Understanding natural gas price decontrol

Technical Report · Fri Apr 01 04:00:00 EST 1983

OSTI ID:6412913

In 1978, the Congress passed the Natural Gas Policy Act (NGPA), which allowed gradual increases in the price of natural gas at the wellhead. The legislation sought to raise the price of most gas to the equivalent of the act's projected price of oil by 1985, at which time much of the nation's gas would be decontrolled. But the price of oil has risen well beyond the projections embodied in the NGPA, and the legislation contained no provision for correcting its gas price trends. Furthermore, contract provisions peculiar to the gas industry have led to further inflexibility in the gas market. Any policy involving gas pricing may redistribute, whether intentionally or not, tens of billions of dollars. The potential significance of any such policy change has led to a range of analyses that often reach conflicting conclusions and recommendations. Much of the difference among these studies lies in the choice of a perspective for analyzing the effects of gas pricing policy, the choice of assumptions concerning the features of the gas market, or the assumed response of the economy to higher gas prices. In order to assist the Congress in comparing these analytic viewpoints, this paper attempts to organize these various perspectives, assumptions, and features into a single unifed framework against which competing analyses can be measured. Its aim is to raise the questions that any analysis of gas decontrol must address in order to be credible. This framework considers the effects of natural gas wellhead pricing policy changes as they occur in three different but simultaneous contexts: the economic adjustments in the natural gas markets; the effects on the entire economy as households and firms adjust to higher natural gas prices; and the effects on the distribution of income among individuals, regions and economic sectors. 1 figure, 4 tables.

• Research Organization: Congressional Budget Office, Washington, DC (USA)
• OSTI ID: 6412913
• Report Number(s): NP-5900388; ON: DE85900388
• Country of Publication: United States
• Language: English

Related Subjects

03 NATURAL GAS
030600* -- Natural Gas-- Economic
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294003 -- Energy Planning & Policy-- Natural Gas
COMMERCIAL SECTOR
DEREGULATION
ECONOMIC IMPACT
ENERGY SOURCES
FLUIDS
FOSSIL FUELS
FUEL GAS
FUELS
GAS FUELS
GASES
INDUSTRY
LAWS
NATIONAL ENERGY ACT
NATURAL GAS
NATURAL GAS POLICY ACT
PRICES
PRICING REGULATIONS
REGULATIONS
RESIDENTIAL SECTOR