Natural-gas decontrol debate heats

You might call it natural-gas wars. From small towns to the lofty headquarters of oil companies - and most of all in the halls of Congress - a controversy is raging over what to do about the tangled natural-gas industry.

Few commodities affect as many people. Just over half of all US homes are heated by natural gas. Factories use the clean-burning fuel to fire boilers, and utilities use it to generate electricity.

Natural gas even affects food prices, since nitrogen fertilizers are made from it.

So it is little wonder that a debate over natural gas is generating its own share of heat. The Reagan administration wants to end federal regulation of natural-gas pricing that began in 1938. Oil has already been deregulated, goes the reasoning, and now it is time for all energy to be in the ''free market.''

Supporters of the Reagan plan say it promises more supplies and maybe lower prices. Opponents cry that it will pour billions into big oil companies, raise heating bills, and even reduce exploration.

No one knows for sure what the results would be, partly because the natural-gas industry is probably the most complex in the United States. It is a Rube Goldberg contraption that includes big oil companies that have vast proven reserves of gas, wildcat explorers, importers of high-cost gas from Algiera and Canada, pipeline companies of all sizes that transport the gas, and distributors who sell it to households and factories.

Virtually every step of the process has been shaped by 45 years of government regulation. And with Congress now considering acting on natural gas, possibly as soon as next month, the groups affected are launching major lobbying offensives.

During August the Natural Gas Supply Association deluged congressional offices with thousands of post cards in what was called a ''grass roots'' campaign to decontrol natural gas. The trade association, which is controlled by major oil companies, recruited volunteers through a computer mailing and asked each to give post cards to five friends and neighbors. The cards were already stamped and addressed to the local congressman.

Michael J. Waters, spokesman for the supply association, says the campaign cost $1 million and that 25,000 volunteers participated. He adds that most of the volunteers were picked from areas where residents ''don't like the idea of government intervention.''

This weekend opponents of decontrol will fire a return volley. The AFL-CIO and the Citizen/Labor Energy Coalition (CLEC) will spread the word that decontrol means higher costs to consumers during two days of ''gas protest'' activities. Members of the groups will be knocking on doors, handing out post cards for congressmen, and attending rallies in cities from Los Angeles to Duluth, Minn.

But beyond these lobbying blitzes, there are hundreds of other voices involved in the natural-gas debate. They include farmers worried about having enough natural gas supplies to make fertilizers, and utilities that have lost industrial customers because of the soaring price of natural gas.

Also watching the legislation are hundreds of natural-gas drillers who have closed down. Although their prices are often low, they can't sell their gas because the pipelines already have too much gas that they have contracted to buy at much higher prices. Rep. Bob Wise (D) charges that 35 to 40 percent of the gas production in his state of West Virginia is ''shut in'' while pipelines continue to buy more expensive gas to fulfill contracts.

As these and other groups try to sway Congress in their direction, the real issues boil down to price and supply. The Reagan administration says decontrol will improve both. Opponents say it will not.

''Look back at what the anti-deregulators said about oil,'' says Robert C. Odle Jr., assistant secretary of the US Department of Energy. The price of gasoline is ''lower in a decontrolled environment,'' he says.

''We have adequate supplies, but prices are rising,'' he says. ''That can only happen when the government has controls.''

Edwin Rothschild, Washington director of the CLEC, counters that decontrolled natural gas will not be a free market. ''Gas will track oil prices,'' he says, and oil prices are controlled by international oil companies. His group maintains that complete decontrol will raise prices 50 percent.

However, experts in natural gas say no one can predict the exact results of decontrol.

Harry G. Broadman, an economist with Resources for the Future, a nonprofit Washington think tank, says that ''full decontrol is probably not going to alter the price of gas, on average, much'' and that gas supplies would be improved under decontrol.

The Reagan administration is backing a plan for phased decontrol for all natural gas that narrowly cleared the Senate Energy and Natural Resources Committee and now awaits action by the full Senate. A less comprehensive House bill that would keep controls on gas from wells drilled before 1977 has gone to full committee.

Meanwhile, opponents are trying to build momentum behind a bill that would reinstate and strengthen controls on natural-gas prices. The proposal, sponsored by Rep. Richard A. Gephardt (D) of Missouri and Sen. Nancy L. Kassebaum (R) of Kansas, has a growing list of sponsors but has not won committee approval.

Although no action has been scheduled on any of the proposals, both sides have said they want action next month before the heating season begins and natural-gas decisions become even more politically difficult.

Next: Nationwide grass-roots effort against natural-gas deregulation.