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Amid Deep Freeze, New Englanders Can ‘Thank’ N.Y. Gov. Cuomo For Their High Energy Bills

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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Gov. Cuomo Proves Pipeline Politics Aren’t Limited To DAPL

As crude oil from the Bakken region began to flow into the Dakota Access Pipeline (DAPL) in mid-April, Reuters carried a story indicating that the largest refiner on the East Coast will no longer be taking delivery of Bakken crude via rail:

“It’s the new reality,” said Taylor Robinson, president of PLG Consulting. “Unless there’s an unforeseen event, like a supply disruption, there will be no economic incentive to rail Bakken to the East Coast.”

Thus, the DAPL has already begun to improve the economics of drilling for and producing oil from the Bakken Shale, whose rig count has begun to rise over the last few months.  And while the aggressive and often-violent protesters who spent half a year opposing the project’s completion would never admit it, DAPL is also already improving the safety of moving Bakken crude out of the basin to be sold and refined.

While rail companies and regulators have moved in recent years to improve the safety aspects of shipping crude by rail following several high-profile incidents, the truth remains that pipelines are far and away the safest means of moving crude oil to market.  Rail will remain a part of the transportation mix for Bakken oil – it represented about 25% of that mix during February of this year – but its market share there will grow smaller in the coming months.  That’s a positive for producers, refiners and the public.

Unfortunately, the good news about oil and gas pipeline safety has apparently not made its way to the governor’s office in Albany , where Andrew Cuomo continues to cost his constituents billions of dollars each year through his efforts to obstruct the building of needed natural gas pipelines in the Empire State.   Gov. Cuomo is of course most famous for orchestrating a statewide ban on hydraulic fracturing, a ban that has denied New Yorkers to share in the riches provided to Pennsylvanians, West Virginians and Ohioans by the massive Marcellus Shale resource, which also extends into Southwestern New York.

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