Gas company

“ At this price gas would be not only the cleanest and most convenient, but also the cheapest form of fuel, and the enormous increase of consumption, the superior quality of the illuminating-gas obtained by selection, and the proportionate increase of by-products, would amply compensate the gas company or corporation for the comparatively low price of the heating-gas. ”

“ The other part of the business-to reduce to possession an adequate supply of natural gas-is of opposite character, being more erratic and irregular and unpredictable in relation to investment than any phase of any other utility business. A thousand feet of gas captured and severed from real estate for delivery to consumers is recognized under our law as property of much the same nature as a ton of coal, a barrel of oil, or a yard of sand. The value to be allowed for it is the real battleground between the investor and consumer. ”

“ The relation of a gas company to a municipality, the commissioners say, is a peculiar one in many respects, and the company ought not, therefore, to be viewed in the same light with other manufacturing corporations. It supplies a commodity which is not a luxury but a necessity; the sale of its product is a limited one, being confined to the city or district which it supplies; and it is expected to lay its pipes so that all who desire to burn gas may do so, which entails an expenditure in distribution that is not, perhaps, repaid by the sale of gas in the particular locality for many years ”

“ The heart of this problem is the elusive, exhaustible, and irreplaceable nature of natural gas itself. Given sufficient money, we can produce any desired amount of railroad, bus, or steamship transportation, or communications facilities, or capacity for generation of electric energy, or for the manufacture of gas of a kind. In the service of such utilities one customer has little concern with the amount taken by another, one's waste will not deprive another, a volume of service and be created equal to demand, and today's demands will not exhaust or lessen capacity to serve tomorrow. ”

“ While holding companies dominated both production and distribution they segregated those activities in separate subsidiaries, [66] the effect of which, if not the purpose, was to isolate some end of the business from the reach of any one state commission. The cost of natural gas to consumers moved steadily upwards over the years, out of proportion to prices of oil, which, except for the element of competition, is produced under somewhat comparable conditions. The public came to feel that the companies were exploiting the growing scarcity of local gas. ”

“ The importance of gas in the oil-producing industry has, therefore, become a question of great concern to the industry itself and to government, to the end that its function may be fully utilized without waste. ”

“ Soon monopoly of production or markets developed. [45] To get gas from the mountain country, where it was largely found, to centers of population, where it was in demand, required very large investment. By ownership of such facilities a few corporate systems, each including several companies, controlled access to markets. Their purchases became the dominating factor in giving a market value to gas produced by many small operators. Hope is the market for over 300 such operators. By 1928 natural gas in the Appalachian field commanded an average price of 21.1 cents per m.c.f. ”

“ If, however, it is decided to cheapen domestic use by resort to industrial sales, should they be limited to the few uses for which gas has special values or extend also to those who use it only because it is cheaper than competitive fuels? ”

“ Gas gives less trouble. It comes in pipes from outside the house. This means that somebody else—the gas company—provides the supply. You turn on the gas when you want to use it and turn it off, if you are wise and thoughtful, the moment it is not needed. The gas company measures the amount of gas that you use by its meter, and you pay for every bit that you burn or waste. The important thing, then, is to use as little gas as possible in order to pay for as little as possible. ”

“ Natural-gas company' means a person engaged in the transportation of natural gas in interstate commerce, or the sale in interstate commerce of such gas for resale.'↑ The three companies include the Mississippi River Fuel Corporation, Southern Natural Gas Company, and the United Gas Pipe Line Company to which gas is sold for the account of the Memphis Natural Gas Company.↑ Petitioner produced and purchased a total of 51,659,799 Mcf of gas in the Monroe field during 1941. ”

“ The service one renders to society in the gas business is measured by what he gets out of the ground, not by what he puts into it, and there is little more relation between the investment and the results than in a game of poker.
Two-thirds of the gas Hope handles it buys from about 340 independent producers. It is obvious that the principle of rate-making applied to Hope's own gas cannot be applied, and has not been applied, to the bulk of the gas Hope delivers. It is not probable that the investment of any two of these producers will bear the same ratio to their investments. ”

“ It consists of intangibles-leaseholds and freeholds-operated and unoperated-of little use in themselves except as rights to reach and capture gas. Their value lies almost wholly in predictions of discovery, and of price of gas when captured, and bears little relation to cost of tools and supplies and labor to develop it. Gas is what Hope sells and it can be directly priced more reasonably and easily and accurately than the components of a rate base can be valued. Hence the reason for resort to a roundabout way of rate base price fixing does not exist in the case of gas in the field. ”

“ The content of gasoline in wet gas varies from one-half gallon to six gallons a thousand cubic feet of gas produced, depending upon its richness. Respondent's contracts provided, generally, that it should install and maintain the necessary pipe lines and connections from casing-heads or traps at the mouth of the well to its plant, through which the producer agreed to deliver the natural gas produced at the well and that respondent should extract the gasoline therefrom, respondent to pay the producer 33 1/3 per cent. ”

“ And, so far as it is given us to look into the future, it seems as certain as anything of such a nature can be, that the demand for gas will increase, and, at the reduced price, increase to a considerable extent. An interest in such a business is as near a safe and secure investment as can be imagined with regard to any private manufacturing business, although it is recognized at the same time that there is a possible element of risk, even in such a business. ”

“ The practice which obtains with the Detroit Mutual Company and others, of adding air to naphtha-gas to reduce its illuminating power so that it can be burned in an ordinary burner, was judged by the commissioners to be the reverse of economical, to both the company and consumer, because the deterioration of the gas by this means is in greater ratio than the increase of its volume. It is said that one per cent, of air will reduce the illuminating power six per cent., or more than carbonic acid, the removal of which is considered necessary by all gas-engineers for the sake of economy. ”

“ This is a relatively routine operation not differing substantially from many other utility operations. The service is produced by an investment in compression and transmission facilities. Its risks are those of investing in a tested means of conveying a discovered supply of gas to a known market. A rate base calculated on the prudent investment formula would seem a reasonably satisfactory measure for fixing a return from that branch of the business whose service is roughly proportionate to the capital invested. ”

“ The West Virginia Public Service Commission having held that 50 per cent. of the net return from the sale of gasoline should be credited to the gas business, the United Company organized a corporation, the Virginia Gasoline & Oil Company, and conveyed to it its gasoline extraction plant, receiving the stock of the new corporation in exchange. ”

“ Since there are no facilities for storage, the amount of gas, other than casinghead, #fn-s-s [1] produced and gathered each day depends on the day-to-day demands of the interstate pipelines, which in turn depend on weather and other conditions in consuming areas. Gas wells are cut on and off as the market demand for the gas requires. Gathering takes place by well pressure forcing the gas through numerous small pipes connecting each well with the central gathering plant or processing station. It is there that the gas first comes to a common 'header' and is processed for use as fuel. ”

“ The function which an allowance for gas in the field should perform for society in such circumstances is to be enough and no more than enough to induce private enterprise completely and efficiently to utilize gas resources, to acquire for public service any available gas or gas rights and to deliver gas at a rate and for uses which will be in the future as well as in the present public interest. ”

“ But is that a wise way of making gas cheaper when, in comparison with any substitute, gas is already a cheap fuel? The interstate sales contracts provide that at times when demand is so great that there is not enough gas to go around domestic users shall first be served. Should the operation of this preference await the day of actual shortage? Since the propriety of a preference seems conceded, should it not operate to prevent the coming of a shortage as well as to mitigate its effects? Should industrial use jeopardize tomorrow's service to householders any more than today's? ”

“ The court hoped to reason from the known to the unknown. But gas fields turn this method topsy turvy. Gas itself is tangible, possessible, and does have a market and a price in the field. The value of the rate base is more elusive than that of gas. ”

“ But the wealth of Midas and the wit of man cannot produce or reproduce a natural gas field. We cannot even reproduce the gas, for our manufactured product has only about half the heating value per unit of nature's own. [38]
Natural gas in some quantity is produced in twenty-four states. It is consumed in only thirty-five states, and is available only to about 7,600,000 consumers. [39] Its availability has been more localized than that of any other utility service because it has depended more on the caprice of nature. ”

“ The gas moves through petitioner's system at well pressure. Shortly after the sales in question are completed, the gas is directed through the compressor stations of the purchasing companies and is there subjected to increased pressure in order that it may be moved to markets as far distant as Illinois. The entire movement of the gas from the wells to the purchasing companies through the compressor pumps and across the state lines is a continuous process without interruption for storage, processing or for any other purpose. ”

“ But it has no rational application where there is no such relationship between investment and capacity to serve. There is no such relationship between investment and amount of gas produced. Let us assume that Doe and Roe each produces in West Virginia for delivery to Cleveland the same quantity of natural gas per day. Doe, however, through luck or foresight or whatever it takes, gets his gas from investing $50,000 in leases and drilling. ”

“ With the source of supply thus tapped to serve centers of large demand, like Pittsburgh, Buffalo, Cleveland, Youngstown, Akron, and other industrial communities, the distribution of natural gas fast became big business. ”

“ The Commission found that the evidence convincingly established 'the existence of a natural gas supply adequate for years to come.' But, as the investnent in the manufacturing plant had been made prudently and in good faith, it was included by the commission in the estimate of the historical cost of the company's gas properties. ”

“ We take judicial notice of the fact that gas is in competition with other forms of fuel, such as oil and electricity. A business never stands still. It either grows or decays. Within the limits of reason, advertising or development expenses to foster normal growth are legitimate charges upon income for rate purposes as for others. ”

“ A gas supply, on the old basis of manufacture [482] at least, must be a unit, with a strong temptation to overcharge its customers. To-day the lighting field is shared with electricity, showing many isolated plants; when these purvey heat as well as light their rivalry with central stations may become formidable. In American villages and small towns the principal source of light is petroleum, largely controlled by the Standard Oil Company. ”

“ Respondent had entered into contracts with oil producers for the treatment of wet gas by the extraction of gasoline. The Board of Tax Appeals made the following findings: Natural gas, commonly known as 'wet gas' as it flows from the earth, is not a salable commodity. It is only through processing by separation of the gasoline therefrom-rendering it dry, that it may be sold for commercial uses. Conversely, it is only through the separation of dry gas from wet gas that the gasoline is salable. ”

“ Every person must have noticed how shamefully many individuals [209] disregard the terms on which they have contracted for a supply of gas, some by means of the excessive flame they keep up, and others suffering the lights to burn hours beyond the time stipulated and contracted with the gas light company which supplies them. ”

“ Although, for a period of perhaps 20 years, the natural gas could be so priced as to appear to offer an apparent saving in fuel costs, this would mean simply that social costs which must eventually be paid had been ignored. 'Careful study of the entire problem may lead to the conclusion that use of natural gas should be restricted by functions rather than by areas. Thus, it is especially adapted to space and water heating in urban homes and other buildings and to the various industrial heat processes which require concentration of heat, flexibility of control, and uniformity of results. ”