Natural gas decontrol: the road to lower energy prices

It is the thesis of this article that comfort with the present regulatory framework for natural gas results from misconceptions about its effects. Price controls reduce the overall amount of domestically produced gas and ultimately lead to higher prices. The authors argue that full decontrol of natural gas would increase supplies by encouraging full production from shallow wells and would, at worst, leave unchanged the average natural-gas price since current market conditions indicate that deep-gas prices have already equilibrated with other energy prices. Full decontrol of natural gas would lead to lower total energy prices as an increase in domestic natural-gas production would reduce the US demand for alternative energy. Foreign oil producers would have to choose between reducing production below current depressed levels or negotiating their first reduction in nominal prices. 14 references, 4 figures, 2 tables.