As temperatures dropped well below freezing in the Northeast U.S. around Christmas, Bloomberg reported that in New England, natural gas spot prices rose more than threefold to the highest in over three years and “turned the region into the world’s priciest market,” with gas for next-day delivery on Enbridge’s Algonquin system settling at $35.35 per million British thermal units.
A few days later, the spot prices in New England had fallen back to $19.75, as reported by MassLive.
When one considers that the NYMEX price for natural gas on that day was sitting at a few cents above $3/mmbtu, that’s some pretty pricey gas that New Englanders were paying for. Back in the “old days,” i.e., before the advent of the production of natural gas from shale formations, a winter event like this, combined with a storage level that is well within the 5-year range, would have sent that NYMEX price up dramatically, where it would have lingered until things warmed up. But in today’s world, that price represented a rise of barely 10%.
So what, you might ask, is going on in New England? As MassLive reported, the biggest reason for what will be a short-term blowout in natural gas prices for power providers is a lack of pipeline capacity.
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America’s ongoing oil and natural gas revolution is delivering big benefits to our economy, our environment and to our nation’s security. As the world’s top energy producer, America is leveraging this position of strength to grow good-paying jobs and economic opportunity here at home while firming up important trading partnership with key allies abroad. The increasing use of natural gas in power generation is also improving our environment at the same time.
This positive shift is a win for the America people and a blow to nations that previously used their energy resources against the U.S. as a political weapon.
Thankfully in Washington, American energy dominance is a central focus of the Trump administration’s policy priorities. With smart, jobs- and consumer-focused policies at the federal level as well as in energy-producing states, our economy and global political muscle will only grow stronger.
Anyone who follows energy trends hears a lot of debate around new pipelines, and how anti-fossil fuel activists want to stop infrastructure development that’s critical to creating jobs and boosting America’s manufacturing sector. We see much less discussion in the energy-related news media about how refineries and existing pipelines are responding to energy revolution’s shifting market dynamics and the benefits these actions bring to consumers.
In the Midwest, refineries have made massive new investments – literally billions of dollars in capital – to expand operations to process more North American crude in recent years. According to Morningstar, these refiners can now process 300+ more mbopd today compared to 2010. And it’s a trend that will likely continue forward.
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