OIL & GAS: Price Boost

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OIL & GAS

Few U.S. industries have grown faster than natural gas in the last five years, largely because gas was so much cheaper than coal. Last week, the Federal Power Commission switched on a green light for gas prices to go scooting up. FPC approved a 15% rate boost ($11.4 million) for Tennessee Gas Transmission Co., one of the biggest U.S. gas pipelines. Thus FPC signified that it will okay a large part of $93 million in other boosts which 28 additional companies are seeking. As a sample of what this may mean to the consumer, Michigan Consolidated Gas Co. has already asked Michigan's rate board for an 18% hike in its rates to homeowners and industries.

Some 20% of the rise was made necessary by price boosts already made by producers who sell to Tennessee. The rest was caused by higher wages, federal and state income taxes and a new "gathering" tax imposed by Texas, which brings in $1,000,000 a month in revenue. The rise was far from enough to close the gap between gas and coal prices. But now that gas prices have started up, the ailing coal industry had hopes of winning back some of its lost markets.