By Erin Ailworth
Globe Staff / May 7, 2010
More than half of the state’s electricity comes from power plants fueled by natural gas — and right now, the commodity is cheap.
But industry insiders say natural gas isn’t likely to remain a deal for long. In fact, its price is steadily creeping up and will continue to do so.
“The price of natural gas, the price of oil, and, to some extent, the price of coal is going to increase over time,’’ said former US energy secretary Federico Peña, who now cochairs the advocacy group Compete Coalition in Washington, D.C. “We’ve got to begin to think long term and look to these clean energy resources.’’
With last week’s federal government approval of Cape Wind, state officials are looking toward offshore wind turbines as an environmentally friendly alternative to natural gas and other conventional fuels, such as coal.
But natural gas was once considered the fuel of choice for the ecoconscious. Because it was cleaner-burning than petroleum — once the state’s leading fuel for power plants — Massachusetts began using more natural gas in the 1990s.
“At the time 20 years ago, when New England started moving heavily toward natural gas, the predictions about natural gas prices were that they would stay low for a really long time,’’ said Ian Bowles, state energy secretary. But, Bowles said, natural gas prices have fluctuated dramatically.
In the last decade, the cost of natural gas has dropped lower than $2 per million BTU on the Nymex commodities market, and has swung as high as $15 per million BTU, according to the Energy Information Administration, the statistical arm of the federal energy department. In gasoline prices, that’s as little as about 25 cents a gallon to more than about $1.88 a gallon. One million BTU equals 8 gallons of gasoline, according to the federal agency.
The wild swings create an unpredictable environment for developers of renewable generating sources. When natural gas prices are high, alternative energy becomes relatively cheaper, and more attractive. But when natural gas is cheap, it becomes more difficult to promote the construction of wind turbines or solar energy facilities, which generate electricity that for now, is typically more expensive than power generated by conventional means.
Peña’s answer is simple: Fossil fuel prices will go up, so consider Cape Wind, because the chances are that it will only benefit consumers.
“You need to ask yourself the question: When will it come online, and then, what will be the price of natural gas and coal?’’ Peña said. “I have always believed that by having more competition in the energy sector, it will bring down prices.’’
Source: http://www.boston.com/business/articles/2010/05/07/natural_gas_prices_vary_widely/
Globe Staff / May 7, 2010
More than half of the state’s electricity comes from power plants fueled by natural gas — and right now, the commodity is cheap.
But industry insiders say natural gas isn’t likely to remain a deal for long. In fact, its price is steadily creeping up and will continue to do so.
“The price of natural gas, the price of oil, and, to some extent, the price of coal is going to increase over time,’’ said former US energy secretary Federico Peña, who now cochairs the advocacy group Compete Coalition in Washington, D.C. “We’ve got to begin to think long term and look to these clean energy resources.’’
With last week’s federal government approval of Cape Wind, state officials are looking toward offshore wind turbines as an environmentally friendly alternative to natural gas and other conventional fuels, such as coal.
But natural gas was once considered the fuel of choice for the ecoconscious. Because it was cleaner-burning than petroleum — once the state’s leading fuel for power plants — Massachusetts began using more natural gas in the 1990s.
“At the time 20 years ago, when New England started moving heavily toward natural gas, the predictions about natural gas prices were that they would stay low for a really long time,’’ said Ian Bowles, state energy secretary. But, Bowles said, natural gas prices have fluctuated dramatically.
In the last decade, the cost of natural gas has dropped lower than $2 per million BTU on the Nymex commodities market, and has swung as high as $15 per million BTU, according to the Energy Information Administration, the statistical arm of the federal energy department. In gasoline prices, that’s as little as about 25 cents a gallon to more than about $1.88 a gallon. One million BTU equals 8 gallons of gasoline, according to the federal agency.
The wild swings create an unpredictable environment for developers of renewable generating sources. When natural gas prices are high, alternative energy becomes relatively cheaper, and more attractive. But when natural gas is cheap, it becomes more difficult to promote the construction of wind turbines or solar energy facilities, which generate electricity that for now, is typically more expensive than power generated by conventional means.
Peña’s answer is simple: Fossil fuel prices will go up, so consider Cape Wind, because the chances are that it will only benefit consumers.
“You need to ask yourself the question: When will it come online, and then, what will be the price of natural gas and coal?’’ Peña said. “I have always believed that by having more competition in the energy sector, it will bring down prices.’’
Source: http://www.boston.com/business/articles/2010/05/07/natural_gas_prices_vary_widely/
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