type of dec i s ion mak ing have been counterproduct ive .
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