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APGA: More Transparency Doesn't Mean More Regulation

To the American Public Gas Association (APGA), high natural gas prices are not "business as usual," and the trade group says, "Any high-ranking government official charged with protecting the public interest" ought to agree.

In this case the high-ranking official is Commissioner Sharon Brown-Hruska of the Commodity Futures Trading Commission (CFTC). APGA CEO Bert Kalisch took umbrage at remarks she made during a January speech in Houston (see NGI, Jan. 30). In her talk, Brown-Hruska said the CFTC does not need expanded authority to monitor natural gas market activity. The commissioner referred to House bill HR 4473, passed by the House in December (see NGI, Dec. 26, 2005), which would require greater CFTC scrutiny of energy markets through increased surveillance and reporting requirements.

"As economic fundamentals change, markets reflect the changes through price movements, and there is never a shortage of individuals or interests that believe that such movement reflects market abuse or manipulative behavior," Brown-Hruska said in Houston.

In a Feb. 14 letter to the commissioner, Kalisch commended her for saying the nation needs to increase its natural gas supply. "You go on, however, to state that 'energy users will react to prices,'" he wrote. "While true, the consequences associated with the reaction to high prices for this essential commodity will be dramatically more severe. Since much of its demand is price inelastic, natural gas is not subject to the textbook laws of supply and demand."

APGA said that high natural gas prices are affecting budget-strapped schools and low-income consumers who are being forced to do without necessities to pay gas bills.

"While historically high prices for this commodity may be 'business as usual' for some, it is certainly not APGA's position or the position of its Members or the people they serve."

Kalisch referenced letters sent by APGA in June and November 2000 to the Secretary of Energy and the chairman of the Federal Energy Regulatory Commission, expressing concern over "unexplained" high natural gas prices (see NGI, June 12, 2000). "The responses from both agencies to both letters are strikingly similar to your [Brown-Hruska's] comments last month -- essentially 'simply supply and demand.'

"Shortly after our letters were sent, you know as well as I about the abuses that occurred within Enron and other gas marketers with false price reporting fiascoes [sic] and other manipulative practices that took our government years to uncover," Kalisch wrote.

"APGA believes that one of the ways to respond to consumer concerns that markets are being manipulated, and in turn instill greater confidence in markets, is to have a level of transparency that can readily and easily demonstrate to consumers that market prices are a result of appropriate market forces and not manipulation," Kalisch continued in his letter. "I do not believe that a call for greater transparency is a call for greater regulation."

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