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Page added on January 30, 2014

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How much natural gas is enough?

Consumption

Oh, to be in the fuel oil or propane business these days (!), I think to myself every time I hear the boiler in the basement ignite with a shudder or listen to the whoosh of the blue enamel propane heater in our drafty kitchen.

Of course, I realize it is no fun delivering fossil fuels to half-frozen residents or trying to collect from hard-pressed customers unable to make it through to spring. But you can fantasize about someone benefiting from the dis-spiriting cold weather that seems to have us in its death grip.

Just last week we learned that propane prices in Maine had hit a new all time high. But so did natural gas prices—in fact natural gas customers throughout New England pay the highest prices in the country. And because natural gas must by law be delivered first to residential customers who use the fuel for heat, large industrial users like paper mills that buy on the spot market have decided to shut down because they cannot make money at current energy prices.

Propane prices spiked because supplies come into Maine via rail and the deep freezes of the past two months ground the supply trains to a halt. The solution to the propane price squeeze is more storage, but a proposal to build a large new propane storage tank at Mack Point in Searsport was defeated last year by local and island residents concerned about safety and aesthetics.

So there we have our basic train wreck.

What can we do? Even though natural gas prices have spiked upwards and are substantially higher this year than last, gas is still cheaper than fuel oil on an apples-to-apples basis for heating your home. The problem is that only 5 percent of Maine residents heat with gas, partly because most areas in the state lack nearby pipelines and those pipelines that serve customers in places like Portland and Bangor need additional capacity to serve more customers.

Pretty much everyone agrees that Maine (and the rest of New England) has an undeniable need for more natural gas. The real question is who is going to pay for the pipeline upgrades or extensions to get it to us. The answer appears to be all of us whether or not we heat with natural gas.

Just last week, the six New England governors agreed to a plan whereby New England’s electricity regulators who operate the New England grid (known as ISO New England) would seek federal approval to increase natural gas pipeline capacity in the region by 600 million Btus—a 20 percent increase—and charge electric ratepayers across the region for the upgrade.

The argument is that since the region’s electric and natural gas systems have become increasingly interdependent—because upwards of half our electricity is produced from natural gas generators—we should spread the costs of natural gas infrastructure improvements across the entire New England region. Maine ratepayers’ share would presumably be about 8 percent of the total, since we consume about 8 percent of the region’s electricity.

I must say this proposal is far preferable to the plan approved by the Legislature and governor last year, whereby our leaders agreed to authorize entering into long term contracts for up to a third of the 600 million Btu capacity increase. Are you lost yet?

The point is that unlike other big environmental issues facing Maine—whether to restrict wind development or permit new mineral mining, for instance—energy issues are increasingly decided by small numbers of players in regional processes run by bureaucrats to which ordinary citizens have virtually no access.

The current plan to charge electricity ratepayers to increase natural gas pipeline capacity was negotiated by Thomas Welch, the governor’s chair of the Maine Public Utilities Commission.  All you can do is hope Mr. Welch made a good deal for us.

The big questions lurking in the background are: How much natural gas capacity does Maine need in the long run and how much longer will gas stay relatively cheap? And will natural gas push renewables out of the market before climate change cooks us all?

Since pipelines are built to last 50-100 years, these are not trivial questions—they are questions we should all be asking—and answering—and not leave them to a few bureaucrats to decide behind closed doors.

In the meantime, the three cords of firewood I lugged into the basement this fall are still the most economic source of heat—even at $250 per cord—if you don’t count the cost of health insurance for strained spinal ligaments. The problem is I can’t count on my back forever.

working waterfront



2 Comments on "How much natural gas is enough?"

  1. rollin on Thu, 30th Jan 2014 12:08 pm 

    It looks like the first stages of collapse are hitting the US when residents can’t afford heat, supply is limited and businesses close due to cost of fuel.

    I think New Englanders need to invest in increased insulation and alternative forms of heat. I would not depend on extra pipelines or a long term cheap supply of gas, oil or electricity.

  2. mo on Thu, 30th Jan 2014 1:47 pm 

    Wood is definitely the way to go if you live in a rual area and have access to it (plenty here in n.Arizona). Ive heated my houses for 35 yrs with wood and saved 10 s of thousands of $. If you plan on building a house, good windows, insulation and( important) a centraly located stove will keep your house comfortable

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