House Judiciary Committee Chairman Henry J. Hyde (R-IL), whothis summer asked the Federal Trade Commission to investigatepotential price gouging in the gasoline market, has now called onthe agency to investigate the escalation in natural gas prices.

In a letter yesterday to FTC Chairman Robert Pitofsky, Hydeurged the agency to specifically investigate whether gas producersmay have illegally colluded to create the current shortage innatural gas supply in order to drive up prices.

“The press reports indicate that last year when prices werelower, producers cut their production. That production cut has ledto the current shortage with corresponding higher prices. Suchproduction cuts could be a legitimate response to market forces. Onthe other hand, if they were done collusively, they could violatethe antitrust laws,” Hyde wrote in his Oct. 10 letter.

“I am making no accusations because I do not know all therelevant facts. However, I do believe the situation calls for somereview,” he said, urging the FTC to report its findings andrecommendations “as promptly as possible” to the JudiciaryCommittee. “Consumers need to know whether or not producers andutility companies deliberately diminished reserves of natural gasin order to drive the price up,” Hyde said in a prepared statement.

Gas producers believe Hyde is on a fishing expedition. “Thisclearly has more political overtones than any merit. It doesn’tlook by the letter [to the FTC] that Hyde has any concreteevidence. But given the fact that gas prices are high, he’sprobably looking for political cover from his constituents,” said aproducer source.

The Natural Gas Supply Association (NGSA), which representsmajor producers, has been in contact with both the House JudiciaryCommittee and the FTC about the matter. “This association will beglad to respond to any questions the committee has of us,” saidNGSA Vice President John Sharp.

In requesting the probe, Hyde said “industry sources are hintingin press reports that natural gas used to heat millions of homesmay skyrocket as much as 90% in the month ahead…..I think we mustmove quickly to find out if and why that is true.”

It’s not clear what press reports the Illinois politician wasreading. In its “Winter Fuels Outlook: 2000-2001” last week theEnergy Information Administration (EIA) projected a much moremodest increase in residential gas prices in the months ahead. Itestimates delivered gas prices for residential customers will riseon average by about 30% during this winter heating season. As aresult, a typical Midwest household is likely to pay about $240more for natural gas this winter than it did last year, theDepartment of Energy (DOE) agency said. Hyde’s home state ofIllinois is expected to be especially hard hit by the higher gasprices this winter.

Hyde recalled that gasoline prices fell 30% in the Chicago areafollowing his request for an FTC probe of the market. He hopes theFTC investigation of natural gas prices will send an equallyimportant signal to producers and utilities that federal regulatorsare on the lookout for anticompetitive behavior.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.