It is now well understood that the “energy crisis” of the 1970s was entirely the product of bad government policy. If you need a primer on this point, see Peter Grossman’s fine book from Cambridge University Press, U.S. Energy Policy and the Pursuit of Failure. Federal price and allocation controls meant that disruptions in the oil market by OPEC were magnified here at home, with the result being artificial shortages.
Everyone remembers the 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 percent of the nation’s total electricity in 1973; today the figure is less than 1 percent). Hence there was a popular bumper sticker in Texas back then: “Drive fast, freeze a Yankee.”
Even Jimmy Carter was able to figure out that the federal price controls on oil and natural gas were counterproductive, and he began taking half-hearted steps to deregulate the energy market. (Reagan said “why go so slow,” and eliminated most remaining price controls in his first week in office.) And once the price of natural gas was deregulated, it made possible the construction of lots of new pipeline infrastructure to allow gas to begin displacing oil as an electricity source, which is why gas has been the largest new source of electric power over the last couple of decades.
But from the looks of things the northeast is living back in the bad old days during the current bout of
global warming climate change gripping so much of the country. The spot prices for natural gas and electricity are soaring:
Gee—how can natural gas be so expensive when its abundant and cheap (thank you fracking—see the chart at the bottom*), and moreover available in nearby states like Pennsylvania and Ohio? It’s not necessary any more for eastern natural gas customers to have to deal with those cowboy hat-wearing folk in Oklahoma and Texas.
Ah, maybe headlines like this have something to do with it:
In fact Gov. Cuomo has blocked at least three natural gas pipelines in New York. (The Federal Energy Regulatory Commission overruled Cuomo on one of these last fall.) And since Cuomo has blocked fracking activity for gas in New York state, it is missing out on the prosperity that has revived so many parts of rural Pennsylvania and eastern Ohio.
The Wall Street Journal offered the most comprehensive takedown of this madness in an editorial back in August:
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 New York Gov. Andrew Cuomo, whose shale gas blockade could instigate an energy crisis in the Northeast. . .
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 projects that 14% of the region’s electric generation capacity will be retired within three years and says more pipelines are needed for grid stability.
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% more for natural gas and 44% more for electricity than the U.S. average, according to a recent study by the U.S. Chamber of Commerce. Industrial users in the Northeast pay twice as much for natural gas and 62% more for electricity. . .
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—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 liquefied natural gas 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% in Vermont and 65% in Maine still burn heating oil—which is a third more expensive than natural gas and produces about 30% more carbon emissions per million Btu. Yet many can’t switch due to insufficient natural gas and pipeline infrastructure.
Meanwhile, what is Gov. Cuomo’s current energy policy strategy? Why just last week we got this:
New York Governor Andrew Cuomo, in connection with his State of the State address today, announced a plan to create new energy efficiency targets and appliance 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, and also announced the state’s plans to develop new appliance efficiency standards for products not covered by federal standards, coordinating efforts with other states. According to the Governor, the targets will be “achieved through cost effective implementation strategies and innovative approaches from both utilities and the [New York State] Clean Energy Fund.”
I’m sure this will keep people warm in future cold snaps. I certainly hope Gov. Cuomo runs for president in 2020 on this record.
Turns out the New England electricity grid manager (the ISO) warned of this very problem a couple months ago:
[P]ower 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. 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 liquefied natural gas before winter begins . . .
But what about all that solar power New England states have added in recent years?
While PV helps reduce 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.
Chaser: Here’s the Florida weather map from early last week. Surely proof of
global warming climate change!
This whole “bomb cyclone” thing must be unprecedented. Oh, wait. . .
The Great Blizzard of 1888 or Great Blizzard of ’88 (March 11 – March 14, 1888) was one of the most severe recorded blizzards in the history of the United States of America. The storm, referred to as the Great White Hurricane, paralyzed the East Coast from the Chesapeake Bay to Maine, as well as the Atlantic provinces of Canada. Snowfalls of 20–60 inches (51–152 cm) fell in parts of New Jersey, New York, Massachusetts, Rhode Island, and Connecticut, and sustained winds of more than 45 miles per hour (72 km/h) produced snowdrifts in excess of 50 feet (15 m). Railroads were shut down, and people were confined to their houses for up to a week.
Brooklyn in March 1888:
P.S. Isn’t “Great White Hurricane” racist?
* Chaser 2: