They Must Be Reading The Blog -- February 9, 2018

The energy situation in the northeast has been fascinating to watch and I've posted many, many times on the subject (along with a similar issue in south Australia).

Today, a headline internet story from Forbes: more oil and natural gas invalidate "keep it in the ground" movement."

There is a destructive "keep it in the ground" movement arising from environmental groups to block oil and natural gas development and the pipelines required to transport them. The center of this opposition is in New York and the New England states, where numerous policymakers seek to artificially constrain energy supply. Yet, despite producing none themselves, their reliance on gas electricity has surged. ISO New England now gets about 50% of its power from gas, versus 10% to 15% a decade ago. New York sits in the same boat: gas now generates ~45% of the state’s electricity, doubling its market share since 2005.

It's no wonder, then, that blocking energy development and pipelines has established home power rates in New England and New York that are at least 50% higher than the national average. Industrial rates are more than double, and encourages companies to leave the area. This is unfortunate and illogical since U.S. natural gas prices have been at historic lows. 

There is not enough non-fossil-fuel energy transported to the region to satisfy the needs of businesses and families. For example, Massachusetts has nearly 20 times more gas power capacity than wind and solar capacity combined. Not surprisingly, the "keep it in the ground" movement has no explanation on why those states with the most aggressive renewable energy goals are increasingly using more natural gas. In stark contrast, of course, I've already clearly explained it.

Policies intended to reduce oil and gas consumption are dubious: Even if they work in the short term, over time they just lower oil and gas prices and encourage more usage. I've already clearly explained it. Oil and gas are so obviously ingrained in the U.S. and global economies, supplying over 60% of all energy. In the real world, this means that more economic growth ultimately means more oil and gas demand. That's why year after year demand continues to grow. There is no significant substitute for oil whatsoever. And know that natural gas power plants don't get retired with more wind and solar power, but get built even more because gas is flexible backup required.

Unfortunately for middle-income ratepayers, the energy issue is New York and New England is no longer fact-based. The issue has become political and CAVE dwellers are winning in that region.

Speaking of which, it will be interesting to see how the region does this weekend with winter storm Mateo approaching.