By Heather Douglas
“It is now well understood that the ‘energy crisis’ of the 1970s was entirely the product of bad government policy … Federal price and allocation controls meant that disruptions in the oil market by OPEC were magnified here at home [the U.S.], with the result being artificial shortages.” Peter Grossman, U.S. Energy Policy and the Pursuit of Failure, published 2014.
It looks as though the American northeast is living in the bad old days when the politicians believed in global warming (not climate change). The spot prices for natural gas and electricity soared. One wonders how natural gas can be so expensive when it’s so abundant and cheap, thanks to hydraulic fracturing, and the plentiful supplies coming from the prolific Marcellus natural gas field.
Why? Pipeline constraints were caused by a cold-weather scramble to deliver this product to homes and businesses. Thanks to Governor Andrew Cuomo for refusing to approve the last three natural gas pipeline applications in New York State. Anyone remember the headline Gov. Cuomo Blocks Northern Access Pipeline? Saner minds at the Federal Energy Regulatory Commission overruled Cuomo on one line last fall.
According to the Wall Street Journal’s stinging editorial, “Cuomo’s Natural Gas Blockade, New York’s Governor is raising energy costs for millions of Americans” (August 23, 2017) these actions are madness. “The U.S. shale boom has lowered energy prices and created hundreds of thousands of jobs across the country. But those living in upstate New York and New England have been left in the cold by … Cuomo, whose shale gas blockade could instigate an energy crisis in the northeast…”
The editorial’s rant continued. “Progressives once hailed natural gas as a ‘transition fuel’ to renewables like solar and wind, but now they are waging a campaign to ‘keep it in the ground.’ New York is ground zero … All of this is ominous since the region desperately needs more natural gas to make up for lost power from the impending shutdown of nuclear and coal plants. New England’s Independent System Operator (ISO) projects that 14 per cent of the region’s electric generation capacity will be retired within three years and says more pipelines are needed for grid stability.”
The U.S. Chamber of Commerce is equally disparaging, quoting a study it had conducted in 2017. “Energy costs in the Northeast are already the highest in the nation outside of Alaska and Hawaii in part due to the shortage of natural gas. Northeast residents pay 29 per cent more for natural gas and 44 per cent more for electricity than the U.S. average, while industrial users pay twice as much for natural gas and 62 per cent more for electricity.”
Cuomo’s Doctrinaire Policy
On January 3, 2018 Cuomo announced plans to create new energy efficiency targets and appliances standards. He directed the state’s Department of Public Service and the New York State Energy Research and Development Authority (NYSERDA) to propose new 2025 energy efficiency targets by Earth Day, April 22, 2018. He also proclaimed the state’s plans to develop new appliance efficiency standards for products not covered by federal standards, coordinating efforts with other states.
Cuomo is quoted as saying in his press conference that day, “The targets will be achieved through cost effective implementation strategies and innovative approaches from both utilities and the [New York State] Clean Energy Fund.”
Just a couple of months ago, the New England electricity grid manager (the ISO) warned it would be difficult to keep people warm in future cold snaps (Nov. 30, 2017). “Power system operations could become challenging if demand is higher than projected, if the region loses a large generator, electricity imports are affected, or when natural gas pipeline constraints limit the fuel available to natural-gas-fired power plants … While New England has adequate capacity resources to meet projected demand, a continuing concern involves the availability of fuel for those power plants to generate electricity when needed. The region’s natural gas delivery infrastructure has expanded only incrementally [thank you Gov. Cuomo], while reliance on natural gas as the predominant fuel for both power generation and heating continues to grow.
ISO continued sternly. “During extremely cold weather, natural gas pipeline constraints limit the availability of fuel for natural-gas-fired power plants. Further, the retirement of a 1,500 MW coal- and oil-fired power plant in May has removed a facility with stored fuel that helped meet demand when natural gas plants were unavailable … To address potential shortages of fuel to generate electricity, ISO New England will administer the Winter Reliability Program again to help protect overall grid reliability. The program provides incentives for generators to stock up on oil or contract for LNG (liquefied natural gas) before winter begins.”
But what about all that solar power New England states have added in recent years, one could cheekily ask? While PV (photovoltaics) reduces energy consumption during sunny winter days, demand peaks in winter after the sun has set. Amazing how this simple fact seems to evade supposedly smart people.
History is Bound to Repeat Itself
During the 1970s, Texans had a popular bumper sticker, “Drive fast, freeze a Yankee.”
According to Steven Hayward of PowerLine, everyone remembers the 1970’s lines for gasoline. “What is less recalled are the shortages and price spikes for natural gas, whose price and supply was also regulated at the federal level. But in Texas, intrastate natural gas outside the federal purview was abundant and cheap, and the lack of pipeline capacity to transport it, along with the price controls, meant Texas enjoyed cheap natural gas while the rest of the country shivered or paid out for expensive home heating oil and oil-fired electricity (oil-fired electricity was nearly 20 per cent of the nation’s total electricity in in 1973; today the figure is less than one per cent).”
Hayward says that even President Jimmy Carter could see that federal price controls on oil and natural gas were counter-productive and “he began to take half-hearted steps to deregulate the energy market.” President Reagan eliminated most of the remaining controls in his first week of office. The result? Once the price of natural gas was deregulated, it opened the doors for a pipeline infrastructure boom, allowing it to displace oil, as an electricity source. Today much of the northeast’s electrical grid is fueled by natural gas.
The Great Blizzard of 1888 was one of the worst storms in the history of the United States.
Photo of Brooklyn, New York (courtesy New York Times archives).
The Wall Street Journal’s August 2017 editorial was prescient. “Inclement weather can cause energy costs to skyrocket. During the 2014 polar vortex, natural gas prices in New York City spiked to $120 per million Btu (billion thermal units) — about 25 times the Henry Hub spot price at the time. Natural-gas power plants in New York are required to burn oil during supply shortages. Due to pipeline constraints and the Jones Act — which requires that cargo transported between U.S. ports be carried by ships built in the U.S. — Boston imports LNG during the winter from Trinidad. This is expensive and emits boatloads of carbon.
“Speaking of which, about a quarter of households in New York, 45 per cent in Vermont and 65 per cent in Maine still burn heating oil—which is a third more expensive than natural gas and produces about 30 per cent more carbon emissions/million Btu. Yet many can’t switch due to insufficient natural gas and pipeline infrastructure.”
Despite the claims of the global warming alarmists, the recent cyclone-bomb blizzard wasn’t the first to hit New York. The New York Times reported it this way. “The Great Blizzard of 1888 (March 11-14) was one of the most severe recorded blizzards in the history of the U.S. The storm, called the Great White Hurricane, paralyzed the eastcoast from Chesapeake Bay to Maine (as well as the Canadian Atlantic provinces). Snowfall of 20 to 60 inches (51 to 152 cm) fell in parts of New Jersey, New York, Massachusetts, Rhode Island, and Connecticut. The people endured sustained winds of more than 45 miles/hour (72 km/hour) that produced snowdrifts higher than 50 feet (15 metres). Railroads were shut down and people were confined to their houses for up to a week.”
Lessons for Canadian Politicians
Lest our federal and provincial politicians also get caught in the next polar vortex which could very well sink Gov. Cuomo, there are a few teaching moments we can learn from his misguided actions:
1. Bad government policies – such as federal price and allocation controls – are magnified when unexpected global warming storms create artificial shortages.
2. The shortage of pipelines to transport oil and natural gas can cause prices to dramatically rise and hurt society’s most vulnerable (the elderly, poor, children, and Indigenous Peoples).
3. Electricity produced by natural gas is cheap and plentiful. Renewable sources are not always reliable, cost-effective, and are often scare when inclement weather occurs.
4. When the Sahara Desert gets more than a foot of snow two winters in a row (2016-17 and 2017-18), global warming should be called climate change.
5. Voters – who remember spending cold days and nights because they can’t keep their homes warm — will punish politicians for their short-sightedness.
#ClimateChange #AndrewCuomo #Energy #NaturalGas #EnergyProcessingCanada #NYSERDA #Oil #Oil&Gas #Heating #Canada #TheRoughneck
