Jan

28

This week, New England ran out of natural gas. Supply cannot meet demand because New England didn't invest in appropriate infrastructure. Mid you, there's plenty of natural gas nearby. It just can't get to any of the New England states. As a result, Boston City Gate blew past $30/MMBtu. Today, thanks to LNG from Yemen, it fell to around $15.00.

At the same time, bulk power prices skyrocketed to the stratosphere. This morning bulk power at New England's hub traded in the $400 to $500 range (400 to 500 cents per kilowatt-hour) on normal volumes. Nearby in New Jersey and Pennsylvania, it was in the $20 to $35 range (2 to 3.5 cents).

New Englanders have been protesting coal plants. New Englanders have been protesting nuclear plants. New Englanders have been protesting hydroelectric plants. New Englanders have been protesting transmission lines. So,in response, companies are withdrawing investment and retiring perfectly good energy assets.

If you are wealthy and living in New England, you're paying through the nose for state taxes, local taxes, fuel oil, natural gas and electricity. If you are not wealthy, you're freezing in the dark.

Today, Massachusetts wants to increase taxes on her citizens while they are distracted protesting yet another critical fuel. It turns out New Englanders don't want cheap Canadian oil shipped to Philadelphia through Maine's ports, so they spent the day "rallying against a proposed pipeline from Montreal" (http://tinyurl.com/adn7atf).

Mind you, these protests are not really about a new pipeline. Since World War II, New Englanders didn't fret about shipping foreign oil from Maine's ports through northern New England's pipelines and on to Montreal's refineries. Now, when operators want to reverse the flow on existing facilities, New Englanders suddenly have a conscious.

Nevertheless, when you add it all up, it looks like a collision course in the making. With escalating taxes and skyrocketing energy costs, New England's economy will not be able to attract the jobs it once owned. It will only be able hire teachers for their universities, medical professionals for their insured, busboys for their country clubs and tax accountants to keep everybody straight.

The combination of growing taxes and escalating energy costs is not sustainable. At some point, lunacy has to give way to sanity.

It would seem a movement would develop to address New England's thirst for energy. Once, New England was the nation's capital for commercial nuclear power. The Yankee System included early nuclear plants in Vermont, Maine, Massachusetts and Connecticut. They were supplemented with newer plants in New Hampshire, Massachusetts and Connecticut. Today, only one of the Yankee plants survives. The remaining non-Yankee plants struggle.

From a national energy perspective, New England is an Island. Their only borders are New York and Canada. New York is not an exporter of energy. Eastern Canada is energy challenged with their natural gas wells depleting and their surplus power limited.

New England must move beyond provincial thinking and some seek creative options. Nuclear may no longer be the answer. But solutions are needed and they are needed urgently. It will take leadership at the regional level to bridge provincial interests. Failure to address these issues across all New England states will most certainly cause their economies to deteriorate.

In the interim, the region doth protest too much, methinks.


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