Unatego Area Landowners Association
Students leave and families depart. Upstate New York becomes ever less affordable and opportunity ever more limited, while Cuomo cuts off pipeline lifelines.
A recent article in the Wall Street Journal, “Power Plants Arise Near Natural Gas” noted the construction of billion dollar gas-fired electric plants in the Marcellus region of Pennsylvania. Company reps for Calpine, Invenergy, Dynegy, and Caithness said the proximity to abundant, low cost gas was the reason.
The Marcellus produces about one third of the country’s production at a steep discount to the Henry Hub standard. Contracts have sold as low as $1/mmBtu, about one third of the national price. However, difficulties in moving the gas to markets have induced power producers to move closer to supply.
The electricity is sold into the grid. The article featured PJM Interconnections, a company serving all or parts of 13 states. Given the fungibility of electricity, some of the electricity ends up in New York. Once again, Pennsylvania’s fracked gas is serving New York as electricity, but without the benefits of New York jobs, New York tax receipts, New York infrastructure, and low-cost New York gas serving New York needs. Nor do New Yorkers reap the indirect benefits of a much needed, vibrant new entrant into the state’s economy.
A more comprehensive overview appeared in a October 24, 2017 EnergyInDepth article entitled “Natural Gas Power Plants Bring Major Investments, Jobs to Pennsylvania.” The article lists 25 gas-fired power plants in various stages of completion bringing $10.5 billion in new investments and more than 6,000 construction and permanent jobs. This doesn’t include work done on tear-downs and conversion of coal-fired plants and obsolete gas generators which would add even more money and jobs to the total. New Yorkers can only look over the border and shake their heads.
I am a landowner and a school board member in New York’s Otsego County. Our economic plight is reflected in our school’s enrollment. We’ve lost over six hundred students in twenty years. Last June we had 839 students. We opened the New Year with 806. There are no jobs in our towns. Young families leave.
Sixty miles south of us is the Saudi Arabia of natural gas. The industry estimates there is a 100 years of product in the ground. The problem is a lack of pipelines to move the gas efficiently to market in the Northeast, New York City, and overseas. Because of New York’s strategic position, Governor Cuomo can strangle transmission. He does this in order to appease his radical anti fossil fuel base and to serve his rich renewable energy donors/investors. We have a Governor, a presidential hopeful for 2020, who holds Upstate New York and the Northeast captive to his ambitions.
This gas jam becomes obvious when there is a prolonged cold snap like 2013/14 polar vortex or our recent “cyclone bomb.” The spot market trading hubs of New York and New England were swarmed last week with orders for gas made unavailable by a lack of pipelines. The prices spiraled up: New York City and Boston hit new highs with New York City peaking at an unbelievable $175 a mmBtu.
Prices always settle but a freeze-frame comparison of prices for the New York/New England trading hubs with those of the Appalachian Region on January 4th is illustrative.
Roughly, the Appalachian Region stretches from Pennsylvania to Kentucky on the west to to the mid-Atlantic coast on the east. Pipeline construction is less of an issue in this region.
When it gets cold, gas prices rise. The average price for the eleven hubs in the Appalachian Region rose to $11.19 per mmBtu. However, prices in nine of these Appalachian hubs were only slightly higher, in the $3.50 to $4.30 mmBtu range. The twelve hubs in the New York/New England Region averaged $72.54, over six times the cost of gas just south of us.
Thank you, Governor Cuomo. It’s no wonder people are moving out. Taxes, the cost of living, the cost of doing business, all continue to rise.
Affordability and opportunity continues to shrink. People leave. Note to the last person leaving New York: turn down the thermostat and switch off the lights. Chances are the last electron and Btu will come from Pennsylvania.
They drill gas there.
Richard Downey is a retired New York City schoolteacher and a member of the Unatego Board of Education and the Joint Landowners Coalition of New York.