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DOCUMENT RESUBE
05918 - (B14464981 (Restricted)
[Issues concerning Cargo Preference for Imported Liquefied
Natural Gas]. PAD-78-69; 8-178205. nay 23, 1978. 3 pp. + 3
enclosures (21 pp.).
Report to Sen. Robert P. Griffin; by LEer B. Staats,
Comptroller General.
Issue area: Alternative Approaches or methods to Achieve Federal
Program Objectives (3600).
Contact: Program Analybis Div.
Budget Function: Cosorcw and Transportation: ater
Transportation (406); Natural Resources, Environment, and
Energy: Energy (305).
Organization Concerned: Department of Energy.
Congressional Relevtce: Sen. Robert P. Griffin.
Authority: Department of Energy Organization Act (42 U.S.C.
7101). Natural Gas Act (15 u.S.C. 717). 46 U.S.C. 883. 42
Fed. Reg. 62419. 47 F.P.C. 1624.
Several issues concerning cargo preference for imported
liquefied natural gas (LNG) were analyzed. There is no explicit
statutory basis that provides the Department of Energy (DOE)
with the authority to require cargo preference. Court decisions
which held that the Natural Gas act requires consideration of
the public interest did not deal with the question of whether
such a consideration would permit establishment cf a cargo
preference policy for LEG. DOE would have the burdan of proof
that such a policy was in the public interest and would have to
consider the higher costs involved. The cost of cargo preference
was estimated on the basis of a hypothetical 100% use of U.S.
flag ships. Such a requirement for future LNG import projects
should raise the shipping cost by 11 to 16 cents per 1,000 cubic
feet of gas. The annual cost could range between $220 million
and $630 million and the increase in the price of gas to
consumers could range from 0.6% to 3.3%. If subsidies were used
inste&d of cargo preference, costs would be about the sane, but
taxpayers would bear the cost of subsidies while consumers would
bear the cost of cargo preference. (5TH)](ViewImageLocal?handle=hein.gao/gaobaaxfg0001&div=1&collection=&method=preview&ext=.png&size=3)