Where's the promised price drop?

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DAILY ENERGY NEWS | 01/10/2022

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For the last few years, we have heard that we can get rid of coal because solar and wind are cheaper. Yet electricity prices keep rising as we create more demand for natural gas. When will we see the promised decreases in the price of electricity?

Bangor Daily News (1/6/22) reports: "Natural gas prices and grid modernization investments will drive up overall electricity rates in Maine and New England over the next few years, the state’s utility regulator said in a Thursday report. The report summarizing the Maine Public Utilities Commission’s annual activities, which came at the request of the Legislature’s energy panel, follows the 30 percent rise in electricity rates for most Mainers starting Jan. 1. That hike reflected an almost 95 percent increase in natural gas prices from October 2020 through October 2021. New England’s heavy reliance on natural gas to power its electric grid also caused the regional grid operator, ISO New England, to issue a strong warning in December that New England could face its first rolling power outages this winter if a prolonged cold spell hits. The utilities commission, charged with keeping electricity rates reasonable, also cited reliability improvements by utilities, increased intensity of storms causing power outages, increased costs of labor and materials and transmission investments by Maine and New England to boost reliability and resiliency as factors that would pump up rates."

"Getting gas to Mr. Markey and Ms. Warren’s Massachusetts is so difficult that sometimes it comes into Boston Harbor on a tanker from Russia. And they wonder why heating prices are high."

– Wall Street Journal Editorial Board

To sum it up, politicians continue to lie to their voters in order to do what they want to do.

Bloomberg (1/10/22) column: "The energy transition debate has been largely dominated by this line of argument: Green energy is needed to address climate change, and households and business will benefit from it via lower prices. On Saturday, Isabel Schnabel, an influential member of the executive board of the European Central Bank, articulated another line of thought: the transition is needed, but’s likely to prove inflationary. Schnabel, a German economist, argued that greenflation is very real and, not only is it not transitory, it’s likely to get worse. Central banks will need to react to it. Speaking at an ECB virtual panel over the weekend, she said: 'While in the past energy prices often fell as quickly as they rose, the need to step up the fight against climate change may imply that fossil fuel prices will now not only have to stay elevated, but even have to keep rising if we are to meet the goals of the Paris climate agreement.' The comments signal a re-think among policymakers about the energy transition — already evident within the Biden administration, but now apparently spreading into Europe. Many in the energy industry will be forgiven for schadenfreude: You can almost hear the collective 'I told you so' from Houston. After all, if you reduce supply and don’t lower demand, prices have only one way to go: up."

This makes sense to those with no sense.

Mining.com (1/1/22) reports: "The United States and its allies, such as Canada, the UK, the European Union, Australia, Japan and South Korea, face a dilemma when it comes to the global electrification of the transportation system and the switch from fossil fuels to cleaner forms of energy. On the one hand, we want everything to be clean, green and non-polluting, with COP26-inspired goals of achieving net zero carbon emissions by 2050; and several countries aiming to close the chapter on fossil-fuel-powered vehicles, including the United States which is seeking to make half of the country’s auto fleet electric by 2030. Yet many of these same countries are continuing to go flat-out in their production of oil and natural gas — considered a bridge fuel between fossil fuels and renewables, wrongly imo, for environmental reasons — a/ because they want to be energy-independent; and b/ because they have to. Germany is a good example of a country that tried to switch too soon to renewable energy, retiring its nuclear and coal power plants, only to find that the wind and sun didn’t produce enough electricity. Germany is now having to rely on Russian natural gas and the burning of lignite coal to keep the lights on and homes/ businesses heated throughout the winter."

What has the ECB been smoking?

Energy Markets

WTI Crude Oil: ↑ $79.03
Natural Gas: ↑ $4.12
Gasoline: ↑ $3.30

Diesel: ↑ $3.58
Heating Oil: ↑ $251.50
Brent Crude Oil: ↑ $81.87
US Rig Count: ↑ 703

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