‘Energy Feast and Famine’ – Report Points to Infrastructure Shortcomings

Sam Winstel
Posted July 12, 2019

An interesting read in the Wall Street Journal underscores what we’ve been saying about the nation’s need for more energy infrastructure: Basically, that despite record natural gas production, Americans in some parts of the country aren’t benefiting from it as much as they should. The Journal:

U.S. gas production rose to a record of more than 37 trillion cubic feet last year, up 44% from a decade earlier. Yet the infrastructure needed to move gas around the country hasn’t kept up. …  The result, despite natural-gas prices that look low on commodities exchanges, is energy feast and famine.

For the world’s leading producer of natural gas and oil, this shouldn’t be. Americans in all parts of the country should see the benefits of prolific U.S. production. The key is infrastructure – policies and leadership that welcome needed projects and foster important private investment and streamlined approval processes. 

The Journal article points out that while areas along the Gulf Coast and Ohio River Valley are overflowing with homegrown and affordable fuel, the Northeast and Pacific Northwest have experienced natural gas shortages and price spikes due to inadequate pipeline infrastructure.

Consumers have seen the most acute effects of inadequate infrastructure in New York and New England, highlighted in a recent report by the Manhattan Institute. State policies and regulatory hurdles have blocked and/or delayed development of critical pipelines and natural gas hookups.

The report says that state agencies have exploited a provision in the federal Clean Water Act to obstruct the approval processes for pipeline projects that once were fairly routine. Today, regulators in New York are holding up three natural gas infrastructure developments with a combined capacity of about 1.5 billion cubic feet per day – 15% greater than the amount of natural gas consumed by the state’s entire residential sector in 2018. From the report:

The shortages are due in large part to New York State regulators, who are refusing to allow the construction of new gas pipelines. While these restrictions are claimed to be necessary to protect the environment from harm, they will likely result in increased use of heating fuel oil, which means increased air pollution and carbon-dioxide emissions. New York and the New England states already have some of the highest residential gas and electricity rates in the country, and these rates will only rise as a result of the blockade.

In January, Consolidated Edison, the largest utility provider in the New York City area, announced a moratorium on new natural gas connections in parts of affluent Westchester County. The utility has explained that they cannot guarantee uninterrupted natural gas and power to new customers due to the interstate pipeline constraints imposed by New York lawmakers.

The problem now has expanded beyond Westchester County. Public utility National Grid is advising that applications for new and expanded natural gas service in Brooklyn, Queens and Long Island will not be processed until the proposed Northeast Supply Enhancement project is approved.

And it’s more than just developers and businesses. Heartshare, which helps low-income New Yorkers with heating costs, says projects to help the neediest people could be at risk. Heartshare’s Joe Guarinello to the New York Post:

“Right now, gas is the most inexpensive and the cleanest for heating homes in our area. We’d like to make sure that the people we assist, both the disabled and the economically stressed” can continue to benefit from it.

Gov. Andrew Cuomo has led the crusade against infrastructure development, claiming he is protecting the environment and public health – though pipelines remain the safest and most efficient way to transport energy for everyday use. API-New York Executive Director Karen Moreau:

“Lawmakers’ obstruction of additional pipeline infrastructure is detrimental to all New Yorkers. At a time when the majority of Americans are enjoying affordable natural gas and the economic growth that it enables, agenda-driven policies have left New York’s most vulnerable in an energy crisis.”

Bad public policy has left New York suffering from an energy famine, which leaves consumers in New York paying 44% more for electricity than the average American. It’s a remarkable problem given the fact the prolific Marcellus and Utica shales are present in New York (unused, because the state has a moratorium on hydraulic fracturing) and are producing natural gas right next door in Pennsylvania.  

Utilities in New England, like Holyoke Gas & Electric and Middleborough Gas and Electric Department, have followed suit, issuing similar suspensions for their service areas in Massachusetts. As with New York, the state’s cold winters and infrastructure constraints send prices skyrocketing during seasons of high demand, contributing to the spread of the Northeastern natural gas famine. The added cost of importing fuel into this region has totaled approximately $670 million since 2016.

Residents of New York and New England should have access to the same affordable energy available to consumers elsewhere, and needed infrastructure should not be blocked by agenda politics or short-sighted energy policies. According to the Manhattan Institute, this begins with streamlining the permitting process for energy infrastructure projects subject to Section 401 of the federal Clean Water Act and limiting individual states’ ability to deny pipeline developments at the expense of their consumers. Robin Rorick, API vice president of midstream and industry operations:

“Restoring certainty in the pipeline permitting process is critical to American jobs and ensuring that American consumers have the energy they need and demand every day.”

With policies that advance the construction of additional pipelines and natural gas hookups, the entire U.S. has the opportunity to expand the economic and environmental benefits of natural gas as an abundant, reliable, and clean domestic power source for electricity generation. All American homeowners, businesses and government entities, including public schools, deserve to realize the benefits of affordable natural gas and the nation’s ongoing energy revolution.