Staff Reports
A fuel shortage in New England has led to higher utility bills and threatens to shut down the region's electricity system this winter.
The region's fuel supply issues are largely caused by its lack of pipeline infrastructure. Also, a law known as the Jones Act prevents the transportation of fuel from other regions to New England.
Despite the law's restrictions, the US is still exporting fuel to the European Union at a record rate. This has led to a fuel supply shortage in the region. Many state and utility leaders have criticized the Jones Act.
The Jones Act was passed in 1920 to prevent the transportation of fuel from other regions to New England. It requires ships carrying cargo to be US-flagged and have majority-US crew members.
The law is aimed at ensuring that the domestic shipping industry has a minimum number of vessels, but it has been known to increase costs for companies that transport fuel. According to the Maritime Administration, it costs almost three times more to ship goods using US-flagged vessels.
In response to the region's fuel supply issues, the governors of New England asked the Energy Secretary to look into the possible suspension of the Jones Act. The region would be able to access more natural gas if the law was lifted. However, there are currently no LNG tankers that are compliant with the Jones Act.
According to Joe Nolan, the CEO of Eversource Energy, the company would have to compete in the global market if it wants to continue supplying fuel to New England.
The lack of pipelines has left New England, which is referred to as an energy island, largely isolated from the rest of North America. This has led to the region relying on imported LNG for its supply.
The region's political resistance has also been a contributing factor to the lack of pipeline infrastructure. For instance, Andrew Cuomo, who was the governor of New York, repeatedly blocked the construction of natural gas pipelines.
In 2016, Cuomo used administrative actions to stop the construction of the Constitution Pipeline, which would have brought natural gas from Pennsylvania to New England. He cited various environmental issues.
The lack of natural gas pipelines and the Jones Act are not helping the Northeast this winter. As a result, residents in the region have already experienced higher utility bills. Most of them rely on natural gas and home heating oil to heat their homes.
The Energy Information Administration reported that the average cost of home heating oil for this winter is almost $4,000, which is 45% higher than the previous year and the highest since at least 25 years.
According to the EIA, the high prices of heating oil in October were largely due to the tight supplies and the constraints on refining.
In Boston, the price of natural gas has also increased significantly this winter. In October, the price of natural gas in the city was almost $30 per mmBtu. Even though gas in other parts of the country is trading at a fraction of that price, the price in Boston is still significantly higher.
This month, regulators warned that the region could experience a severe cold snap or a prolonged energy shortage, which could cause rolling blackouts. The inventories of Distillate in the Northeast have also dropped significantly.
In May, three senators from the Northeast asked the Trump administration to reduce the exportation of liquefied natural gas (LNG). These senators, namely, Elizabeth Warren of Massachusetts, Jack Reed of Rhode Island, and Angus King of Maine, noted that the lower prices could help consumers.
Senator Warren noted that the high prices of natural gas are not helping consumers in the US. She said that the country should not allow energy companies to continue to squeeze the consumers.
Senator Warren noted that the Department of Energy should look into the export policies of LNG to find ways to keep the prices low for American consumers.
The preceding is a summary of an article that originally appeared on Washington Examiner.
