Outlook for natural-gas prices as decontrol approaches
Journal Article
·
· Oil Gas J.; (United States)
OSTI ID:5597543
In view of the large oil-price increases that occurred after the passage of the Natural Gas Policy Act of 1978, legislators are concerned that the value of natural gas is increasing faster than provided for by the price schedules in the act. Upon decontrol in 1985, gas prices could move abruptly from the $3.15/million Btu range to some market value, possibly in parity with residual fuel oil prices. The effect of decontrol upon the economy will not follow a pure market response because of the manner in which pipelines and producers have contracted for gas subject to deregulation. The contract problem will cause well head prices to rise instantly by $2.10/million Btu, whereas a pure market response would cause a smaller (about $1.35), more gradual increase. Legislation to accelerate the NGPA decontrol schedule could conceivably cure the contract problem by statutorily modifying the price-escalator terms in existing contracts.
- OSTI ID:
- 5597543
- Journal Information:
- Oil Gas J.; (United States), Journal Name: Oil Gas J.; (United States) Vol. 79; ISSN OIGJA
- Country of Publication:
- United States
- Language:
- English
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