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operator untried in the delivery field of operation might have an opportunity to try to deliver.

Mr. DOUGHERTY. Well your feeling is, I take it, that the Commission would insist on the man showing some experience in the naturalgas business before they felt that he could obtain a certificate?

Mr. BOREN. My humble opinion is that they would say, “What evidence have you to show that you can do this." He has no past history behind him. He would be greatly handicapped.

Mr. DOUGHERTY. Well, that, Mr. Boren, is a matter of opinion. I do not know whether the Commission would view it that way or not. I think that you would have to ask them before you would know what they would say.

Mr. BOREN. Well, certainly, but I have brought that up as one opinion in answer to your opinion that they would be safe along that

You have explained your opinion. Mr. DOUGHERTY. That is true. My experience has been that commissions act as they see things fairly, and I have never known them to turn down these applications abitrarily. Mr. Maltbie has cited the situation in the Cabbot Gas Co. case. They granted that permission over the objection of a great many others who were losing the business that they now have in the sale of coal, to the Eastman Kodak Co.

That same company had previously made an application to the Pennsylvania commission to take gas from the same field, in northern Pennsylvania, over to Bradford and serve the industries there, and at a much lower rate than they were being served, and the Pennsylvania commission after a hearing denied that application to the Cabbot Co. Then the Cabbot Co. in turn turned northward and went into New York with the results as you have heard.

I might also say that sometimes that feature in the law reacts against established companies. Now, there is a pipe line which runs up toward Philadelphia that has made contracts with numerous distributing companies, Reading, Allentown, Bethlehem, for the delivery of natural gas, and Governor Earle of Pennsylvania has refused that company a permit to extend its pipe line each time, solely because he wants to protect the anthracite-coal business, and he feels that the situation in that State is such now that no new gas lines should be extended. Without that Pennsylvania State law, that company could go ahead. Notwithstanding that one instance, I believe over the long period of time the building up of the business so that service will be rendered by companies which can render service efficiently will result, and I believe that the public interest will best be served by such a provision.

It is true in the railroad field. This committee no doubt has passed and sometimes passes on similar sorts of provisions in the interstate-commerce laws. This same provision is in the motorvehicle law which was passed a year or so ago.

The CHAIRMAN. Mr. Dougherty, you represent a number of companies here?

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Mr. DOUGHERTY. Yes, sir.

The CHAIRMAN. Are you at liberty to express an opinion as to the attitude of those companies as to the general purposes of this bill ? I am not asking you for an expression covering details, of course, but general purposes.

Mr. DOUGHERTY. Well, we have no objection to the bill. We are not opposing it. We think that generally it is sound regulation. It follows the lines of regulation in many of the States.

Frankly, I think that about the only result that will occur is increased cost both to the Federal Government in the setting up of additions to the Federal Power Commission and to the companies. I do not believe that the expense that is going to be incurred by these companies, that ultimately must be paid by the rate payers and the consumer, is going to find its benefits in as greatly a reduced rate as some of these city officials feel hat they will get; but we ha objection to the Federal Government stepping into this field of regulation.

I think that ultimately there will happen in this field what has happened in the railroad business, namely, the Federal Government more and more will take over the fixing of rates, and you will get to the point in 10 or 15 years when there is very little State control over natural-gas rates where the gas is brought in from outside; but we have no objection, and I think the bill is, generally speaking, a proper sort of measure.

I would, in connection with that statement, like to make this reservation. Whether or not any of the companies which I am connected with or any other companies at any time want to contest the constitutionality of any of these provisions I am not now informed, and I do not want any statement that I am making now to be binding on those companies in any future court procedure if they should decide to take it.

I say that, Mr. Chairman, because in the case of the Electric Bond & Share Co. which the S. É. C. brought to compel them to register under the Public Utilities Holding Company Act the fact that their officials did suggest to this committee certain forms of legislation that they thought would be advisable was used by counsel for the Government as a basis for estoppel on their part from questioning the constitutionality of any of the provisions, and I do not want to get into that position by anything that I may have said here.

The CHAIRMAN. Of course, I realize that you cannot make a concrete commitment for all of these companies as to the various provisions of the bill. It is only to get a reflection of the general attitude of the companies as to the measure.

Mr. DOUGHERTY. I think the general attitude of the companies is that it is satisfactory.

Mr. EICHER. You are not afraid that it contains any death sentence?

Mr. DOUGHERTY. No; I do not think so. We will keep on selling gas; whether the customers will get it for any less price than they have been paying in the past, Mr. Eicher, is something that will have to be seen. I doubt that they will, but these municipal authorities apparently would all feel much happier if the question of rates was passed on in Washington rather than at their State capitals by State commissions; and if they feel happier, I have no reason to deny them that.

The CHAIRMAN. We thank you.
Mr. DOUGHERTY. Thank you.

. The CHAIRMAN. And at this place in the record I would like to insert a statistical and economic survey of the Petroleum Economics Division of the Department of the Interior which in effect brings the statistics of the gas industry up to date.

(The document referred to is as follows:)

NATURAL GAS INDUSTRY RECOVERY CONTINUED IN

1:33

The marketed production of natural gas, which made it noti ble l'e overy in 1934, continued its upward trend in 1.935 when the output increased s percent over 1934 to a total of 1,916,595,000,000 cubic feet, according to the United States Bureau of Mines, Department of the Interior. Although this gain brought production up to virtually a par with the record of 1929, it was still a little below the record (1,943,421,000,000 cubic feet) of 1930. Imports of natural gas from Canada in 1935 totaled 106,000,000 cubic feet, exports to Canada were 73,000,000 cubic feet and to Mexico 6,727,000,000 cubic feet, making the consumption within the United States 1,909,901,000,000 (•ubic feet, or 144,913,000,000 cubic feet higher than in 1934. Slightly more than half of this gain is traceable to increased demand by industries other than field use and the manufacture of carbon black with the next largest increase in domestic and commercial consumption.

The downward trend in the value of natural gas at the wells, which began in 1929, was continued in 1935 when producers received an average of 5.8 cents per thousand cubic feet, compared with 6 cents in 1934. Although the 1935 average represents the lowest average return to the producers so far recorded, it should be borne in mind that the decline in this value in recent years has been due chiefly to the increasing proportion of 1 or 2 cent residue gas in Texas. Because of the large volumes involved, this business has undoubtedly been profitable to the producers, mostly as revenue from natural gasoline sales, partly as income from sales of residue gas to carbon black plants and consumers in the field.

In other words, most of the natural gas proclucers are probably receiving a higher average price today than they did five years ago. In 1935, the average price paid by domestic and commercial consumers l'emained about the same as in 1934, there being a decrease of only 0.1 cent from the previous year. The industrial price, which had declined in 1934, increased slightly in 1935; hence, the total average value at points of consumption rose from 22.3 cents in 1934 to 22.4 cents in 1935.

Of the total consumption in 1935 (1,909,901,000,000 cubic feet), 580,414,000,000 cubic feet (30 percent) was used for tield purposes; 313,498,000,000 cubic feet (17 percent) was used by domestic consumers; 100,187,000,000 cubic feet (5 percent) was used by commercial consumers; 241,589,000,000 cubic feet (13 percent) was consumed in carbon black manufacture; 80,175,000,000 cubic feet (4 percent) was consumed at petroleum refineries ; 125,239,000,000 cubic feet (7 percent) was consumed at electric public-utility power plants; 26,752,000,000 cubic feet (1 percent) was consumed at portland cement plants, leaving 442,047,000,000 cubic feet (23 percent) consumed for “other” industrial purposes. Compared with 1934, these data reflect chiefly a gain in the relative importance of "other" industrial consumption, that is, the consumption by other than the oil, gas, and cement industries.

The number of domestic and commercial consumers (meters) of natural gas in 1935 was 8,004,000, compared with 7,566,000 in 1934. Included in the 1935 total are 2.316,000 consumers of mixed gas, compared with 2,147,000 in 1934.

The number of gas wells completed rose from 1,373 in 1934 to 1,401 in 1937, the increase resulting primarily from the intensified search for petroleum. Tue number of producing wells at the close of the year was 33,790, compared with 53,260 for December 31, 1934.

The total interstate and export movement of natural gas increased 13 percent in 1935 to a total of 468,944,000,000 cubic feet. As this gain / was relatively higher than the increase in total distribution, it follows that the proportion moved in interstate and foreign commerce increased. This resulted from increased operations in the established systems as no new long lines were built.

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Summary of natural-gas statistics, 1935

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9, 214
10, 347
61, 949
11, 595
34, 886

5, 964
10, 329
21, 271

5, 578
43, 307
1, 264
4, 682
17, 430
7, 161
7, 009
2,015
15, 836
35, 776
24, 006
45, 400

078

475 49, 632

1,469
1,871
14, 450
1, 672
6, 919
2, 701
2, 205
5,060
1, 519
7, 919

445

724
3,677
1, 210
1, 626

627
3,865
12, 495

3,857
12,778

472
1, 116
15, 132

[graphic]

Production

Millions
of cubic

feet

Average
Average

value at
value at points of
wells per consump-
M cubic

tion per
feet M cubic
(cents) feet

(cents)

Alabama
Arkansas
California.
Colorado
Illinois
Indiana
Iowa
Kansas.
Kentucky
Louisiana
Michigan
Mississippi
Missouri.
Montana.
Nebraska
New Mexico.
New York
Ohio
Oklahoma
Pennaylvania
South Dakota
Tennessee
Texas.

27, 931

837
2,613

604
2, 386
2, 437
1, 470
1, 874
7, 345

132

712
3, 651
31, 288

199, 876

180, 470

2,368

25, 515

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