Gas Pains
This Winter, the New England states could be facing their own energy crises, due to a natural gas shortage. According to their power grid operator, ISO New England, a cold winter might impact their ability to heat New England homes and businesses. In fact, the states may face rolling blackouts this year – a situation that Americans identify as a foreign-country problem like in China and Ukraine, or perhaps in California, during wildfire disasters.
According to the Wall Street Journal, New England’s power generation systems are limited, so they rely on natural gas to provide energy for electricity and heating in colder months. The region’s ability to store gas is also limited, so a constant supply of imported natural gas is needed to keep the power on. As a result, these northern states pay more for natural gas than anywhere else in the United States.
“But wait a moment!” (I hear you say). “Doesn’t the US produce lots of natural gas from our vast underground gas fields via fracking and other extraction methods? I thought that we actually exported lots of natural gas, so why would New England be importing the stuff?
It’s true, we do produce a lot of natural gas. In fact, the United States set a new record for the largest production of gas ever. We now exceed the trillions of cubic feet per month that we produced pre-Covid.
Natural gas has become the energy of choice in many areas, as states switch from coal to cleaner gas to generate electricity. Also, the war in Europe has driven countries around the world to import US Liquid Natural Gas (LNG) to replace Russian exports. This has increased the cost of gas, along with the cost of using the limited number of specialized oceangoing vessels that can transport LNG.
If we had an effective pipeline network to move gas from producing states to New England, they wouldn’t need to worry about LNG storage facilities. But there are few pipelines available (another story for another time) so the North depends on LNG.
“No problem!” (you say) “Just ship some LNG to New England terminals, instead of forcing them to buy imported gas, and that will lower the costs to households in Maine and Massachusetts!”
But of course, it’s not that simple.
America is unable to ship any LNG to New England.
They can only buy gas from other countries.
What?!?
It’s true, thanks to one of my favorite laws to detest: The Jones Act. This 100-year-old law dictates that no ship may travel from one US port to another unless that ship had been built in the United States. Since the US does not build LNG ships (it’s too expensive), it is illegal for Dominion Energy’s terminal located on the coast of Maryland to ship LNG to New England (with terminals near Boston) via the Atlantic Ocean. Since the Jones Act prevents us from using foreign-built vessels, people in Boston need to import their gas from other countries.
The Jones Act has long been one of the most ridiculous laws on our books. It supports a handful of high-cost ships yards that assemble ships that are actually built elsewhere, like South Korea. (Yes, we weld together ships that would have been far cheaper to complete in other countries). We can’t even assemble a cruise ship since the costs would be prohibitive. What happens when a foreign-built cruise vessel takes Americans on a trip from Los Angeles to Alaska? The ship must make a stop in Canada, simply to comply with the Jones act. This adds time, uses fuel, raises costs, and makes Congress happy with political donations.
This law, enacted in 1920, causes millions of Americans today to suffer from higher costs and lack of essential transportation infrastructure. New England voters, in particular, will be paying a very high price for a terrible law that exists only to line the pockets of politicians and a handful of corporations and unions.
Protectionist laws, like the Jones Act, tend to create the opposite of their intended effect. Rather than allowing a domestic industry to grow stronger by staving off competition, it removes all reasons for investing in productivity. The result is that US-flagged commercial ships represent a fraction of the world commercial shipping capacity (according to Forbes, 200 out of 44,000 ships!) Forbes is mistaken by blaming this on a lack of taxpayer subsidies. The long tradition of American ship building was based on innovative and competitive builders, just like other successful industries. The Jones Act squashes that competition and innovation.
It is time for Congress to rescind this terrible law that has contributed to the ruin of a once-successful industry. Yet again, we must insist that Congress stop filling their reelection purses and do the right thing for their constituents. With the repeal of the Jones Act, we can make it legal to use the lowest-cost transportation to bring goods and energy from one state to another. Voters in New England will be colder and poorer each year the Jones Act is left to stand.
End it now.