American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc.

Abstract

It is a daily occurrence to read and hear about our energy crisis. It is, and should be, everyones concern. The small voice of the independent oil and natural gas producer has been heard but not heeded. The independent oil and Gas Association of West Virginia, recognizing these problems, set out to correct the situation. It seemed that a reasonable solution should be attainable. However, we have experienced many setbacks which have been both expensive and frustrating. We have gained a great deal of respect for the problems of the interstate pipeline companies and the impossible task of federal regulation of natural gas prices.

The constant turmoil created by the Natural Gas Act and indecisions of the Federal Power Commission and Congress has put the entire petroleum industry, and put the entire petroleum industry, and especially the small independent, close to the point of extinction.

This cloud over our heads is certainly discouraging; however; we must not decrease our efforts toward a just and free enterprise system.

Background

The basis of our problem stems from the Natural Gas Act of 1938 passed by Congress. The Act required the Federal Power Commission to regulate the price of natural gas sold in interstate pipeline systems. The trouble started in 1954 when the FPC was ordered by the Supreme Court to also set prices for producers. This task of determining "just producers. This task of determining "just and reasonable" prices individually for thousands of producers, turned into a real monster. So by 1960, the Commission publicly announced that even if its Staff were tripled, it couldn't catch up with pending cases for 83 years.

Several attempts have been made by the FP C to accomplish fair regulation. Geographical areas were set up where supposedly costs of operating were equal.

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