It matters where our energy comes from
Most Americans never think about the infrastructure systems around them. How often do you flip a light on in your home and think “Wow, I’m glad the grid is working properly today” or drive on a road and think “it really is wonderful that this road exists so I can drive to my doctor appointment”? I’d put my money on “almost never.”
Perhaps it’s because we are so busy in our daily lives, we just expect things to work as expected and therefore pay them no notice unless they suddenly don’t. My oven works when I turn it on; my refrigerator is keeping my food at the proper temperature; this bridge will hold the weight of my car as I cross the river.
And what happens when the infrastructure system becomes constrained? Much like road construction season shutting down all but one lane on a local highway, it becomes a very big deal.
New England suffers from lack of natural gas pipelines
Case in point, the eastern United States is in the midst of recovering from bitter cold weather that impacted more than a hundred million Americans. And despite being located in close proximity to the prolific Marcellus Shale formation, the lack of natural gas pipeline infrastructure into the New England states has created an immense disparity between what folks will be paying when their next heating bill comes due.
On New Year’s Day the United States burned the most natural gas ever, beating out the record set by the Polar Vortex in 2014. And at the same time, the New England states gained the dubious honor of becoming the world’s priciest gas market. Spot prices on the Algonquin pipeline hit $35.35 per BTU in late December.
And the market price had an immediate effect on where New Englanders will be getting their natural gas from. On Monday, the Boston Globe reported on a liquefied natural gas tanker (LNG) headed to the city from London. Why?
“Gas from anywhere is profitable into that northeastern US gas market as prices are the highest in the world,” said Trevor Sikorski, head of natural gas, coal, and carbon at Energy Aspects Ltd. in London.
The LNG tanker should arrive in Boston on January 22nd after it’s finished loading fuel from United Kingdom’s Isle of Grain. The tankers first stop on its voyage was to pick up fuel from the Yamal LNG plant in Russia. Yep. You read that correctly.
Natural gas supply impacts more than just heating homes and businesses
A recent article from Energy In Depth pointed out how the lack of natural gas supply during this cold weather meant it became more cost effective for electric generators to burn petroleum to meet demand rather than paying absurdly high price for natural gas. They cited this Forbes article on ISO New England‘s switch: “Over the course of one day, December 27, 2017, petroleum use grew from less than 500MW to nearly 4,000MW. Petroleum accounted for 22% of the electricity generation, just behind nuclear at 35% and natural gas at 24%.”
The true effects of the astronomically high natural gas prices may not be felt until the next utility bills come due for residents and business owners. But the sad truth is that even if the weather remains mild, the New England states consistently pay higher than average rates for both natural gas and electricity. In July, the Consumer Energy Alliance reported that New Englanders paid 151% more than the national average for electricity. To quantify it another way, the U.S. Chamber of Commerce released a report on what not building natural gas infrastructure will cost the region – and the numbers aren’t pretty.
Changing the narrative
If someone told me I was paying 151% more for a product or service than someone else, I would certainly start asking some questions. It’s legitimately sad to see headlines reading Siberian Gas by Way of London Rescues Chilly Boston in Bloomberg when there is a very real solution involving increasing natural gas capacity from a domestic source into the region.
The Marcellus Shale has changed the face of U.S. energy. It’s brought price stability to the region and lessened our dependence on foreign sources of energy. Unless folks in New England are okay with paying more than necessary for their energy, they may want to start asking what they can do to bring their costs closer to the national average.