OPINION:
Last week, 10 U.S. senators, all Democrats, sent a letter to Jennifer Granholm, the secretary of energy, asking her to limit the export of American natural gas — supercooled and therefore in liquid form — to other nations.
These senators sent the letter at the very same time that President Biden is scrounging all over the world looking for extra supplies of liquefied natural gas to send to his pals in Europe, who might need it in the event their new best friends and natural gas suppliers the Russians invade Ukraine and/or decide to cut off the natural gas supply to Europe.
Ordinarily, a Russian natural gas embargo would not be a big problem, but this summer, the wind didn’t blow as much as expected in Europe, so they had to burn more natural gas than anticipated to generate electricity. This is partly because the Europeans, in a sad attempt to win the love of the environmentalists, have closed most of their coal power plants and even some of their nuclear power plants.
However, it turns out that parts of Europe get cold in the winter, and natural gas is used to heat homes and generate electricity. The Europeans are short on natural gas so any disruption would be bad, like people freezing to death bad. In the meantime, it also means that natural gas is expensive in Europe (lots of demand, not too much supply). We’ll get back to that in a second.
Of the 10 senators who signed the letter fretting over liquefied natural gas that might go to people elsewhere, seven are from New England. The disquieting reality is that New England is located within a few hours’ drive of one of the richest natural gas fields on the planet – the Marcellus shale formation — with its production centered mainly in Pennsylvania. After just 15 years, the Marcellus produces about 30 billion cubic feet of natural gas every year. That’s about as much as the entire United States produced in 2007.
If New England wanted to, it could build a pipeline or two from Pennsylvania at a pretty reasonable price and in a couple of years. But New England has steadfastly and energetically avoided building natural gas pipelines.
Does it make a difference?
Well, natural gas from Pennsylvania that travels in pipelines is currently selling at about $5 per million BTU. New England is buying liquefied natural gas, which travels by ship and is based on the European price (because they are competing for the supply with Europe, where natural gas is scarce and therefore expensive), for about $30 per million BTU.
So, New England’s unwillingness to build pipelines means consumers are paying six times as much for natural gas as everyone else in the United States. The letter from the senators managed to not address this peculiar pathology of New England at all.
The senators also managed to avoid mentioning the Jones Act. That federal legislation, which has been around in various forms since the War of 1812, essentially makes it unlawful for vessels to transport cargo (like LNG) from one American port to another unless it is carried in ships built in the United States, flagged in the United States, and crewed by Americans.
Unfortunately, there are no ships that can carry LNG flagged in the U.S. or otherwise meets the requirements of the Jones Act.
That means that LNGs, priced at $5 per million BTU and now headed from the Gulf of Mexico to places like Japan, could instead be headed to Boston. But federal law — the Jones Act — makes that impossible.
The system created by the Jones Act is so backward that a company could load a cargo of LNG in Louisiana, take it to Europe, drop its cargo, and reload an identical cargo, then head over to Boston and sell it for upwards of $30 per million BTU and still make a bunch of money.
The senators who signed that letter have the power to amend or scrap the Jones Act — and to advocate for pipelines from the rich natural gas fields of Pennsylvania into New England — and, in so doing, save their constituents hundreds of millions of dollars.
But they aren’t going to do any of that because most of them have spent their entire careers actively opposed to finding, producing and using natural gas. The sole purpose of their letter to the secretary of energy is to get on the record as being “concerned” about the high price of natural gas in New England. They have no intention of doing anything about those prices.
They think voters are stupid and won’t see or understand that.
• Michael McKenna, a columnist for The Washington Times, is a co-host of “The Unregulated” podcast. He was most recently a deputy assistant to the president and deputy director of the Office of Legislative Affairs at the White House.
Correction: A previous version of this column incorrectly reported the price paid for imported natural gas in New England, which is now $30 per million BTU.
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