Gas-price study should include imposed supply limits

Bob Tippee

To expect Congress not to investigate surging prices of natural gas would be unrealistic.

Traders have manipulated prices in the past. Lawmakers have reason to ask if they're doing so now.

The investigation promised by Sen. Orrin Hatch (R-Utah) thus differs from the inquiries that issue pointlessly from Congress whenever gasoline prices cycle upward.

Yet suspicion over one piece of the market and one price move must not obscure the larger, more troublesome picture.

Hatch raises a good question when he says he can't understand why gas prices rose 50% in less than a month while inventories were on the high side of their 5-year average.

The question, however, has a menu of possible answers that have nothing to do with trading shenanigans. They range from forecasts of cold weather to projections of robust economic growth.

Any news implying elevated consumption makes gas prices spurt in a market constrained by supply.

Whether or not rogue traders have abused that condition of the gas market, early-December prices were acute manifestations of a chronic challenge: The US needs more gas than the market can deliver.

At present, the market can accommodate new demand in one area of the economy only by shedding demand in another.

All year, manufacturers dependent on gas for fuel and feedstock have been switching to cheaper fuels, curtailing operations, and in some cases closing plants. They're howling now and apparently winning congressional attention.

That's good. But congressional failure to heed past warnings about a supply crisis deserves at least as much examination as the possibility of trading mischief.

Ignoring one forecast after another about supply problems, Congress has steadfastly refused to open to exploration and development enough federal acreage to make a difference.

The resource potential certainly exists. The political will to turn potential into deliverable supply does not. The limits now clobbering consumers are, to an alarming degree, congressionally imposed.

Hatch should conduct his investigation. If any traders are taking illicit advantage of an edgy market, they should be stopped and punished.

But Congress has villains, too. On land access, they constitute a majority.

The next Editor's Perspective will appear Jan. 2.

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