Natural Gas Supplies for Tomorrow

Abstract

The control sought to be vested in the Federal Power Commission over the price received by the producer and gatherer of natural gas presents one of our most important contemporary problems. The issue, in so far as it affects the independent producer,' is now before the United State Supreme Court in the Phillips case (State of Wisconsin v. Federal Power Commission2). The issue as it affects natural gas companies has already been passed on in several cases, the soundness from the legal standpoint and wisdom of which are still being debated.3 The problem is a fundamental one in so far as natural gas supplies for tomorrow are concerned. The business of producing and gathering natural gas and selling it in or near the field is, under our American system, a private undertaking. The risks and hazards are so great that no one will undertake them if he is held to a return on his investment similar to that received by utility companies with altogether different types of operations and risks. Notwithstanding this, in the past decade through a series of encroachments on the part of the Federal Power Commission and by strained constructions given the Natural Gas Act by the courts, such a limitation on return or income would appear to be sought. As a basis for understanding the problem presented, it is necessary to describe briefly the nature of natural gas, the operations involved in producing and gathering it, and the competitive and risk-taking characteristics of gas exploration and production.