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
"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
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,
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."