Why Is New England Paying The Equivalent Of $180 Oil For Natural Gas
Yesterday New Englanders had reason to feel a little more … European than usual. that’s because according to Department of Energy data they were paying a spot price of $30.5 per million British thermal units for natural gas. This is an absurd price, in line with what Europeans, facing their worst energy crisis in a generation, have been suffering in recent months. To put it in context, $30.5 per mmBtu is the equivalent of paying $180 for a barrel of oil (double what it is today), or 20 cents per kilowatt-hour for electricity. In other words: nuts. How much are Bostonians getting shafted on natural gas? By comparison, the spot price of gas on the Gulf Coast of Texas and Louisiana yesterday was $5.50 per mmBtu (the energy equivalent of about $33/bbl oil). This price spread is exceptionally wide, nearly unprecedented. But it’s easily explained — by the perennially misguided energy policy in New England. Just 200 miles to the south, beneath western Pennsylvania, lay the nation’s biggest gas field — the Marcellus shale. From practically nothing 15 years ago, the Marcellus now provides roughly a third of America’s gas supply, more than 30 billion cubic feet per day. America’s shale gas fracking boom is the primary reason why the nation has been able to dramatically switch away from dirtier coal, and cut overall carbon dioxide emissions by nearly 20% — more than any other leading economy. But very little Marcellus gas flows to New England, because NIMBYs and their politicians have blocked construction of pipelines. Yet the region still relies on cleaner-burning gas to fuel power plants. Over the weekend, when New England was walloped by snow, its power grid was running 37% natural gas, 22% oil, 22% nuclear, 11% renewables, 6% hydro power, and less than 1% coal. (See current mix here.)And yet how does New England get its gas? Nearly all of it comes by ship, in giant insulated tankers carrying -260 degree condensed liquefied natural gas, most of which dock at the Everett LNG regasification terminal in Boston harbor, owned by Exelon Generation. Where’s that gas come from? Despite more than $50 billion of recent investment into LNG liquefaction plants in Texas and Louisiana, you won’t find any American freedom gas being delivered into Boston. Instead, because of a law called the Jones Act (which requires ships carrying goods from one U. S. port to another to be U. S. owned and flagged), the gas that lands in Boston has historically been sourced from fields in Trinidad & Tobago, Norway, and Russia. Which is why New England is now paying through the nose for gas. Or rather, they are paying the international price — in line with LNG spot prices in Tokyo, Shanghai, and Europe. Is it reasonable that New England’s natural gas price depends on decisions made in Europe to shut down nuclear power plants, turn off the flows from giant fields like Holland’s Groningen, and rely on Gazprom to maintain flows from Russia? Of course not.
All data is taken from the source: http://forbes.com
Article Link: https://www.forbes.com/sites/christopherhelman/2022/02/01/why-is-new-england-paying-the-equivalent-of-180-oil-for-natural-gas/
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