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FTC, APGA Respond to Concerns over High Prices

FTC, APGA Respond to Concerns over High Prices

Federal Trade Commission (FTC) Chairman Robert Pitofsky has informed Rep.Henry J. Hyde (R-IL) that his concerns about rising natural gas prices will receive "careful consideration" at the agency, but he stopped short of promising to undertake a full-scale investigation.

At the same time, the American Public Gas Association (APGA), which represents municipal and other publicly owned gas distributors, has renewed its request for the Department of Energy (DOE) to conduct a full review into the operation of the natural gas market, with specific focus on escalating prices.

"Your letter has been forwarded to the [FTC] commissioners, to the director of the commission's Bureau of Competition, and to staff members within the Bureau of Competition" for a close review of the "information and views you have provided," Pitofsky wrote in his Nov. 17 letter to Hyde.

The agency "will remain vigilant to detect any antitrust violations involving natural gas and other energy markets," he said. It "will immediately let you know of any public action the Commission or its staff may take involving the natural gas industry."

In early October, Hyde urged the FTC to investigate whether gas producers may have illegally colluded to create the current shortage in natural gas supply in order to drive up prices for the fuel (see NGI, Oct. 16). With Congress out until Dec. 4, Hyde was not available to comment on the FTC's response.

In seeking an FTC investigation, Hyde said he was not accusing the gas industry of collusion, but nevertheless he believed the situation merited a review. "Consumers need to know whether or not producers and utility companies deliberately diminished reserves of natural gas in order to drive the price up," he said last month.

Major gas producers claimed that Hyde, chairman of the House Judiciary Committee, had no "concrete evidence" to justify an FTC investigation, and was simply on a fishing expedition.

In a Nov. 15 letter, the APGA cited its dissatisfaction with the DOE's reply to its request in mid-June for an agency review of gas prices. Last summer, the department responded that it would "continue to monitor developments in the nation's gas markets," but it had a "reasonable expectation" to believe prices would moderate over time (see NGI, July 10).

But that has been far from the case, APGA President Ken Craig wrote to Energy Secretary Bill Richardson. The Nymex contract for December 2000 the week of Nov. 13 "opened.at $5.65/MMBtu and has even exceeded $6/MMBtu, while the price for that same contract was only $3.75/MMBtu when we wrote you in June --- more than a 50% increase," Craig said.

On Friday, the December futures contract on Nymex ended the regular trading session at a record high of $6.621, but was eclipsed by an all-time high of $6.70 for the January futures contract.

"On behalf of the nation's public gas systems and more importantly their customers, APGA again registers its concern and requests that DOE conduct a review" of the gas market and prices, Craig noted. Specifically, he asked the DOE to weigh the impact on gas prices of increased price speculation in the commodity, greater use of gas for power generation, OPEC-driven oil prices and consolidation in the energy industry.

The department "needs to take a leading role in first determining why we are confronted with unjustifiably high natural gas prices and then developing solutions to this serious problem."

Susan Parker

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