Gas Firms Reject a St. Louis Offer

The story so far:  On November 28, 1939, 75 years ago, a thick, black smoke covered St. Louis, turning day into night, snarling traffic and angering and shocking residents.  Coal dealers and producers had fought changes in the past, a December 5 gathering of 52 citizens declared change was necessary and the new Smoke Elimination Committee met for the first time on December 13 and realized that task would be daunting.  Through January they were meeting regularly while newspapers were detailing how the smoke was damaging St. Louis.

By Bob Wyss

When the Smoke Elimination Committee held a meeting in late January several members believed that they had a solution to the city’s smoke problem.

Instead of burning coal in home burners, residents could convert their heating systems to burning gas.  James Ford, the committee chairman, told executives of the Laclede Gas Co. that they could cash in on the city’s plan to sharply curtail the burning of Illinois coal.

Germany Coal Power Plant

Laclede’s 1940 story echoes a similar pattern today using coal-fired generation such as here in Germany. AP Image

Surprisingly Laclede officials had no interest in this potential bonanza. The firm only sold gas to a select number of industrial and wealthy customers. Converting coal burners to gas in homes was prohibitively expensive, executives said.  Besides, they added, the poor had a history of lousy credit and a worse collection record.

Also, there was not enough gas available on the coldest days of winter when demand peaked.  Even cities such as Tulsa and Oklahoma City that relied on gas ran out in cold weather.

“On days like we had last week, it would take three billion cubic feet an hour,” said Harry F. Perkins, a consulting engineer.  “Gas has its place, but beyond a certain point it can’t be expanded.”

There was some truth in what Laclede officials said.  But very little.  Besides discriminating against the poor, the company for years had engaged in what the St. Louis Star-Times called “corporate incest.”  The company had a government sanctioned monopoly and it was using it to profit its affiliate companies while charging outrageous prices to customers.  Very little of this would have been known, if the Star-Times had not launched a major investigation in 1937.  Even afterwards, however, few continued to understand the extent of the subterfuge.

Since the 19th Century the first use of gas was provided by so-called town or manufactured gas, produced from coke and other products.  Then in 1918 drillers in the North Texas Panhandle had stumbled onto the first of a series of huge natural gas fields.  At first, it was considered a nuisance because there was no market for it.  Then, advances in welding techniques produced a thin-walled, high-tensile strength pipe capable of being pressurized so that it could transport large volumes of natural gas over long distances.

By 1940 pipelines were snaking northward and they had connected to Laclede.  Yet the company still had a strong investment in its manufactured gas operation.  Rather than expanding, it mixed its manufactured gas with natural gas and sold it for 14.9 cents per therm (a therm equals 100,000 BTU).

In contrast, natural gas in other cities were paying much lower prices: 6.6 cents in Joplin, Mo., 5.5 cents in Cleveland, and 2.7 cents in St. Joseph, Mo.

Laclede bought its natural gas from the Mississippi River Fuel Corp. and together those two firms had succeeded in opposing any other natural gas pipelines from coming into St. Louis to provide a more competitive price.  Plus, through a series of complex agreements Laclede had worked out with affiliated companies, the use of natural gas was banned in St. Louis at least through 1947.  Only a mixture of town and natural gas was permitted.

What the Star-Times investigation had shown was that Laclede had made a significant investment in its manufactured gas operation, and it wanted to capitalize on that decision.  At a time when the rest of the nation was embracing natural gas as a cleaner, cheaper solution, Laclede was using its corporate powers to oppose it.

The decision was not really that different than what has been happening in recent years in the U.S. and around the world.  Companies and entire nations have invested in coal-fired electric generation and burned coal for greater industrial production.  Many have been reluctant to abandon those strategies and investments, even though it was clear that natural gas would produce far less carbon and global warming.

Laclede Gas was still years from recognizing the vast and lucrative heating market that it would eventually tap after World War II.

No, gas was not the immediate answer 75 years ago to the coal smoke suffocating St. Louis.  The resistance was simply too fierce.  Sometimes history does repeat itself.

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