Laserfiche WebLink
<br />2.2.12 Crude Oil Windfall Profit Tax Act of 1980 <br />For a discussion of this legislation, see subsection 2.9.4. <br /> <br /> <br />2.3 NATURAL GAS <br />The distribution and use of natural gas were first regulated by state <br />public utility commissions (PUC). In return for being granted exclusive <br />rights to market natural gas in a particular area, a distribution company <br />surrendered authority to the government to decide what facilities would be <br />built and where, and how much the company could charge for its services. 54 <br />By their very nature, such decisions required consideration of how to best <br />serve the public interest, and natural gas use regulation was developed <br />largely based on consumer protection concepts. <br />Early controls on the production of natural gas were designed to <br />conserve the production capability of oil and gas reservoirs.* Various <br />state laws were enacted prohibiting venting and other wasteful practices. <br />Additionally, petroleum producing states, such as Texas <!nd Oklahoma, <br />restricted production by controlling the number of wells drilled, their <br />spacing in a field, and their monthly prOduction rates. 54 <br />By the early 1900's natural gas was thus controlled at both the pro- <br />ducing and consuming ends. Whereas interstate pipelines had extended <br />only short distances, transmission facilities expanded into more distant <br />market areas during the 1920's and 1930's. Prior to 1938, such pipelines <br />were laid by unregulated private concerns. 54 As demand continued to <br />increase and pipelines extended from Texas to New England, a situation <br />developed where both consuming states and producing states were attempting <br />to regulate (through PUC's) the interstate transportation of natural gas <br />with conflicting objectives in mind. The Supreme Court ruled consistently <br />that all such attempts violated the Commerce Clause of the US Constitution, <br />and Federal interstate legislation was formulated to resolve the conflict. <br /> <br />*Natural gas production is sometimes incident to oil production and <br />depletion of the gas from a reservoir can severely impair recovery of oil <br />from the field. <br /> <br />2-18 <br />