Pricing provisions of the Natural Gas Policy Act of 1978. Energy Policy Study, Volume 3

Technical Report · Mon Oct 01 04:00:00 EDT 1979

OSTI ID:5121530

Dickens, III, P F; Thrasher, R

The Natural Gas Policy Act of 1978 represents a major change in the regulation of natural gas. The Act extends the authority of the Federal Energy Regulatory Commission to virtually all natural gas production, establishes a set of ceiling prices for natural gas at the wellhead, and provides a method for allocating the costs of high-cost gas among end users. This study was conducted to explore the effects of the current regulatory structure on the prices and quantities observed in the markets for natural gas and to compare the regulated markets with the results that might be expected to exist in the absence of specific controls on natural gas markets. To assist in this effort, first of all, a short description of the natural gas market, the production process, and a brief review of past regulation are presented. The pricing provisions of the NGPA, effects of the NGPA pricing, incremental pricing and its effects, and non-price allocation on natural gas curtailments and priority access are covered in detail. The general conclusion is that relative to an unregulated market, the price controls of the NGPA have the effect of redistributing wealth from producers of natural gas to consumers. To the extent that society values the redistributive aspects of the controls, this Act may offset or exceed the valuation of the efficiency loss relative to a free market occasioned by these programs.

• Research Organization: Department of Energy, Washington, DC (USA). Energy Information Administration
• OSTI ID: 5121530
• Report Number(s): DOE/EIA-0201/3
• Country of Publication: United States
• Language: English

Related Subjects

03 NATURAL GAS
030600 -- Natural Gas-- Economic
Industrial
& Business Aspects
031000* -- Natural Gas-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
294003 -- Energy Planning & Policy-- Natural Gas
ALLOCATIONS
ENERGY SOURCES
FLUIDS
FOSSIL FUELS
FUEL GAS
FUELS
GAS FUELS
GASES
INCREMENTAL-COST PRICING
INDUSTRY
LEGISLATION
NATURAL GAS
NATURAL GAS INDUSTRY
NORTH AMERICA
PRICES
REGULATIONS
USA
WELLHEAD PRICES