Partial deregulation of natural gas Essay

With the new year came the long awaited price decontrol of between 50 and 60 percent of the nation’s natural gas supplies. Contrary to many predictions, however, this deregulation is now expected to result in an initial price drop, largely because of a gas surplus estimated at between 1 and 2 trillion cubic feet.

Congress enacted the Natural Gas Policy Act (NGPA) of 1977 to give gas producers a greater incentive for investing in costly new exploration by permitting them to charge significantly more for any fuel extracted from these operations. Until Jan. 1, NGPA set a ceiling on the wellhead price of more than 20 natural gas categories. Decontrol allows the price of interstate-pipeline supplied gas in several categories — mostly “new” gas, from wells drilled after April 20, 1977 — to fluctuate according to market conditions or contract provisions.

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