API economist calls for gas pipelines to New England as winter nears

New England consumers, who will pay much more for electricity and natural gas than their counterparts elsewhere in the US because of inadequate interstate gas pipeline capacity, are the exception to an otherwise good supply picture heading into the winter heating season, the American Petroleum Institute’s chief economist said.

Consumers are expected to face colder temperatures the next few months than they did a year earlier and the US Energy Information Administration estimates that temperatures in the Northeast, Midwest, and South will be 20% lower year-to-year, Erica Bowman said.

Gas and propane inventories are near or at record peaks, and heating oil stocks, which EIA expects to be higher as October ends, are at multiyear peaks, she told reporters during an Oct. 28 teleconference.

“With temperatures set to drop outside, American consumers will continue to rely on gas as the most prominent energy source to heat their homes,” Bowman said. “Forty-eight percent of homes use natural gas while 37% use electricity and gas has become the leading fuel source for [power] generation this year. Ten percent of households use heating oil and propane combined.”

She said the US Northeast historically has been “the poster child for high gas prices during the winter” because there are not enough pipelines there to bring the gas to market. “According to the New York Mercantile Exchange, New York City is expected to have the highest gas prices in the nation this winter, due in part to the region’s lack of gas infrastructure,” Bowman noted.

It doesn’t have to be that way, Bowman noted. NYMEX projects that Spectra Energy Corp.’s proposed 1,129-mile Algonquin Gas Pipeline, which would connect the Texas Eastern Transmission and Maritimes & Northeast systems, could reduce New England’s wintertime gas prices 20% from a year ago, Bowman said. She also said that without more pipelines, the region’s rising gas demand will keep New England the country’s second-highest priced region.

Higher gas prices also have raised electricity costs where power is generated increasing in gas-fired plants that don’t have access to sufficient supplies through pipelines, Bowman said. “In addition to its positive impact in utility prices, new and improved energy infrastructure will help our nation continue leading the world in the production of oil and gas and in the reduction of carbon emissions, which are near 20-year lows,” she said.

Contact Nick Snow at nicks@pennwell.com.

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