Natural Gas Policy Act Begins Energy Sector Deregulation

President Jimmy Carter signed the Natural Gas Policy Act (NGPA) into law on November 9, 1978, following Senate passage on September 27 (57-42 vote) and House passage on October 14 (231-168 vote). The legislation was part of Carter’s National Energy Act of 1978, a response to the 1973 energy crisis and OPEC oil embargo. The NGPA authorized the Federal Energy Regulatory Commission (FERC) to regulate both intrastate and interstate natural gas production and transmission while setting price ceilings for wellhead first sales of gas. Critically, the law included phased deregulation of wellhead prices for new natural gas, with most gases scheduled for deregulation between 1979 and 1987, leading to complete decontrol through the Natural Gas Wellhead Decontrol Act of 1989.

Carter presented the energy legislation following his televised address on April 18, 1977, calling the energy crisis “the moral equivalent of war” and announcing plans to increase energy supply while reducing domestic consumption through conservation and expanded renewable energy. However, the final legislation represented an intricate compromise that retained elements of Carter’s proposals—particularly extending controls to the intrastate market so all U.S.-produced gas faced price controls—while incorporating Senate demands for phased deregulation. The NGPA proved the most controversial portion of Carter’s energy program, with critics arguing that what was widely viewed as a deregulation measure was actually more restrictive and burdensome than the pricing policies it superseded.

The Natural Gas Policy Act demonstrated Carter’s embrace of deregulatory neoliberalism despite his administration’s rhetoric about energy conservation and renewable development. By removing price and non-price regulation over most producer sales of natural gas, the NGPA transformed natural gas into a separate commodity unbundled from transportation, enabling its sale by diverse market participants without regulatory approval. This commodity transformation laid the groundwork for natural gas futures markets and the financialization of energy trading. The legislation established the template for energy sector deregulation that accelerated under Reagan, contributing to the wholesale restructuring of electricity markets in the 1990s and early 2000s. Combined with airline deregulation signed just weeks earlier, the NGPA marked Carter’s administration as the launching point for the neoliberal dismantling of New Deal regulatory frameworks, setting precedents that corporate interests would exploit for decades to prioritize profit extraction over public interest, energy security, and environmental protection.