The Natural Gas Policy Act of 1978 (NGPA) is federal legislation that had been enacted as a response to US natural gas shortages of 1976–77. It was enacted for the following motivations:
The NGPA:
The Natural Gas Policy Act (NGPA) was the first building block in a plan from the Carter Administration to increase energy supply while reducing domestic consumption of energy. [2] It preceded the Energy Security Act that President Carter would sign into law in 1980. [3]
In the 1970s, natural gas was persistently in short supply throughout the 1970s, largely because of following:
Based on this type of energy setting in the 1970s, Congress enacted the NGPA. The act was intended to raise natural gas rates to market clearing levels. [4]
The NGPA set prices based on where natural gas was old, new, or of high cost. New gas paid a higher price than older gas, which in turn encouraged oil and gas producers to produce from new sources of natural gas. However, this pricing system created a risk for higher prices for consumers as well as inhibiting production for the existing vast old gas reservoirs. [5]