Ronald Reagan picture

Radio Address to the Nation on Proposed Natural Gas Deregulation Legislation

February 26, 1983

My fellow Americans:

Today I'd like to talk to you about a subject that touches on all of us one way or another—in our homes, schools, at workplaces, and in the overall economy. I want to talk about one of our major energy sources—natural gas—and what this administration proposes to do to ensure abundant supplies of it at reasonable prices.

As the situation stands now, the American consumer is being hurt by government regulations that actually contribute to higher gas bills. We want to change that. Now, I know all too well that energy is a subject that some people in public life just can't resist playing politics with. It's unfortunate, but I guess it's a fact of life, or at least a fact of life as we know it in Washington, which can be pretty different from hometown America.

Many of you, I'm sure, recall the howls that went up when we acted to deregulate oil prices 2 years ago. Remember how you were told that deregulation would lead to skyrocketing prices for the gasoline that fuels millions of American ears, or the oil that heats millions of American homes? Well, the evidence is in, and the doomsayers were dead wrong.

You don't have to go any further than the nearest filling station to see that prices have gone down, not up, since decontrol, just as we promised they would. The economic realities of the marketplace have done more to bring down the price of oil than all those years of frenetic government regulating.

I think there's a lesson here for all of us and one that goes a lot deeper than the price of energy. Way back in 1824, Thomas Jefferson wrote about the difference between two kinds of political mentalities. Both of them are still very much with us today. Here's what Jefferson said about them: "Men by their constitutions are naturally divided into two parties—those who fear and distrust the people, and wish to draw all powers from them and those who identify themselves with the people and have confidence in them."

Now, the vast majority of us identify with the second group, the one that believes in trusting the wisdom of the people rather than taking power away from them and concentrating it in the other hands. On a more personal level, anyone who's ever wrestled with a tax form or had to make sense out of a complicated bureaucratic regulation knows how costly and time-consuming government overregulation can be. And that brings me back to regulation; in this case, regulation of natural gas.

I'm convinced—and I believe that the evidence backs me up—that just as deregulation of oil has led to a better deal for the American consumer, a freer market in natural gas will have the same beneficial effect for you. So, next week I'm sending the Congress a proposal for correcting the problems that have resulted from past excessive regulation of the natural gas market. While I'm taking this step out of the deep belief in the principle involved, there are human reasons as well.

In recent months, thousands of you have written to me, to Members of Congress, and to State and local officials expressing your distress about rapidly rising natural gas bills. Some areas of the country have been especially hard-hit, and it's clear that consumers are being poorly and unfairly served by the existing regulatory system. That system prevents natural gas producers and their customers from entering into contracts that respond to market forces, including pressure for lower prices that are now possible due to plentiful gas supplies and declining oil prices.

Today there's a surplus of natural gas, and oil prices are dropping. These factors normally would result in lower natural gas prices. But the regulatory morass has kept the marketplace from achieving lower natural gas prices. In sharp contrast, the Department of Energy estimates that if our proposal is enacted, natural gas prices will drop by at least 10 to 30 cents per thousand cubic feet in the first year.

The measure I will submit to the Congress is not a partisan plan, and it resorts to no quick political fixes. Instead, our approach is a comprehensive proposal that can, and I believe will be supported by Congressmen and Senators of both parties and will benefit the consumers they represent.

Basically, our legislative package will allow a freer market for natural gas so that there will be real and long-term incentives to produce and market abundant gas supplies at the lowest possible cost, just as gasoline and home heating oil prices have declined since we deregulated oil. Although we believe free markets not only can but will achieve these results, we aren't asking you, the consumer, to take that on faith.

To assure that consumers are protected, I have insisted on a provision which reverses the present law and provides that until 1986, there will be a moratorium on the automatic pass-through to consumers of increased gas costs by the gas pipelines, other than those caused by inflation, which, as you know, has been declining steadily.

The key to cheaper, more abundant energy for all Americans is a policy that combines consumer protection, incentives to produce, and efficient, economic use of our resources. That's what our program will do. And I look forward to working closely with Members of both parties in the Congress to obtain its passage without delay.

Until next week, thanks for listening, and God bless you.

Note: The President spoke at 12:06 p.m. from the Oval Office at the White House.

Ronald Reagan, Radio Address to the Nation on Proposed Natural Gas Deregulation Legislation Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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