Mineral Market Reports
No. M. M. S. 414

October 29, 1935.

DEPARTMENT OF THE INTERIOR

UNITED STATES BUREAU OF MINES
(John W. Finch, Director)

STATISTICAL AND ECONOMIC SURVEYS, PETROLEUM ECONOMICS DIVISION

Natural-gas industry registers material recovery in 1934

The marketed production of natural gas, which had been adversely influenced by the depression of 1931, 1932, and 1933, registered a notable recovery in 1934, when the total output was 14 percent above the level of 1933, according to the United States Bureau of Mines, Department of the Interior. The total output in 1934 was 1,770,721,000,000 cubic feet, compared with 1,555,474,000,000 cubic feet in 1933 and with 1,943,421,000,000 cubic feet in the peak year of 1930. Although the distribution of natural gas for domestic purposes increased slightly, the major portion of the recovery in total distribution in 1934 was due to a material gain in demand for industrial purposes.

The downward trend in the value of natural gas at the wells, which began in 1929, was continued in 1934 when the producers received an average of 6 cents per thousand cubic feet, compared with an average of 6.2 cents in 1933. As in most recent years, the decrease in the average well value conformed to the decline in Texas, the leading producing State. If it were not for the consumption of large quantities of 2-cent gas in Texas for field purposes and in carbon-black manufacture, the national average would be considerably above 6 cents; in fact, the producers in some States receive more than 20 cents per M. Although the average price paid by domestic and commercial consumers increased slightly in 1934, the decline in the average industrial price was sufficient to cause the average value of the entire production at points of consumption to decline from 23.7 cents per thousand cubic feet in 1933 to 22.3 cents in 1934.

The total consumption of natural gas, or production (1,770,721,000,000 cubic feet) plus imports from Canada (68,000,000 cubic feet) minus exports to Canada and Mexico (5,801,000,000 cubic feet), amounted to 1,764,988,000,000 cubic feet. Of this total, 554,542,000,000 cubic feet (31 percent) was used for field purposes; 288,236,000,000 cubic feet (16 percent) was used by domestic consumers; 91,261,000,000 cubic feet (5 percent), by commercial consumers; 229,933,000,000 cubic feet (13 percent) was consumed in carbon-black manufacture; 127,896,000,000 cubic feet (7 percent) was consumed at electric public-utility power plants; 79,965,000,000 cubic feet (5 percent), at petroleum refineries; and 27,331,000,000 cubic feet (2 percent), at cement plants, leaving 365,824,000,000 cubic feet (21 percent) consumed for "other" industrial purposes. Compared with 1933, these data indicate chiefly gains in the ratios for carbon black and refinery consumption, balanced by a decrease in the ratio for domestic consumption.

The number of domestic and commercial consumers of natural gas in 1934 was 7,566,000, compared with 7,232,000 for the previous year. Included in the 1934 figure are 2,147,000 consumers of mixed gas, compared with 2,038,000 in 1933.

The number of gas wells completed increased from 932 in 1933 to 1,373 .in 1934, but the number of producing gas wells declined from 53,660 on December 31, 1933, to 53,260 on December 31, 1934.

The number of employees in the natural-gas industry, as reported by the distributors, increased from 48,500 on December 31, 1933, to 52,300 on December 31, 1934.

The total interstate and export movement of natural gas rose from 346,810,400,000 cubic feet in 1933 to 414,183,000,000 cubic feet in 1934, an increase of 19 percent. The proportion of total natural-gas consumption moved in inter state and foreign commerce increased in 1934, a development which resulted more from the increased shipments through the established systems than from operations of new lines.

Summary of natural-gas statistics, 1934

Alabama.

Arkansas.

Georgia.

Kansas.

Kentucky-

Mississippi.

Missouri..

Nebraska..

335

94

6,566

West Virginia.

Wyoming.

Interstate transportation and exports of natural gas in 1934

Colorado.

34,000

Kansas..

451,000

2, 457,000

352,000

5, 404, 000

100,000

40, 045, 000

17,743,000

44,000

3,000

1, 126, 000 812,000 4,822,000

Prepared under the supervision of G. R Hopkins, Acting Chief Economist, Petroleum Economics Division, Oct. 29, 1935.

INTERSTATE TRANSPORTATION AND EXPORTS OF NATURAL GAS IN 1934

Mr. BATTLE. According to this United States Bureau of Mines report, 31 percent of the natural gas is used for field purposes, 16 percent by domestic consumers, 5 percent by commercial consumers, 13 percent by carbon-black manufacturers, 7 percent by electric publicutility power plants, 5 percent by petroleum refineries, 2 percent by cement plants, and 21 percent for other purposes. The other purposes are not defined, but I presume they include blast furnaces, glass works, Government buildings, hospitals, barracks, and so forth, brick and clay burning, general hospitals, hotels, and small manufacturing plants not otherwise described.

To analyze further these figures of the Bureau of Mines, 31 percent used in field production, as I construe the bill, would not be subject to any regulation; 53 percent would not be subject to regulation, as it is for industrial use. I cannot distinguish between industrial and commercial use. This leaves only 16 percent used for domestic consumers; and if I understand the general operation of the industry, by far the greater portion of this 16 percent would be distributed locally by local plants and not subject to this bill. Therefore, I repeat what I said at the outset, under the very provisions of the bill itself there is practically nothing left to regulate when the exceptions are taken into consideration.

The figures from the Bureau of Mines are for the year 1934 and are found in their Mineral Market Reports, No. M. M. S. 414, dated October 29, 1935. This same report points out that there has been a large increase in the production and use of natural gas in recent years and states that the major portion of the recovery in total distribution in 1934 was due to a material gain in demand for industrial purposes. The report likewise shows a large increase in the number of domestic and commercial consumers in 1934 over the previous year. Attention is called to the fact that the average value at wells per thousand cubic feet in 1934 was 6 cents, and the average value at point of consumption per thousand cubic feet was 22.3 cents. I take it from this report that this covers all of the gas, and I particularly call your attention to the fact that for domestic, including commercial distribution, which would account for only 21 percent of the total, the average value at point of consumption was 68.6 cents per thousand cubic feet. So it would seem that the domestic consumer is paying a very high price for gas and industrial users are paying very low prices.

Natural gas has displaced millions of tons of bituminous coal throughout the Nation. It is our opinion that natural gas is being sold for industrial purposes at prices that are unreasonably low, while at the same time the domestic and household users are paying prices that are several times greater than those for industrial users. Our industry is interested in this phase of the business-that is, the industrial use of natural gas-as it comes in direct competition with us and by practices that we question. We feel that the competition is unfair. It is reported to me that it is not an uncommon practice for the manufacturers of natural gas to call on an industrial plant and offer to furnish heat at 10 percent less than they are paying at the time without even ascertaining what their fuel bill is. I submit that this kind of competition is unfair and cannot be met on any business principle.

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