The spike in natural gas prices in response to soaring demand from a second blast of cold air is exposing the failure of government energy central planners.
Natural gas is a great domestic resource. However, the demand for this fuel to provide both electricity and home heating is overwhelming the ability of the existing pipeline infrastructure to deliver it to utilities.
Obama’s war on coal is making this situation worse as hundreds of coal-power plants close because of EPA regulations. Reducing energy supply and diversity will increase prices with the impact hitting those who can least afford to pay higher utility bills.
Rising utility bills for consumers and businesses may be the least of the problem for a major section of our country if natural gas shortages result in power brownouts or blackouts.
In an earlier post, I wrote about the dangers of New England’s dependency on natural gas and now the reliance on this fuel is spreading to the Atlantic and Midwestern states.
Last week, PMJ Interconnection – the electricity grid operator for 13 Midwest and Eastern states and the District of Columbia – urged its 61 million customers to conserve energy.
From PMJ’s press release:
The call for conservation was prompted by continuing frigid weather increasing the demand for electricity and placing stress on generating resources.
PJM asks consumers to conserve electricity, if health permits – especially from 3 p.m. to 7 p.m. today and 6 a.m. to 9 a.m. Friday. Conserving electricity will help ensure adequate power supplies.
Earlier in the month, the Pittsburgh Post-Gazette reported on a system power loss at PMJ and the shortage of natural gas pipelines.
The nation’s largest electric grid servicing Pennsylvania and 12 other states, managed by Valley Forge-based PJM Interconnection Inc., lost about 20 percent of its power supply during the frigid peak Tuesday. Nearly a quarter of that loss came from natural gas plants that needed more fuel to make power.
“This is pretty different than anything we’ve seen in a long time,” said Paula DuPont-Kidd, a PJM spokeswoman. The last time temperatures fell this much was in 1994, she said. The last time PJM asked consumers to voluntarily conserve energy was during a heat wave in 2006.
“Calling for conservation is something we don’t take lightly or do very often,” she said.
But on Monday and Tuesday, PJM appealed to consumers to mind their usage. That, along with other mitigation strategies, helped it avoid any blackouts or brownouts.
The demand for natural gas is also hitting consumers hard. New York’s grid operator – New York Independent Service Operator (NYISO) – said the state’s reliance on natural gas is the reason for high electricity prices in a story from The Troy Record.
“Since New York relies heavily on natural gas as a fuel to generate electricity, wholesale electric prices are very sensitive to the price of natural gas,” according to a statement released by NYISO. “Natural gas prices have been up over the past year.”
In 2013, there was a 54 percent increase in the average cost of natural gas compared with 2012, and a 30 percent year-to-year increase in the wholesale price of electricity.
The story also mentioned the impact on consumers.
Jennifer from Watervliet, who did not want to give her last name, said she noticed that her bills had increased the past two months for her one bedroom apartment with a den. Her bills have gone up about $90 each month compared to earlier in the season.
“Ours went up like crazy and I’ve seen so many other people complaining about it as well,” she said. “It’s insane. I feel bad that people are about to get their power shut off and can’t afford food.”
Obama’s heavy handed interference in the electricity market is preventing a diverse energy supply to power our economy. As with ObamaCare, we are all going to pay the price for Obama’s command and control governing.