Cold, Consumers and U.S. Infrastructure Needs

Mark Green
Posted January 4, 2018

With the East Coast shivering from the effects of something the weather folks have dubbed a “bomb cyclone,” a couple things come to mind:

• Gratitude for abundant natural gas that affordably heats homes and reliably fuels electricity generation.
• Dismay that for some in the U.S. – the world’s leading producer of natural gas and oil – affordable natural gas is something only other Americans enjoy during winter cold snaps, mostly due to insufficient natural gas pipeline infrastructure.

We’re again talking about New England, where anti-consumer government policies and extreme environmentalism have blocked infrastructure projects that could bring more natural gas to the region. The absurd reality is that New Englanders are again weathering high energy costs even though one of the country’s most prolific natural gas-producing plays, the Marcellus shale, is practically next door in Pennsylvania. It’s also cold in Ohio, yet natural gas prices were actually falling for some consumers in that natural gas-producing state.

New England Petroleum Council Executive Director Steve Dodge writes that last week the region achieved the dubious distinction of having the most expensive natural gas on the planet:

When the spot-market price for natural gas hit $35.35 on Dec. 26 at the main trading hub for all of New England, the Algonquin Citygate, that was more than 13 times more expensive than at the central U.S. price-setting location, the Henry Hub in Louisiana. That’s the equivalent of filling up your car with $32-a-gallon gasoline.

More Dodge:

Why is this happening? The short answer: New England does not have sufficient natural gas pipeline capacity needed to ensure reliable, affordable access to this clean-burning, abundant fuel produced right here in the United States.

This high consumer cost is self-inflicted. As Dodge notes, New Englanders pay hundreds of dollars more every year for electricity and home heating “because everyone from local environmental extremists to New York Gov. Andrew Cuomo has relentlessly opposed every reasonable proposal to let New England secure the natural gas pipeline capacity it needs.”

Forbes’ Christopher Helman writes:

The region wants more gas, but supply infrastructure hasn't kept up, with pipeline projects blocked by NIMBY. Last June, utilities Eversource and National Grid withdrew their plan for a $3 billion pipeline that would bring cheap gas to New England because there wasn't enough political support for getting ratepayers to foot the bill. Enough already. … Solar and batteries get a lot of hype for helping to smooth summer time peaks, but for dealing with a deep freeze, it's clear the northeast needs something else – more natural gas.elman

The overarching lesson is that public policy should serve the public. How many winters must New Englanders endure inadequate supply and unreasonably high costs before elected officials from town councils all the way up to the statehouses put consumers first? Here in Washington, trade groups including API have urged Congress to prioritize infrastructure spending, but it’s just an exercise if state and community policymakers stand in the way of needed infrastructure construction.

Now, to the argument that cold winters and natural gas costs justify distorting the marketplace with subsidies and/or preferences that favor other energy sources, the issue is insufficient infrastructure, not the availability of natural gas supplies. ISO New England, which oversees operation of New England’s bulk electric power system, in its Winter 2017/2018 outlook:

The region’s natural gas delivery infrastructure has expanded only incrementally, while reliance on natural gas as the predominant fuel for both power generation and heating continues to grow. During extremely cold weather, natural gas pipeline constraints limit the availability of fuel for natural-gas-fired power plants.

Misguided initiatives to subsidize or otherwise favor some energy sources over others in the marketplace – whether through state or federal policy impact consumers. Voters in Ohio, New Jersey, Pennsylvania and Connecticut oppose such policies because they know that as consumers, they’ll foot the bill.

Baby, it’s cold outside, and it should underscore the need for sound energy and infrastructure policies that put consumers first – so that the benefits of abundant, affordable U.S. energy are available to everyone.