When the 55 delegates to the Constitutional Convention convened in Philadelphia in 1787, foremost among their concerns was addressing the growing tendency among states to tax or inhibit their neighbors’ commercial trade.
New York was an especially nettlesome practitioner of economic warfare on adjacent states, placing import duties on New Jersey cabbage and Connecticut firewood while leveraging its preeminent harbor at the mouth of the Hudson River to extract additional fees from its unmaritime peers to the east and south.
In 1824, the U.S. Supreme Court voided a New York law that granted an exclusive right to navigate by steamboat within state waters.
New York is at it again, 195 years later, with Gov. Andrew Cuomo abusing the federal Clean Water Act to prevent the construction of natural gas pipelines across the state, not only denying New Yorkers a reliable, less expensive, and cleaner source of energy, but also denying those same benefits to people living to the east in New England.
The oil and gas industry has used hydraulic fracturing since 1866, with Edward Roberts’ “Exploding Torpedo.” Today’s high-tech fracking uses sophisticated sensors and data analysis to extract hydrocarbons from areas previously thought uneconomical. Fracking is why Pennsylvania is now America’s second-greatest producer of natural gas, behind Texas.
But much of Pennsylvania’s natural gas can’t get to where it’s needed most. In New York’s case, the third-largest source of energy for electric generation and home heating is fuel oil, with natural gas and nuclear power providing the bulk of the state’s energy needs. While New York was 5th in natural gas consumption in the U.S., more than a third of the state’s electricity-generating capacity can switch between gas and fuel oil as needed—but fuel oil produces 38% more carbon dioxide than natural gas and generates more pollution, as well.
And, while Gov. Cuomo continues to obstruct new pipelines, generating political goodwill from some, his state’s policies, combined with a 99-year-old law that bans foreign vessels from shipping cargo between U.S. ports, result in the importation of liquified natural gas (LNG) from Russia and Trinidad and Tobago—rather than Pennsylvania or Texas.
Compounding New York’s natural gas shortage is a state ban on fracking, which essentially places the Empire State’s portion of the vast Marcellus shale formation off limits to economic activity.
But the region needs energy, and so natural gas is making into New York and points east, whether imported from overseas or shipped in on rail car (at a considerable premium to liquify and transport the fuel).
The Trump Administration has taken note of the efforts to block oil and gas pipeline construction around the nation, whether it is Keystone XL in the Midwest or the Constitution Pipeline in New York, and responded with three initiatives: Executive orders to remove regulatory impediments to natural gas transport in the Northeast; speed up the permitting process for interstate pipelines and related infrastructure; and allow for rail shipment of LNG.
These remedies may take a year or more to implement. Until then, New York’s anti-domestic natural gas policies are resulting in energy distributors National Grid and Con Ed telling regulators that they can’t accept new customers due to supply shortages.
When public policy restricts energy supplies, the inevitable result is higher prices. In the case of electricity, the U.S. Energy Information Administration reported New England’s average electric costs in 2017 at 16.58 cents per Kilowatt-hour, the costliest regional average in the 48 contiguous states. New York electric consumers paid 14.74 cents per Kilowatt-hour, the highest outside of New England in the lower 48 except for California. In energy-rich Pennsylvania, electricity went for 10.13 per Kilowatt-hour in 2017, placing a projected policy price premium for electricity at 46% in New York and 64% in New England.
Higher energy costs and less reliable supplies act to put further downward pressure on a regional economy that’s already been losing residents and investment to other states. The U.S. Census Bureau estimating that 167,000 more people moved out of New York to other states than moved in in 2017, with Massachusetts seeing a net loss of 27,000 to domestic migration that year. Meanwhile, Gov. Cuomo has warned of a tax revenue shortfall of $2.3 billion, as higher income New Yorkers move to avoid paying the state’s high taxes.
Reversing New York’s de facto ban on the construction of new natural gas pipelines will increase the supply of a reliable and clean American-made fuel to consumers in New York and New England, reducing the cost to heat and light homes while also significantly reducing the region’s reliance on energy imported from overseas.