February 16, 1977

Public Ownership Of Gas No Longer Unthinkable

NOTE: The following column was published in January 1975 and is reprinted to illustrate that the present energy shortage was known long ago by public and private officials.  My observations then seem just as pertinent today.

Given the right circumstances, the unthinkable becomes realistic.

Columbia Gas Company of Ohio has announced that the supply of natural gas will be cut in half to industrial users and that a complete shutoff is a possibility within five to ten years.

Suddenly, the prospect of public ownership of the gas industry - to be followed by oil, coal and electric - seems not only possible but, to many, even desirable.

James G.  McKee, Columbia board chairman, said recently that gas shortages will get worse unless the Federal Power Commission lifts controls of wellhead prices.

He said substantially higher prices are needed by the gas producers in order to boost profits to a point that exploration of new fields will be feasible.

McKee points out that his company is only a local distributor of natural gas.  Production in Texas is controlled by an independent company, and distribution by pipeline is by still a third firm.

As a result of political suppression of interstate gas rates by FPC, says McKee, the Texas producers can sell their highly efficient fuel within their own state for $1.45 to $1.90 per thousand cubic feet.  The federal rate allows only 50 cents per thousand cubic feet delivered in Ohio.

Even the village idiot can figure out why, all at once, there is a gas shortage in Ohio.

Also, it doesn't take a high degree of perceptiveness to foresee a consumer-oriented, politically-motivated backlash developing as a consequence.

When Governor James Rhodes was inaugurated last week he emphasized that Ohio had gas and coal underground.  "We're going to get it out of the ground and let industry burn it to make jobs and let homeowners burn it to keep warm," said Rhodes.  "We're not going to let the big gas companies gouge Ohio citizens."

Rhodes said the state would help develop methods of removing sulfur pollutants from the coal, but the tone of his voice indicated he wasn't going to let environmentalists stand in the way.

It is interesting to note that the tone was not lost on State Senator Oliver Ocasek, now leader of the majority Democrats in the Ohio Assembly and an opponent of strip mines.  "He (Rhodes) just declared war," muttered Ocasek to William Blair, director of Ohio Environmental Protection Agency, as they left the inauguration platform.  

Blair told me later that no governor can ignore environmental safeguards built into EPA laws.  He admitted, however, that a determined administrator still has a lot of leeway in getting action.

As unemployment rises and the temperature drops, the prospect of discharging sulfur into the air no longer is unthinkable.

It, too, will be readily embraced as a way of life when life depends upon it.

Ohio has a 300-year supply of coal available.  There is no likelihood of our freezing to death in poverty when salvation exists in a strip-miner's bucket.

The present gas crisis smells.

It has all the characteristics of power play by the gas producers.

Ohio industry dependant upon gas is in near panic.  The spectre of bankruptcy is frightening.

A permanent energy shortage eventually might concentrate industry - and jobs -into Texas, Oklahoma and California where the U.S. supply of gas and oil is located.

The economic impact of a relocation of manufacturing facilities in a small area in just a few years would be catastrophic.

The alternative, of course, is government control of the gas and oil industry.  Federal intervention would be swift.  President Harry Truman waited only 60 days to take over the rail roads when a nationwide strike imperiled the national economy.

No U.S. president would wait even that long, in the event of a gas cut off to the populous northern areas.

In my opinion, Congress will not take the present gas reduction quietly.  Before this winter is over we can be sure that our representatives will be turning the screws on the gas producers.  The first thing to go probably will be the depletion tax credit, and this will make matters worse.

If the gas producers are smart they will ease up their strangle hold on Ohio.

It is true that the government has held down the price of gas for political reasons.  It is popular to order cheap, clean fuel.

But this has been a dream world.  Why bother with bulky, dirty coal when gas is so cheap?  We have lived like there was no tomorrow.

With coal outlawed, and the Arabs driving up the cost of oil to astronomical levels, the gas producers think they now have the economic power to force Congress to redress the balance.

I say that Congress and the gas companies are playing a dangerous game of brinkmanship.

We may find out which is the stronger, but perish in the revelation.

For everyone's sake it is time to back away from the brink.  Congress must allow gas to rise to a more realistic price level, and the producers must be satisfied with profits more modest than that of competitive industry.

The alternative is public ownership, and that really spells disaster.  It would be the first step to inevitable regimentation of all aspects a of life - a la the Soviet Union and the People's Republic of China.

Better we should re-think the problem.

Author: Lindsey Williams