John Felmy's remarks at press briefing teleconference on America’s natural gas infrastructure and home heating
As prepared for delivery
Press conference on America’s natural gas infrastructure and home heating
John Felmy, API chief economist
Thursday, January 16, 2014
Opening statement, as prepared for delivery:
Good morning and thank you for joining our call today.
As I’m sure you know, it has been cold outside. Very cold.
Fortunately, U.S. advancements in hydraulic fracturing and horizontal drilling have unlocked vast energy reserves here in the United States. And those new supplies have significantly lowered the cost of keeping our homes and businesses warm.
Last winter, consumer natural gas prices were down to three-quarters of what they had been during winter of 2008 and 2009.
These savings are part of the extra $1,200 in disposable income that the average U.S. household enjoys, thanks to new U.S. shale production, according to a study conducted by IHS.
That’s because natural gas is the primary source of heat for about half of all U.S. homes, and it generates electricity for many more. Natural gas also has fueled a dramatic drop in U.S. carbon emissions -- now near 20-year lows.
Still, abundant supplies are only part of the equation. Reliable, affordable energy requires a 21st century system of transmission lines, pipelines, and energy infrastructure. As the EIA has noted, “pipeline capacity constraints during periods of high natural gas demand can result in a distinct price separation among regional markets.”
The recent cold snap provided a chilling reminder of what happens when demand approaches the limit of our current ability to bring abundant U.S. supplies to the regions that need it most.
In New York, for example, spot prices for natural gas jumped from $12.83 to $47.80 per million BTUs on January 6th, according to the EIA. In New England, spot prices jumped from $16.00 to $38.10. Electricity prices also rose. In response, the EIA issued “critical notices” about constraints on pipeline capacity for the New York and Boston markets.
Fortunately, our system is flexible, and utilities were able to meet the needs of their customers by utilizing Canadian gas and other resources. But this spike in demand demonstrated how important it is that we move quickly on infrastructure projects that often face lengthy regulatory delays.
A new study released last week by IHS shows that capital spending on oil and gas infrastructure increased by 60 percent between 2010 and 2013, thanks to America’s shale energy revolution.
With the right policy choices, these investments will accelerate, providing a major boost to the economy, creating jobs, and strengthening the supply chain to consumers.
In total, IHS anticipates up to $1.15 trillion in oil and gas infrastructure investments over the next 12 years, contributing as much as $120.58 billion to U.S. GDP; supporting as many as 1.15 million jobs; and providing an additional $27.45 billion in government revenues on average, annually between 2014 and 2025.
These are private dollars – not public funds – ready to put shovels in the ground.
It’s no wonder families across America support expanding America’s vital energy infrastructure. A December poll by Harris Interactive revealed that 93 percent of registered voters agree that increased development of energy infrastructure would help create jobs, while 89 percent agree that infrastructure investment would strengthen America’s energy security.
Public officials are taking notice too. President Obama recently announced a new Quadrennial Energy Review of transmission and distribution infrastructure.
Our message is simple: let’s recognize the value of investing in our energy transportation network and work together to streamline the regulatory and permitting process, so that small delays don’t potentially add up to huge costs for consumers across country.
In a moment, I’ll be joined by Karen Moreau, executive director of the New York State Petroleum Council, who can elaborate further about some of the state and regional issues that have emerged as our industry works to create jobs and bring affordable natural gas to homes this winter.
But before we turn to your questions, I would like to make one last point: thanks to hydraulic fracturing, we have a new energy landscape in America. Prices have been down and supply has been up. But to bring the full benefit to consumers and accelerate job creation, we need a 21st century energy infrastructure, and that’s a priority we plan to remind lawmakers about through this election and beyond.
Now, we’d be happy to take your questions.