The People of America's Oil and Natural Gas Indusry

Energy Costs, Natural Gas and Infrastructure

Mark Green

Mark Green
Posted July 14, 2016

CNBC has put out its annual ranking of America’s top states for business, an analysis based on a number of things including metrics for workforce, infrastructure, access to capital and quality of life. Another of those metrics, cost of living, caught our eye because energy was part of the calculation. Indeed, in CNBC’s ranking of the country’s 10 most expensive states to live in, the cost of energy to residents a key factor.

Five members of that dubious top 10 are New York, Connecticut, Massachusetts, Rhode Island and New Hampshire, and energy costs there are higher than they need to be. According to the U.S. Energy Information Administration (EIA), those states and neighbors Maine and Vermont all had costs for residential electricity and natural gas that exceeded national averages this past winter. Of course, these states are located in a part of the country where more energy infrastructure (see previous posts here and here) could positively impact energy costs.  

A couple of charts show the cost being borne by consumers in those states, in part, because there’s inadequate natural gas pipeline infrastructure to meet home heating and power generation needs during peak winter months. First EIA data on residential electricity prices:

revised

You can see that residents in each of the seven states, from New York to Maine, paid more for electricity than the national average. EIA data show a similar picture for natural gas:

natgas

Higher natural gas costs for the region are elevated in heating months like February mostly because there’s insufficient pipeline infrastructure to meet the needs of residential users and power generators at peak demand. Thus, increased costs for electricity as well.

Energy is an important consideration in every American’s household budget. In most parts of the country affordable, abundant natural gas is helping to lower the cost of living. People in New York and New England should be able to realize this benefit, too. Saying yes to infrastructure is critically important in getting there.

An added benefit, which we’ve discussed a number of times, is that increased natural gas use – safely developed with fracking – is helping the United States lead the world in reducing energy-associated carbon emissions.

For this successful model to be sustained, needed infrastructure must gain approval from the responsible government agencies without undue delays caused by small minorities that oppose progress associated with fossil fuels. This is where leadership support from public officials, communities and individual residents is needed. API’s Marty Durbin, executive director for market development, at an energy summit earlier this year:

“[T]hose who would like to see fossil fuels ended today are now taking (on) every pipeline project. … I do believe the administration, if they want to achieve the goals they’ve laid out – economic, emissions reductions, climate legacy, call it what you want – they need to be able to stand up and more forcefully say yes we have to do it safely, yes this pipeline has to be built responsibly, but we have to do it. And it is safe and manageable.”

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.