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The Thick Plottens

Ed Reid's picture
Vice President, Marketing (Retired) / Executive Director (Retired) / President (Retired) Columbia Gas Distribution Companies / American Gas Cooling Center / Fire to Ice, Inc.

Industry Participation: Natural Gas Industry Research, Development and Demonstration Initiative Chair, Cooling Committee (1996-1999)   American Gas Association Marketing Section...

  • Member since 2003
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  • Jun 7, 2022
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The Biden Administration has announced several goals to be achieved regarding climate change, culminating in Net Zero GHG emissions by 2050 in the US. However, the Administration has not publicly introduced plans to achieve these goals, though the elements of such plans must be in existence.

Certain elements of such plans have begun to become obvious over the past 15 months. The Administration has taken numerous actions to hamper the exploration for and production of oil and natural gas to starve the market for these commodities, including delaying or canceling lease sales and “slow walking” operating permits on existing leases. The Administration has also encouraged the financial markets to deny financing to new fossil fuel projects. The Administration is also preparing new environmental regulations intended to make oil and gas production, transmission and distribution more difficult and expensive.

These actions have resulted in an approximate doubling of fossil fuel prices. The intent of these actions and the resulting increases is to make fossil fuel use less attractive and thus make electric end-use more attractive to consumers and businesses. The most obvious manifestation of this intent is the promotion of electric vehicles of all types, including purchase incentives and federal support for the installation of EV fueling infrastructure. The Administration has actually recommended that people buy EVs to avoid increasing gasoline prices. The recent ban on imports of Russian oil will likely further increase gasoline prices, which have already doubled under the Administration.

The Administration is also actively promoting renewable electricity generation and providing continuing incentives for the construction of wind and solar generation. However, wind and solar generation represent redundant generating capacity, since they require full conventional generation backup in the absence of electric energy storage sufficient to power the grid during periods of low/no wind and solar generation. The conventional backup requirement, combined with dispatch preferences for renewables when available, increases the cost of utility electricity while disincentivizing the operation of the conventional backup generation, which operates at progressively lower capacity factors and thus higher cost per unit of power generated

Interestingly, the proliferation of renewable generation is increasing electricity costs and thus increasing the cost of the electricity required to recharge the batteries in the EVs being promoted to avoid rising gasoline costs.

Perhaps the most interesting outcome of these Administration actions and the resulting price increases and electric grid reliability issues is the “Blame Game”, in which the Administration denies any responsibility for the results of its actions and points the “finger of blame” at the oil and gas industries and the electric utility industry.

The Administration is joined in pointing the “finger of blame” at the electric utility industry by the developers of renewable generation projects, who assert that the utilities should be responsible for extending transmission lines to their projects and also for providing sufficient electricity storage to meet grid demand during periods of low/no wind and solar generation. That position allows the renewable developers to brag about their low generating costs while blaming the utilities for the increased utility rates resulting from these transmission and storage investments.

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