NCPA - National Center for Policy Analysis

The Northeast's Natural Gas Supply and Demand Problem

April 3, 2015

The cost of residential heating and cooling in the Northeast is comparatively high. Fracking regulations and outright bans are pushing entire industries out of densely populated municipalities as well as entire states, such as New York, where the extraction technology has met strong opposition at every level of government. Even the importation of natural gas from other states, such as Pennsylvania — which remains very active in tapping Marcellus shale deposits — is becoming difficult, with neighborhood groups and city governments opposing pipelines and other forms of infrastructure to support burgeoning energy demand.

Vocal adversaries of gas withdrawals and transport cite two reasons for supporting gas restrictions:

  • The environmental danger of fracking and the construction of gas lines.
  • Falling property value due to aesthetic degradation from pipelines around residential areas.

Unfortunately, these opponents still pay a hefty premium for limiting the availability of gas through higher residential heating and cooling prices.

Crowded regions pining for their power needs to be met are unwilling to make concessions for it, with $700 million projects such as the Constitution Pipeline between Pennsylvania and New York being put on hold. With less population density, Southern and Midwestern states do not suffer from the congestion, which limits gas transfer. Logically, New Englanders are overpaying for gas by $3.58 per thousand cubic feet. This amount may seem trivial, but for long-term residents and businesses, it represents a huge cost.

Source: Santiago Bello, "Natural Gas Supply and Demand — A Structural Problem in the Northeast," National Center for Policy Analysis, April 1, 2015. 

 

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