Summary
The Natural Gas Policy Act of 1978 (NGPA) is federal legislation that had been enacted as a response to US natural gas shortages of 1976–77. It was enacted for the following motivations:
- To create a balance between natural gas supply and demand,
- Create a national gas market, and
- Transition to market-based prices.
The NGPA:
- Authorized the Federal Energy Regulatory Commission (FERC) to regulate interstate and some intrastate natural gas production and transportation.
- Was designed to encourage the development of new natural gas supplies by gradually deregulating wellhead gas prices.
- Established maximum lawful prices (ceilings) for the sale of natural gas, which were phased out over a series of years, allowing market forces to set natural gas prices.[1]
The Natural Gas Policy Act (NGPA) was the first building block in a plan from the Carter Administration to increase energy supply while reducing domestic consumption of energy.[2] It preceded the Energy Security Act that President Carter would sign into law in 1980.[3]
In the 1970s, natural gas was persistently in short supply throughout the 1970s, largely because of following:
- Wellhead price regulation
- The 1973 OPEC oil embargo.
Based on this type of energy setting in the 1970s, Congress enacted the NGPA. The act was intended to raise natural gas rates to market clearing levels.[4]
Effect on natural gas supply edit
The NGPA set prices based on where natural gas was old, new, or of high cost. New gas paid a higher price than older gas, which in turn encouraged oil and gas producers to produce from new sources of natural gas. However, this pricing system created a risk for higher prices for consumers as well as inhibiting production for the existing vast old gas reservoirs.[5]
References edit
- ^ "Glossary | Practical Law". content.next.westlaw.com. Retrieved 2024-03-20.
- ^ MacAvoy, Paul W. "The Natural Gas Policy Act of 1978". Natural Resources Journal. 19 (4).
- ^ S.932 - 96th Congress (1979-1980): Energy Security Act | Congress.gov | Library of Congress
- ^ "Our Experience Under the Natural Gas Policy Act of 1978, and Its Relevance to the Natural Gas Wellhead Decontrol Act of 1989". University of Arkansas at Little Rock Law Review. 12 (2).
- ^ "Mobil Oil Exploration and Producing Southeast, Inc., et al.,petitioners, v. Federal Energy Regulatory Commission, Respondent, 885 F.2d 209 (5th Cir. 1989)". Justia Law. Retrieved 2024-04-26.