Investing in Energy: A Primer on the Economics of the Energy Industry

Natural Gas as a Utility

In the United States, natural gas is governed by the Federal Energy Regulatory Commission (FERC). FERC is the governing body in the natural gas, natural gas storage, and pipeline sectors of the energy industry. It is important to note what FERC does and does not do. FERC sets tariffs and pricing throughout the industry. Local distribution companies simply cannot charge the public without having made their case before FERC. In other words, profitability is very much regulated in the natural gas utility world.

As a result of various FERC orders, pipeline companies became strictly transport companies. In other words, the pipeline companies do not own the hydrocarbons. They simply transport the molecules. Pipeline transport ...