Why New Englanders should get ready for high energy prices over the long term

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Opinion
Why New Englanders should get ready for high energy prices over the long term
Opinion
Why New Englanders should get ready for high energy prices over the long term
Lit light bulb with coins beside it. Energy tariffs.
Lit light bulb with coins beside it. Increase in energy tariffs. Efficiency and energy saving.

Households in the Boston area pay about
50% more
for electricity than households across the nation. On average, Massachusetts residents spend about
$276
a month on electricity. That is 37% higher than the national average.

Across New England, electricity prices are skyrocketing. Central Maine Power customers are experiencing a
50% increase
in their electricity bills. The dramatic increases in the cost of electricity burden households across New England. The increases are especially onerous for lower-income households that spend more of their disposable income on essentials, heating, food, and transportation.

It wasn’t always so. As the current century unfolded, natural gas fueled just 15% of the region’s electricity. But with the development of the natural gas fields of the prolific Marcellus Shale basin in Pennsylvania, new natural gas pipelines and power plants were built connecting New England with the Marcellus Shale deposits. The new power plants were efficient.

As natural gas increased as a fuel source, there was a significant long-term decline in the emission of greenhouse gases. Relatively clean gas replaced carbon-heavy coal and oil.


RUSHING THE GREEN REVOLUTION IS POLITICALLY AND ECONOMICALLY NONSENSICAL

Until recently, 2008 marked the historic peak in energy prices in New England. In fact, the energy market value of fuels consumed in New England reached record lows in 2016. Natural gas from the Marcellus Shale basin was cheap. Since 2016, however, matters have changed. New England politicians, including both senators from Massachusetts, Elizabeth Warren and Ed Markey, as well as newly elected Gov. Maura Healey, along with green energy advocates, have blocked the addition of new pipelines.

On very cold days, there is inadequate pipeline capacity to satisfy the energy needs of Massachusetts and the other states of New England. Massachusetts power companies are forced to burn oil or to import liquified natural gas, LNG, and burn that. Unfortunately, because of the Jones Act, which mandates that ships, including LNG tankers, that carry cargo from one U.S. port to another U.S. port must be U.S. flagged and crewed by Americans, it is not economical to ship LNG from the Gulf Coast to New England. U.S.-flagged ships are not competitive in the global shipping market. So New England power companies import LNG from Europe. In fact, as late as last year, New England imported LNG from Russia.

Progressive politicians prefer that New England households consume LNG from Russia and not relatively inexpensive natural gas from Pennsylvania, a few hundred miles from the western Massachusetts border. Progressives won’t admit the truth about sky-high electricity prices in New England. They blame greedy energy companies. That blame is an outright lie. Insufficient pipeline capacity is the cause, not corporate greed.

This past winter, when LNG prices soared because of the war in Ukraine, progressives wanted to violate one of the principles of free market economics, free trade, and ban exports of LNG. That was just a political talking point. Progressives know that even if LNG exports were banned, the Jones Act would still make it prohibitively expensive to import LNG from Texas. So, when it gets really cold, New England households pay through the nose.

Finally, progressives say the problem of high electricity prices will be solved as soon as more wind and solar power systems are deployed in New England. That is a misrepresentation. It often takes a decade or longer to approve new wind power systems in the U.S.

New England residents can look forward to sky-high electricity bills well into the 2030s.


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James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes 
a daily note
 on finance and the economy, politics, sociology, and criminal justice.

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