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U.S. should stop selling off its needed natural gas
Sunday, September 7, 2008
When our natural gas bill hit $1.485 per therm in August, I hit the computer. The news is not good. As you may have suspected, New Yorkers are being ripped off. According to the federal Office of Energy Statistics (OES), New Yorkers pay 20 percent more than the national average for natural gas and 30 percent more than do Texans. Ours, of courses, is piped in. So is that of Texans, although at a shorter distance. In the past six months, OES reported that natural gas rose in price 33 percent for residential customers but only 20 percent for commercial users. During that period, I was charged 70 percent more per therm. Since the recent collapse of crude, the price of natural gas has strangely fallen as well. On Bloomberg radio, a reporter asked an expert why natural gas also fell with crude. He explained that natural gas always tracks gasoline. This may be true, but it makes for poor logic. We are talking of apples and oranges. There should be no correlation between the prices. Clear differencesNatural gas is domestic and needs no refining nor extraordinary delivery charges. Crude, on the other hand requires pumping, transportation across the world, refining, then truck deliveries to regional depots and finally trucking to gas stations. Crude has many more moving parts and is also held prisoner to OPEC, international currency valuations, as well as to those sinister speculators. So why are New Yorkers as well as the rest of the country being robbed by the natural gas industry? Because the latter can get away with it. It holds us all hostage, especially during the winter. Is Big Oil also Big Natural Gas? Quite often. The natural gas industry also seems to be nursed by our state Public Service Commission [PSC], which permits any pricing demanded. One issue that got Franklin Roosevelt elected president in 1932 was his anger at the monopolistic practices of public utilities, such as Samuel Insull’s pyramid of Midwestern companies. But the New Deal programs promoted by Roosevelt for protecting the common man have since been destroyed by deregulation — by which I read no regulation. The PSC employees don’t seem to mind paying higher heating bills, as if they could not change things. The PSC certainly cares less for the little guy, since New York homeowners pay 37 percent more than do commercial customers (stores, say) and 42 percent more than industries. Another instance of welfare for big business. Taped on windows at Stewart’s shops is a company statement — that one dollar for every five spent there goes to pay taxes. We could see our added heating expense as a hidden tax. And who can forget the 4 percent sales tax? Were the PSC willing to rectify some of these inequities, everyone would be able to save. And isn’t that the purpose for creating and funding such agencies? The OES numbers further reflect the macro-economy. In the past five years the nation’s natural gas use for residentials grew 6 percent. For commercial customers, 5.6 percent. But industrial purchases of natural gas fell 7.8 percent. That suggests the many jobs and companies which have moved out of the country during that time period. In fact, natural gas consumption has fallen 3.8 percent during the past five years. In that span, our cost per therm has risen 170 percent. In March, the wellhead price for natural gas was $8.29 per thousand cubic feet, but the residential cost was $12.92. That means shipping and handling added 59 percent to our cost. Frankly, I can’t see those pipes doing all that much more work. They just lie there underground like pythons eating our money. And watchdog agencies like the PSC keep feeding them. The national industrial cost for natural gas is only $9.44 per thousand cubic feet, or 16 percent above the wellhead. The residential cost is 34 percent above the industrial price, just to remind of the injustice. It’s the bulk mailing principle all over again — while business can send out junk mail for a penny a letter, we have to pony up 42 cents and thereby pay for the entire system. However, the state PSC may not be the greatest villain of the piece, after all. No conscienceEven the evil speculators could escape some censure. For, lurking within the stack of energy stats was U.S. natural gas exports. It reads like the tragedy of the Irish potato famine, when England sold Irish potatoes abroad for a profit while it starved the indentured Irish peasant farmers. Absolutely inhuman. But, as they say, capitalism has no conscience. Anyway, while the cost of natural gas has nearly tripled during the past five years, exports of U.S. natural gas to Canada have risen 155 percent. In fact, 38 percent of all piped U.S. gas goes to Canada. Another 33 percent is pipelined to three Michigan hamlets on rivers across from Ontario. Mexico does not receive quite as much as Canada. Responsibility must lie in NAFTA and free trade. For by shipping our life-preserving gas out of the country during an energy crisis — and endangering the lives of her people during the winter — the United States is treating its own citizens no better than the English served the enslaved Irish. Thus, all the compassionate chatter of politicians worrying about how the poor will be able to survive the winter are rather shameful as they realize that their laws have contributed to the misery. But we import much crude oil from Canada, some will argue. True, but the Canadians at present have no use for their excess oil. The United States has a critical need for the natural gas it ships out of the country. Until we discover new pools of natural gas, it is imperative that we retain what we have. Even the White House campaign for the need of offshore drilling now seems shallow, a ploy to feather the oil bed they sleep in. Why can’t we use what we have first? Why? Because there is less profit in it for the industry. David Childs lives in Johnstown Get ALL of our news...Click here to subscribe to our online edition, a complete replica of our print edition.
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July 4, 2009
11:02 a.m. [ Suggest removal ]
Sir,
Your facts are wrong. According to the EIA, the US produced 19.3 trillion cubic feet (tcf) in 2007. 0.5 tcf was exported to Canada. Therefore 2.5% of US produced gas goes to Canada.
More importantly, the US imports 3.8 tcf from Canada (accounting for 16.4% of US gas consumption). That is missing from your analysis.
Finally, those 'hamlets' in Michigan are giant storage fields that receive gas in the summer and send it out in the winter, to areas in Michigan and Illinois.
-Knower of things Nat Gas
1:03 p.m. [ Suggest removal ]
The previous poster is correct. The gas is exported from the US because it is more convenient in the overall picture to export from Canada to the US in some areas rather than transfer the gas internally within Canada. If the US were to block exports to Canada, all that would happen is that Canada would export exactly that amount less to the US to start with, and transfer it internally to the areas that are currently importing from the US, incurring greater costs.
The author really needs to grasp the bigger picture here.
5:47 p.m. [ Suggest removal ]
Mr. Childs, From previous research I can say many of your facts seem way off base. You might want to do some more research on the subject and repost a corrected article.