Brass Tacks

Natural Gas

Harry Truman is now faced with making one of the most important appointments of his career. The Federal Power Commission is without a chairman. If Truman selects a man sympathetic to the oil and natural gas industries, as was Mon C. Wallgren, the former chairman, the price of natural gas for home use may skyrocket. The FPC passed a ruling during Wallgren's chairmanship that stated that the FPC, under the Natural Gas Act of 1938, could have no jurisdiction over the Phillips Petroleum Co. In so doing, Wallgren turned over control of the FPC to the industries it is supposed to regulate--industries which may now take a couple of million extra dollars from the consumers.

This nasty situation began in 1938 with the passing of the Natural Gas Act, allowing FPC regulation of interstate transportation of natural gas. This act applied only to the wholesale prices charged by the companies which piped oil oil from the "gathering" companies who owned the wells. The pipeline companies could charge natural gas retailers the price they paid at the wells, plus a standard charge for the use of the pipeline. This was a satisfactory arrangement until after the war, when the natural gas industry became a big business.

Now, natural gas was a seller's market. Shrewd businessmen circumvented the FPC by forming holding companies, which combined pipeline and "gathering" companies. These "integrated" companies charged themselves high prices, which jacked up consumer costs and brought in huge profits. "Short-arm" or independent gathering companies with no pipelines of their own, also raised their prices.

In order to regulate the rising price of both the "integrated" and "short-arm" companies, the Supreme Court ruled that the FPC had jurisdiction over both the transportation and the gathering companies. The gas interests had to find a new way of making their exorbitant profits legal.

The obvious step was to get control of the FPC, to try to depose the administration partisans and install pro-oil politicians as members of the commission. Oklahoma Senator Robert S. Kerr was well suited to tht job. A former governor of Oklahoma, Kerr owns vast oil and gas properties, and is deeply involved with the Phillips Oil Company.

Kerr attempted to oust FPC Chairman Leland Olds, after loading the Commission with two of his oilcronies, Harrington Wimberly and Burton Bailing. They began a smear campaign to brand Olds as a Socialist, and the Senate rejected his renomination. Meanwhile Kerr railroaded a bill through the Senate which gave the natural gas producers legal protection against the FPC. Truman vetoed the measure, and Congress couldn't muster the necessary 2/3 majority to override the President.

Truman then appointed Wallgren to the empty chairmanship of the FPC, and Wallgren promptly delivered the commission into Kerr's hands. Supported by Wimberly and Bailing, Wallgren reversed the Truman veto with the August 22 ruling, allowing the increased prices demanded by "short-armed" producers like the Phillips Oil Company. This action brought justified complaints from the "integrated" companies, whose prices are still controlled by the FPC. And, what is more dangerous, Wallgren's decision may act as an opening wedge for other public public utilities to demand less price regulation by the government.

Only if President Truman appoints a new chairman who sees the dangers of the FPC's ruling and who has the vitality to act to reverse it, will higher prices of natural gas for consumers be prevented and further danger averted.