Natural Gas Policy Act of 1978: Difference between revisions
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The Natural Gas Policy Act of 1978 (NGPA) authorized the Federal Energy Regulatory Commission (FERC) to regulate both intrastate and interstate natural gas production and transmission. In addition, the act set price ceilings for wellhead first sales of gas, though these were later repealed. In fall 1978, the 95th United States Congress approved NGPA and President Jimmy Carter (D) signed it into law.[1][2]
Background
Because the United States supported Israel in the 1973 Arab-Israeli War, Arab states of the Organization of the Petroleum Exporting Countries (OPEC) instituted an oil embargo against the U.S. As a result of the embargo and diminishing production at home, the United States suffered a shortage in oil and gasoline, as well as increasing prices.[3][4]
According to the U.S. Senate Committee on Energy and Natural Resources, the embargo, which was lifted in March 1974, "propelled energy issues to the top of the national agenda and ultimately led to the creation of a separate agency for energy." In 1974, Congress created the Federal Energy Administration (which was subsumed by the U.S. Department of Energy upon its establishment in 1977). The Energy Policy and Conservation Act of 1975 declared a comprehensive federal energy policy and created the nation's Strategic Petroleum Reserve.[5]
Much of the nation's midwest suffered a natural gas shortage in 1976 and 1977. At this time, FERC did not have the authority to regulate intrastate natural gas production or transmission. On February 2, 1977, President Jimmy Carter signed into law an emergency natural gas act authorizing the federal government to take emergency actions to address the shortage.[6][7]
On April 18, 1977, Carter delivered a televised address about the nation's energy crisis. In his address, Carter called for energy conservation and the expanded use of renewable energy sources. He also announced his intention to present Congress with a series of energy proposals.[8]
| “ | I know that some of you may doubt that we face real energy shortages. The 1973 gasoline lines are gone, and our homes are warm again. But our energy problem is worse tonight than it was in 1973 or a few weeks ago in the dead of winter. It is worse because more waste has occurred, and more time has passed by without our planning for the future. And it will get worse every day until we act. The oil and natural gas we rely on for 75 percent of our energy are running out. In spite of increased effort, domestic production has been dropping steadily at about six percent a year. Imports have doubled in the last five years. Our nation's independence of economic and political action is becoming increasingly constrained. Unless profound changes are made to lower oil consumption, we now believe that early in the 1980s the world will be demanding more oil that it can produce.[9] | ” |
| —President Jimmy Carter | ||
Legislative history
See bill: Natural Gas Policy Act of 1978 (as passed)
Natural Gas Policy Act of 1978 |
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| United States Congress |
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| Legislative history |
| Introduced: March 21, 1977 (introduced in the United States House of Representatives) |
| House vote: Approved; July 18, 1977 |
| Senate vote: Approved; October 4, 1977 |
| Conference vote (House): 231-168; October 14, 1978 |
| Conference vote (Senate): 57-42; September 27, 1978 |
| President: Jimmy Carter |
| Signed: November 9, 1978 |
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Representative Sam Gibbons (D-Florida) introduced NGPA in the House on March 21, 1977. The Committee on Ways and Means reported the bill favorably on June 16, 1977. The House approved the legislation on July 18, 1977 and sent it to the United States Senate. The Senate Committee on Finance reported the bill favorably on September 9, 1977. The Senate passed its version of NGPA on October 4, 1977. A conference committee was convened to reconcile the differences between the two bills and submitted its report to the Senate on August 18, 1978 and to the House on October 10, 1978. The Senate agreed to the conference committee report on September 27, 1978 by a 57-42 vote and the House followed suit on October 14, 1978 by a 231-168 vote. President Jimmy Carter (D) signed NGPA into law on November 9, 1978.[2]
In remarks delivered at the signing ceremony for NGPA and four other energy bills, Carter said the following:[10]
| “ | [The Natural Gas Policy Act of 1978] ... will end 30 years of debate over how natural gas should be regulated, how it should be priced. One of the major altercations of President Harry Truman with the Congress was his veto of a bill relating to the same subject. This act will for the first time provide a uniform national market for natural gas, with adequate incentives for producers to increase their production in a sustained and dependable and efficient way, and also to guarantee consumers increased long-range supplies of this valuable source of energy and also with predictable and moderate price increases.[9] | ” |
| —President Jimmy Carter | ||
Components
FERC regulatory authority
Between 1938 and 1978, the Federal Power Commission (the predecessor to today's FERC, which was formed in 1977) and FERC regulated only interstate natural gas production and transmission. Enactment of NGPA authorized FERC to regulate both interstate and intrastate production and transmission. According to the U.S. Energy Information Administration, FERC was granted this regulatory authority in an effort to "shift from the previous system of bifurcated markets, in which natural gas was produced and sold in upstream markets (i.e., those close to the producing field) under markedly different regulations."[1]
Price ceilings
NGPA created a system of price ceilings for wellhead first sales of gas. The ceilings were determined in accordance with a variety of factors, including the date the well was started, the well's depth, the well's proximity to other wells, the date the well entered production, and the geology and geography of the deposit that produced the gas. Price ceilings were designed to account for inflation.[1]
Enactment of the Natural Gas Wellhead Decontrol Act of 1989 (the Decontrol Act) repealed NGPA price ceiling provisions. Representative Philip R. Sharp (D-Indiana) introduced the Decontrol Act in the House on April 6, 1989. The House approved the bill on April 17, 1989. The Senate approved its version of the legislation on June 14, 1989 by an 82-17 vote. A joint conference committee was convened to reconcile the differences between the two bills and submitted its report on June 22, 1989. The Senate agreed to the conference committee report on June 22, 1989 and the House followed suit on July 12, 1989. President George H.W. Bush signed the Decontrol Act into law on July 26, 1989.[11][12]
See also
External links
Footnotes
- ↑ 1.0 1.1 1.2 U.S. Energy Information Administration, "Natural Gas Policy Act of 1978," accessed August 21, 2014
- ↑ 2.0 2.1 The Library of Congress, "Bill Summary and Status - 95th Congress (1977-1978) - H.R. 5289 - Major Congressional Actions," accessed August 21, 2014
- ↑ U.S. Department of State Office of the Historian, "Oil Embargo, 1973-1974," accessed August 1, 2014
- ↑ National Public Radio, "The 1973 Arab Oil Embargo: The Old Rules No Longer Apply," October 16, 2013
- ↑ U.S. Senate Committee on Energy and Natural Resources, "History," accessed August 1, 2014
- ↑ The American Presidency Project, "Jimmy Carter - Emergency Natural Gas Act of 1977 Remarks on Signing S. 474 and Related Documents," February 2, 1977
- ↑ NaturalGas.org, "The History of Regulation," accessed August 21, 2014
- ↑ The American Presidency Project, "Jimmy Carter - Address to the Nation on Energy," April 18, 1977
- ↑ 9.0 9.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ The American Presidency Project, "Jimmy Carter - National Energy Bills Remarks on Signing H.R. 4018, H.R. 5263, H.R. 5037, H.R. 5146, and H.R. 5289 Into Law," November 9, 1978
- ↑ The Library of Congress, "Bill Text - 101st Congress (1989-1990) - H.R. 1722 ENR," accessed August 21, 2014
- ↑ The Library of Congress, "Bill Summary and Status - 101st Congress (1989-1990) - H.R. 1722 - Major Congressional Actions," accessed August 21, 2014
