Northeast utilizing dirty, expensive fuel oil – not clean natural gas – during this deep freeze
Yesterday, I wrote about the record cold and corresponding increase in energy usage. I noted that the Midwest is still experiencing low natural gas pricing while the Northeast is seeing prices spike. The situation appears ready to climax this week as blizzard-like conditions strike, followed by more record cold.
An article from Bloomberg illuminates how the cold drives natural gas pricing in the Northeast to record levels.
Nothing like a cold spell to boost the nation’s natural gas demand, and cost. Forecasts now indicate this week’s outbreak will be stronger than anticipated, with Chicago seeing sub-zero readings. In New England, spot prices more than tripled to the highest in over three years and turned the region into the world’s priciest market.
A similar article from a Boston area publication expressly makes the point that a lack of pipelines from the Appalachian Basin (Ohio, Pennsylvania, and West Virginia) is causing the price hikes.
The settled price for natural gas in spot market trading tripled Tuesday to $35.35 per dekatherm, making New England the "world's priciest market" for the fuel, Bloomberg News reported. By Friday, the price had dropped [but was] still four times than that paid by power generators in the Chicago area, where temperatures have also plummeted.
The problem is limited pipeline capacity to serve New England, industry representatives are saying -- even as popular resistance to new fossil fuel infrastructure remains strong in Massachusetts. "Chicago does not have the same pipeline constraints as New England and parts of New York," said Stephen J. Leahy, vice president of policy and analysis for the Northeast Gas Association, an industry trade group.
It was interesting to see the response from an environmentalist group in the same article.
Kathryn Eiseman, president of Massachusetts Pipeline Awareness Network, said the temporary winter price spike should not be used as an argument to build more pipelines. Despite the cold, power plants have had no problem providing reliable power to New England, she remarked. "Have we seen widespread blackouts? No," she said.
Eiseman does not take into account the fact that power plants are switching over to burning oil to avoid more expensive natural gas.
This week, many dual-fuel power plants in New England switched to burning oil as temperatures plummeted and the cost of natural gas skyrocketed. The arrangement keeps the lights on but increases air pollution.
Here are two charts that break down the most economical and the cleanest fuels:
|Cost per 100K BTU|
|CO2 emissions in lbs. per 100K BTU|
The cleanest fuel for heating is natural gas. Natural gas is also the second most economical. Coal is the dirtiest but also the cheapest. The charts beg the question – why is the Northeast resisting utilizing one of the most economical – and certainly the cleanest – fuels?
McDonald Hopkins will be discussing these issues and many more at our next Energy Forum on January 16. Click here to register.