Energy prices in the United States are wreaking havoc on budget-sensitive households, making it harder for families to save money or get ahead financially.
Since President Joe Biden took office in January 2021, Americans’ electricity bills have skyrocketed nearly 30%, or 13 times faster than in the previous seven years, according to a Wall Street Journal analysis of the latest consumer price index data.
The data showed that the energy index rose by 1.1% in March following a 2.3% increase in February. The gasoline and electricity index also increased in March, climbing 1.7% and 0.9%, respectively. The U.S. Bureau of Labor Statistics (BLS) reports that the energy index jumped 2.1%, the gasoline index increased 1.3%, and the electricity index soared 5.0% annually.
Despite the Federal Reserve holding interest rates steady since July 2023, inflation continues to pose a problem for policymakers and households.
“There is no improvement here, we’re moving in the wrong direction,” said Bankrate chief financial analyst Greg McBride in an interview with Fox Business. “The usual trouble spots persist — shelter, motor vehicle insurance, maintenance, repairs, and service costs. Add electricity to that list, up 0.9% in March and 5% over the past year.”
Part of the reason for the surge in energy prices is due to the push to replace fossil fuels and nuclear power plants with renewable subsidies and green-energy mandates.
Despite the Biden administration passing the Inflation Reduction Act in 2022, the law has done little to lower energy prices. For example, the average cost of electricity has jumped from $0.136 per kilowatt hour in January 2021 to $0.174 per kilowatt hour in March 2024, a nearly 28% increase, BLS data shows.
The U.S. Energy Information Administration expects hotter summer temperatures this year, so the agency forecasts an annualized 4% rise in residential electricity consumption. This means the average household’s electricity bill will be much more expensive in 2024 than in 2023.
Originally written by the Dallas Express, republished with permission.
“California leaders know that rising prices are a huge problem. The state is now considering a plan to tie utility rates to personal income so that the rich pay more and low-income residents pay less. Costly California looms as an example of poor energy policy.”
Energy prices are skyrocketing in California. The state’s electricity, gasoline, and natural gas prices are amongst the nation’s highest and rising. Green energy policies are the primary cause for high and escalating California energy prices.
Electricity
California electricity prices increased by 98.2 percent over the last 15 years, the highest rise in the nation. No other state comes close in terms of price increases. US average electricity prices rose 30.6 percent over the same period. California power prices rose to a level that is the second highest in the nation, only lower than Hawaii. In contrast, prices in Texas have actually declined since 2008 due to a focus on retail competition and a sharp decrease in natural gas prices, more than offsetting wind and solar additions. [1]
California is the epicenter of green energy in the United States. The state established the first renewable portfolio standard in 2002, mandating that 20 percent of electricity be from renewable sources by 2017. Governor Arnold Schwarzenegger instituted a 33 percent renewable requirement by 2020. In 2018, Governor Jerry Brown signed an executive order mandating 100 percent zero-carbon electricity by 2045.
The transition from traditional power plants to renewables has been a top priority for California for the last 20 years. By the start of 2023, California’s grid contained more than 6 gigawatts(GW) of wind, 17.5 GW of utility-scale solar, and 14 GW of residential rooftop solar.
Over the last two decades, the state retired 11 coal-fired power plants and converted three other coal plants to burn biomass fuel. The San Onofre Nuclear Generating Station closed in 2013, and the Diablo Canyon Power Plant, the state’s last nuclear plant, has been scheduled for closure.
In 2022, natural gas provided 42 percent of California’s in-state electricity generation, with other sources providing: solar (27%), nuclear (8%), hydroelectric (8%), wind (7%), geothermal (6%), and biomass (2%). The state imports about one-fifth of its electricity from surrounding states.
Solar and wind generators are more expensive than traditional coal, gas, and nuclear generators. Wind and solar occupy huge amounts of land, perform poorly during winter months, and suffer from intermittent output.
Vaclav Smil’s book Power Density points out that wind and solar systems use about 100 times the land area of traditional generators to produce the same electricity output. Renewable facilities also tend to be far from population centers, requiring expensive buildouts of transmission systems. Land and transmission costs boost the price of electricity from these generators.
The intermittency of wind and solar generation has the largest cost impact. Cloudy days and nights eliminate solar output and windless days idle wind turbines. Winter solar output drops to about half the available summer output. About 90 percent of traditional coal or natural gas generators must be maintained as backup for intermittent wind and solar systems, boosting power prices.
Batteries
California leads the US in deployment of grid-scale batteries. The plan is to use batteries to store electricity when wind and solar generation is high and then release the stored power back to the grid when wind and solar output is low. Wind and solar plus battery systems are being deployed as a low-carbon alternative to coal and gas power plants.
But the use of grid-scale batteries to backup renewable generators multiplies the cost of electricity. Utility-scale solar systems cost about $1 million per megawatt (MW) of rated capacity. Grid-scale batteries with four hours of discharge duration cost about $1.5 million per megawatt of capacity. These batteries can back up solar for only about four hours.
To replace a gas-fired power plant, a battery system would need to back up a solar installation for one or more days. A battery that can back up a $1 million one-megawatt solar facility for a single day would cost about $9 million. Grid-scale batteries only have a 12-year lifetime, about one-half of the solar lifetime. Adding batteries to backup solar for a single day boosts the total capital cost by more than a factor of ten.
Gasoline
February 29 found California regular gasoline prices at $4.74 per gallon, the highest in the nation. California drivers pay 40 percent more than the national average. The state has its own blend of gasoline, and claims that the blend will emit fewer greenhouse gases when burned. Higher gasoline taxes and a shortage of local refineries also factor into the high prices.
Natural Gas
California also consistently ranks in the top 10 in natural gas prices. Prices are high because the state has long discouraged local production, importing more than 90 percent of its gas from other states. There is a also a shortage of gas storage facilities.
Green energy policies affect not only electricity and fuel prices, but also housing utility and construction costs. Many regulations aim to reduce greenhouse gas emissions from buildings. The California Air Resources Board passed a regulation outlawing new residential gas heaters by 2030. San Francisco, Los Angeles, and other cities have voted to ban gas appliances in new construction. Only electric heat pumps, water heaters, and stoves may be used. These measures further boost the cost of energy for homeowners.
Housing Costs
Housing prices are rising because of green energy mandates. The 2020 California Solar Mandate requires newly constructed homes to have solar panels and wiring for electric appliances. The California Building Standards Commission enacted standards that require electrical conduit for level two EV charging in single-family homes and parking facilities with EV chargers for multi-family homes and hotels. These additional requirements make the cost of housing less affordable for low-income residents.
Conclusion
Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric, the big California utilities, have all asked for 2024 rate increases, in part needed to bury hundreds of miles of transmission lines to reduce the threat of forest fires. Residents already pay $300-500 per month for energy. There seems to be no end in sight to rising California energy prices.
California leaders know that rising prices are a huge problem. The state is now considering a plan to tie utility rates to personal income so that the rich pay more and low-income residents pay less.
But affordable energy is clearly not as important as efforts to try to stop global warming. Costly California looms as an example of poor energy policy.
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[1] Storm Uri (February 2021) rate spikes of $10 billion or more have been paid by floating bonds and/or are in legal limbo, which would make Texas’s electricity rates higher than recorded.
Steve Goreham is a speaker on energy, the environment, and public policy and the author of the new bestselling bookGreen Breakdown: The Coming Renewable Energy Failure. His previous posts at MasterResource can be found here.
As 2024 unfurls, it’s worth putting a few things in context. While we may have seen a slight dip in gasoline prices, we’re still paying prices last seen 12 years ago. Add in persistent inflation that still brings sticker shock at the grocery store and interest rates last seen in the 1980s, and it is clear Americans will enter the election with money on their minds.
There is one important financial thread we all need to pay attention to, and that is energy costs. Lower energy prices spark lower prices for our essentials – food, housing, and transportation – including every gift you sent during the holiday season, whether by U.S. Mail, UPS, FedEx or Amazon. Conversely, higher energy prices mean higher everything prices because energy is literally an inescapable factor in every economic calculation.
This is the broad message I delivered in testimony during a Congressional hearing on Jan. 11, at the kind invitation of the House Subcommittee on Energy and Mineral Resources. Against this concerning energy backdrop, it behooves American voters to support candidates who, regardless of party, back sensible energy policies that deliver abundant, affordable, reliable, and environmentally responsible energy.
Right now, the United States in 2023 is expected to have produced more natural gas and oil in a year than any nation, ever, according to the latest U.S. government data. This is a great achievement – coupled with our increasing use of renewable energy – but is generally viewed in a negative light by extreme activists and a few fellow travelers in government. This is a mistaken, sad response to an achievement that – if allowed to continue – will do more for our economy, our households, and our environment than the myriad of government controls being offered.
America’s energy success is borne largely of entrepreneurship and market competition, and comes despite a federal administration and a few states intent on throwing every regulatory and bureaucratic impediment in the way. That playbook has included, among other things:
· Ignoring laws passed by Congress requiring an oil and gas lease sale in the Gulf of Mexico until forced to do so by a federal court
· A 500-day delay in a legally required offshore leasing plan
· The fewest onshore and offshore lease sales in history
· Constantly delaying and changing the rules to permit much-needed pipelines and transmission that would help keep electricity rates low for Americans.
The current Administration’s M.O. from day one has been to attack and limit domestic energy production, by issuing restrictions, delays and numerous economically self-defeating energy regulations. These include policies restricting the use of natural gas and targeting natural gas appliances – water heaters, furnaces and even the gas stovetops that a majority of Americans love – without any plan for how all that new electricity will be generated.
Although the stated impetus for these policies is something we all agree is important – an improved environment – the evidence is crystal-clear from California to New York to Europe that these policies trigger higher costs, restrict consumer freedom-of-choice and require us to use higher-emitting sources of energy to make up the predictable supply shortfall.
In other words, the environment loses.
Ordinary people lose, too.
Retail residential electricity rates slowed their rise in 2023 but still were still climbing in October, the latest data available. Although electricity pricing is complex, one of the biggest factors is the cost of fuel – once again, when supply is restricted in the face of unyielding demand, prices climb. This is what makes unwise, restrictive energy policies so expensive.
In states like California, New York and Massachusetts, where energy sources are limited by government fiat, rates have risen higher than elsewhere. The cold weather across the nation this month has shown that regional grid managers are right to have shouted from the housetops about near-term blackout worries.
Already, many elected leaders who have opposed traditional fuels are signaling they may have been shortsighted, or are trying to deflect blame and keep the cost quiet.
California has kept its Diablo Canyon nuclear facility and several natural gas power plants online longer than planned because the state doesn’t have enough generating capacity. It’s already importing more energy from neighboring states, increasing what are already some of the highest electricity rates in America.
All this is occurring while the U.S. leads the world in carbon reduction. In fact, since 1990, the U.S. has reduced its greenhouse gas emissions by 19% while the rest of the world has increased theirs by over 18%.
What conclusion can we draw from all this? It clear that curtailing energy production and consumer choice is costing families and businesses greatly while generating a federal debt that is unsustainable – and now exceeds $100,000 per American. All while we are already marching toward ever-improving environmental performance and ever-greater energy diversity – and we acknowledge that more needs to be done.
A sensible U.S. energy policy is essential. Cries to ban one energy resource for another should be cast aside in favor of non-partisan, broad-choice energy solutions.
For all of us, energy is a central part of every day, all but taken for granted as it underpins our economy, our lives and our future. Energy should not be a partisan issue, especially when higher prices affect us first through our bills and second, when those costs are passed on to us through the goods and services we buy, which drives inflation. Those in poverty and on fixed incomes are hurt the most.
If we all bear that big picture in mind, regardless of party, our ballot-box decisions should become self-evident. Are we for affordable progress and future prosperity, or failed ideas that remove freedoms and raise the cost of living?
David Holt is president of Consumer Energy Alliance, a U.S. consumer energy and environment advocate supporting affordable, reliable energy for working families, seniors and businesses across the country.
This article was originally published by RealClearEnergy and made available via RealClearWire.
What will the death of the green energy illusion look like? From time to time (see, for example, here and here) I have described a vision where some state or country runs headlong into a “green energy wall” — an impassable barricade of physical impossibility, characterized by scarcity and blackouts, into which the country crashes suddenly. Among the net zero zealot countries I have identified as the leading candidates for imminently hitting such a wall are Germany and the UK.
But perhaps, instead of a sudden crash, the demise of the green energy illusion will look more like a slow but steady decline, a gradual withering of economic activity and prosperity. In this scenario, high energy prices brought about by energy restrictions drive important industries out of business and, as good jobs disappear and energy prices increase, the people gradually and inexorably get poorer. Recent events in the UK and Germany seem to point in the direction of this type of scenario.
The latest edition of the GWPF’s Net Zero Watch Newsletter has the headline “Net Zero is dying.” (Go here and follow the link for your own copy of the newsletter. Full disclosure — I am on the board of the American affiliate of the GWPF.). Nine linked news articles from the past couple of days all deal with recent instances of industrial decline in the UK and Germany, each one a consequence of energy prices intentionally driven upward in the pursuit of “net zero.”
Several of the pieces cover the impending closure of the Port Talbot steelworks in Wales, with the loss of up to 2,500 jobs. Illustrative is a January 19 piece in the Daily Telegraph by Allison Pearson, headline “Port Talbot has been sacrificed to the angry god of net zero.”Although the Telegraph is behind paywall, the NZW Newsletter has a lengthy excerpt. Here is a part:
The high price of UK energy makes Port Talbot uncompetitive. . . . [N]et zero. That absurd and misanthropic creed . . . calls British workers losing their jobs “progress” while their carbon will now be emitted in India and China. . . . [The UK will now be] the only G7 nation with no first-class steel manufacturing – are they serious? You might almost get the impression the nation was run by a fifth column plotting its downfall.
In another item in the current Newsletter, GWPF points to its own warnings of what was coming from 2016 and 2021. From 2016:
“As an energy-intensive manufacturer of internationally traded commodities, the steel sector is particularly sensitive to energy costs. It is the first to feel the pain of the UK’s climate policies, but it will not be the last. [Steel] and the energy-intensive sector more broadly can be regarded as a miner’s canary, giving early warning of general economic damage as the costs of climate policies are passed through from energy to all other sectors of the economy.”
[T]he underlying and fundamental cause [of the ongoing closure of the steel industry in the UK] is the uncompetitiveness of all heavy industry in the UK, and for this government is itself largely to blame. GWPF has long predicted that Britain’s unilateral climate policies were making it all but impossible to operate heavy industry the UK.
Elsewhere in the Newsletter, the focus is Germany. A January 19 piece from the Times of London has the headline “What’s gone wrong with Germany?” Again it’s behind paywall; but the overall picture is a combination of self-inflicted consumer pain and equally self-inflicted industrial decline brought about by senseless mandates and high energy prices from the so-called “energy transition.” Excerpt:
The coalition has been plagued by unforced errors, typified by a hugely unpopular attempt to force homeowners to install heat pumps instead of gas or oil boilers. It has been riddled with public infighting and has presided over the worst economic performance in the G7.
That Times article does not go into detail on the industrial decline. But for some specifics consider this piece from July 13, 2023 from Politico, headline “Rust Belt on the Rhine.” Example:
Chemical giant BASF has been a pillar of German business for more than 150 years, underpinning the country’s industrial rise with a steady stream of innovation that helped make “Made in Germany” the envy of the world. But its latest moonshot — a $10 billion investment in a state-of-the-art complex the company claims will be the gold standard for sustainable production — isn’t going up in Germany. Instead, it’s being erected 9,000 kilometers away in China. . . . [BASF] is scaling back in Germany. In February, the company announced the shutdown of a fertilizer plant in its hometown of Ludwigshafen and other facilities, which led to about 2,600 job cuts. . . . [T]he company lost €130 million in Germany last year.
The explanation? From Politico:
Confronted by a toxic cocktail of high energy costs, worker shortages and reams of red tape, many of Germany’s biggest companies — from giants like Volkswagen and Siemens to a host of lesser-known, smaller ones — are experiencing a rude awakening and scrambling for greener pastures in North America and Asia.
Politico notes that in the 15 years since the 2008/09 recession, the U.S. economy has grown by some 76%, while the German economy has grown by only 19%. Oh, that is the same period of Germany’s “Energiewende,” which has included forcing electricity prices to go to triple the U.S. level.
For the big picture of the German industrial situation, here is a chart from YCharts.com, showing the trend over the last 5 years:
After you eliminate the steep Covid-induced valley of 2020-21, you are left with a decline that is steady and inexorable.
Frankly, the UK and Germany would be better off hitting a hard wall, which could wake them up in time to potentially turn things around. The current situation of steady ongoing decline is inflicting damage that may well not be reversible. Even if energy prices suddenly come down in the UK by a factor of 3 or more, is anyone going to re-build Port Talbot once it has been dismantled?
Net zero may be dying, but so are the economies of the UK and Germany. I just hope that the U.S. can be rescued in time.
The Heartland Institute’s Jim Lakely, Chris Talgo, Linnea Lueken, and special guest Jason Isaac of the Texas Public Policy Foundation present episode 422 of The In the Tank podcast.
The Biden administration is continuing to mandate the electrification of everything while at the same time pulling offline the reliable and affordable power generation and transmission that would make it remotely possible.
And this is a global delusion, not just a growing problem in the United States. Energy prices are skyrocketing and the “green energy” industry is now demanding even more government handouts – and permission to hike prices even more – to keep the scam going.
But are we seeing signs that a rapid collapse of the scam is near?
Investments in “alternative energy” companies took off in 2020, but all those gains are now gone. General Electric announced that it will post $1 billion in losses in its wind division.
The S&P Global Clean Energy Index is down more than 30 percent this year and still dropping. Siemens, one of the premier German manufacturers of wind turbines, saw its stock price crash by nearly 40 percent in one day last week and now wants a 15-billion-euros handout from the German government.
It also appears that “Big Oil” is giving up on pretending to be a part of the “green energy” future and is consolidating to produce even more oil and gas in the future.
And in signs that the EV bubble is collapsing, Ford announced that it lost $1.3 billion in its EV division during the third quarter of 2023 – which translates into a loss of $62,016 for each of the 20,962 EVs it sold during the period.
The CEO of Mercedes Benz said of the glut of EVs on the market that the public doesn’t want: “I can hardly imagine the current status quo is fully sustainable for everybody.”
Even Elon Musk is warning that demand is just not there for this massive, government-driven push for EVs.
Joining us to talk about all this is Jason Isaac, senior fellow of Life:Powered, a national initiative of the Texas Public Policy Foundation and co-author of the brand new report: “Overcharged Expectations: Unmasking the True Cost of Electric Vehicles.”
With government so invested with OUR MONEY in these schemes, is it inevitable that a massive financial bailout for these boondoggles is coming?
The far left extremists and eco- nutters really want is for us all to pay much more for our energy in the name of global warming. Well, what do they want to tell us when we get a colder climate period?
Let’s see what the fraudsters at CCN have been up to this week:
Writing in the Los Angeles Times on Monday, Bill McKibben and Rev. Lennox Yearwood, Jr. urged President Joe Biden’s administration to block “a massive fossil fuel buildout” being proposed in Louisiana. The argument they make is worth journalists’ attention, for it highlights a central challenge often overlooked in climate coverage.
It’s indisputably good news that solar, wind, batteries, and other climate-friendly energy sources have been plummeting in cost and gaining market share, because this can reduce demand for fossil fuels. But reducing the supply of fossil fuels is the true measure of successful climate policy, because global temperatures will keep rising until the world stops burning those fossil fuels. The fossil fuel industry has no intention of letting that happen. ExxonMobil just announced a $60 billion purchase of a rival oil and gas producer, signaling that Exxon plans to sell vast amounts of fossil fuel for decades. The United Arab Emirates is expanding its production capacity by 7.5 billion barrels of oil equivalent, even as Sultan Al Jaber, who heads UAE’s state-owned oil company while also presiding over next month’s COP28 summit, insists that he favors a net-zero future.
The contradiction at the heart of the climate fight, as Paris Agreement architect Christiana Figueres told the recent “Climate Changes Everything” conference, is that climate-friendly technologies are accelerating even as fossil fuel industry intransigence keeps greenhouse gas emissions climbing. This is the contradiction that our reporting needs to spotlight and explain to audiences. In Louisiana, oil and gas companies want to construct an array of pipelines and terminals to export liquid natural gas. The climate implications are enormous, partly because LNG is as carbon intensive as coal. The proposed CP2 terminal alone would “be responsible for 20 times more greenhouse gas emissions annually than the controversial Willow oil drilling project in Alaska” that Biden approved earlier this year, McKibben and Yearwood write, according to analysis by the US Environmental Protection Agency and Interior Department cited by the Sierra Club.
Journalists do not have to be in Louisiana to report this story. As Damian Carrington and Matthew Taylor revealed last year in their “carbon bombs” expose for the Guardian, scores of similar climate-busting projects are being proposed or developed all over the world.
Incredibly, governments and public lending agencies are spending trillions of dollars to subsidize such climate-wrecking fossil fuel production. In 2022, they paid out $7 trillion in fossil fuel subsidies, the International Monetary Fund calculated. “That’s a definition of insanity,” John Kerry, the US special envoy for climate change, said two years ago in the lead-up to COP26.
As journalists prepare to cover the COP28 summit starting November 30 and elections in the US and elsewhere next year, it’s essential we understand — and help our audiences understand — that fossil fuels have to go, soon, if a livable planet is to be preserved. Questions to explore in your reporting include: How much is your country’s government spending to subsidize fossil fuels? And what is your country doing — or failing to do — to stop burning the fossil fuels that are dangerously overheating the planet?
Many consumers will be so relieved to hear that Ofgem has lowered its price cap again that they won’t bother to ask the question they ought to be asking: how come, in a privatised electricity market, the price we pay for energy is still being determined by officials at a government agency? Why can’t I go shopping around for a better deal just as I do for food, petrol, clothes, holidays and most other things?
We used to have some kind of retail energy market, but consumer groups started moaning that some customers were paying more than others – something that is inevitable in a market. They persuaded themselves that energy companies were profiteering despite their margins being wafer-thin.
Ed Miliband, then Labour leader, came up with the wheeze of capping energy prices and the Conservatives, while they damned him at the time, found it politically expedient to interfere in the market too.
Indeed, last autumn the Government ended up with the idea of capping the price cap with the Energy Price Guarantee – funded, needless to say, from our taxes.
On the wholesale side, we never did have a genuinely free market in electricity. What was created after privatisation was a fudged, artificial market, the rules for which failed to foresee what would happen when we started feeding renewables into the grid. It is so dysfunctional that the prices that we pay for our power are vastly inflated.
Energy companies are forced to buy a proportion of their power from green sources, partly explaining our higher electricity prices. Retail energy companies are still obliged to buy “renewables obligation certificates” from older wind and solar plants. Newer solar and wind plants are paid a guaranteed ‘strike price’ instead.
But another reason we pay so much for our power – around 80pc more, unit for unit, than US households – is thanks to something called “marginal cost pricing”.
Every half an hour the grid runs an auction in which electricity suppliers submit bids to provide power for that period. The lowest bids are accepted first, followed by the next highest and so on until supply has matched demand.
But here is where it gets odd. Rather than be paid what they bid, all electricity providers are paid the same rate – equivalent to the highest bid. In other words, a wind farm might have bid to provide power at cost of £40 per megawatt-hour (MWh) and a gas plant at £60 per MWh, but both will be paid at a rate of £60 per MWh.
It is rather as if you go to a supermarket to buy 12 bottles of Prosecco for your wife’s birthday party but find they only have 11 bottles. To make up the 12 you buy a single bottle of Bollinger. But when you get to the till you are charged for 12 bottles of Bollinger.
Obviously, such a market works in favour of the producers rather than the consumer, yet it didn’t matter so much when our electricity market was made up mostly of large-scale reliable sources such as coal, gas and nuclear which charged similar prices for their electricity.
However, then came renewables. While the marginal cost of supplying wind and solar energy tends to be low, these sources are very intermittent, and are prone to under-deliver at short notice if the wind stops blowing or the sun stops shining.
In order to make up the gap between supply and demand, the operators of gas power stations have to be called upon to switch on their power plants at short notice. But it costs a lot more, MWh for MWh, to provide a burst of power for a couple of hours than it does to provide a steady load of power.
Britain is becoming increasingly reliant on electricity imported via subsea interconnectors. But we quite often end up paying eye-watering prices.
At one point in June 2022 we ended up paying £9,724.54 per MWh to import electricity from Belgium – over 100 times more than its average wholesale price. And given the rules of marginal cost pricing, everyone supplying power to the UK grid at that point was paid the same, silly sum.
Over the past year alone, thanks to intermittent wind and solar, the average daily price paid in the wholesale market has varied between £56 and £458. Retail customers don’t see these enormous spikes on their bills, but the costs are passed onto them.
The problem is compounded by green levies. If you own a gas power station you have to pay the Climate Change Levy – a tax on the burning of fossil fuels which is passed onto consumers. Yet thanks to marginal cost pricing, consumers are effectively paying the climate change levy even on renewable electricity.
Wind and solar farms would be making a killing from our dysfunctional wholesale energy market were it not for the fact that the Government has shaped an effective windfall tax on them – capping how much they are paid per MWh.
Yes, that is how silly it has become: renewables are being subsidised and subjected to windfall taxes at the same time.
At some point someone in government is going to ask: why don’t we sweep away all the absurdities – the levies, subsidies and bizarre rules like marginal cost pricing – and have a proper, functioning energy market? We might be surprised how liberating it is – and how much better value for the consumer.
Your humble author has pretensions to theory and here is one for your consideration dear reader. Bear with me, but here it is in a nutshell. Governments and policymakers keep drumming it into our ears that fossil fuels are bad and will lead to the “end of days”. The ultimate appears in the form of oil, gas and coal. Ordinary Joe Blow will listen to the self-proclaimed climate change experts and their official sponsors. He will bear higher gasoline and electricity prices, higher airfares for his modest holidays, and even pay more for his beef since cows belch methane. After all, Joe Blow – a decent and humble fellow — wants to be a responsible inhabitant of the planet.
But there comes a point in time when the burden on Joe hits a nerve, that node of effective pain, when he explodes. It seems that is where the Germans are with the ban on oil and gas heating systems from 2024 by the Scholz coalition government. And ditto for the Americans with the loss of their natural gas cooking stoves threatened by the Biden Administration. Peak green seems to have come about as the shards of effective pain hit citizens in the West.
Let me elaborate.
The Green Cult
The Green cult has been long in the making. Maurice Strong, a Canadian environmentalist and principal architect of the 1972 Stockholm conference – the first global summit to make the environment the central issue – proclaimed in 1997 that “If we don’t change, our species will not survive… Frankly, we may get to the point where the only way of saving the world will be for industrial civilization to collapse.”
Strong’s prophetic words on industrial civilization are already seeing fruition. Germany, the epicenter of the Green cult, is actively de-industrializing at the altar of “renewable” energy and “fighting” climate change as we speak. Former Economics Minister of Saxony-Anhalt Dr. Horst Rehberger of the FDP party, sharply critical of the country’s “energy transition” ambitions, said in 2021 that “Inexpensive and secure energy is essential for competitive industry. Expensive and unstable energy supply forces companies to migrate to other countries that allow competitive production with coal and nuclear energy.”
In an interview in 2020, Professor Fritz Vahrenholt – a towering if critical voice on German environmental policies — had this to say of the main party in the coalition government: “Unfortunately, the SPD no longer has its clientele in mind. There is already a party for the hip, green urban crowd. But the employees in the steel, chemical or car industry have been lost from sight. The little people will now be punished with a CO2 tax starting in January.”
Perhaps the best meme of the green cult is the picture of an EV charging point running on a diesel generator.
Only Carbon Dioxide Matters!
Over the past few decades, we have been led to believe that it does not matter from a climate change point of view that the earth orbits the Sun elliptically and at an axial tilt, as described by Milankovitch cycles. Nor does solar activity (frequency and strength of sun flares) which affects the cosmic-ray flux and cloud formation processes on earth. It also matters little that an estimated million volcanoes spew materials and gases into the oceans, even if we wonder what might be heating the oceans. Let’s not waste too much time on heat distribution between the oceanic and atmospheric systems with highly complex and variable ocean-atmosphere coupled global circulation.
None of these or many other facts of physics and meteorology matter. The focus is on the carbon dioxide emitted by humans combusting fuels for industry, cooking, heating and transport. For the green cult, CO2 is indeed the control knob of climate and, by extension, our cataclysmic future, unless we listen to the wisdom of a Swedish school drop-out who deleted her 5-year old June 21st predictive tweet about the end of the world. Along with Greta Thunberg are the assorted “climate scientists” who construct global warming “hockey stick charts out of their climate models duly adopted by the UN’s politicized IPCC.
Nor does it matter that the Vikings grew barley (for their malted beer) in their heyday in 1000 AD. And if the Romans grew grapes in northern England (800 – 1300 AD) during the Medieval Warm Period, why that was a one-off, only relevant to a restricted geography and irrelevant to our common global climatological history. What really matters is industrialization and the human contribution to the dreaded CO2, or so the climate cultists tell us.
It may well be true that fossil fuels helped our forefathers to escape endless backbreaking labour, grinding poverty and a life expectancy of 30 to 40 years. It is also true that fossil fuels brought us the steam engine, the locomotive and the automobile. They brought us healthier and longer lifespans. And they allow the world to feed 8 billion people (from 2.5 billion people in 1950) quite comfortably with ever growing yields in crops.
But all these miracle stories of our increasingly improving lifestyles since the industrial revolution pale into insignificance for the cultists. Our children are destined for heat deaths 10 or 50 years from now as the oceans rise, extreme weather afflicts the nations, leading to mass deaths and migrations, as the celebrated doomsayer Paul Ehrlich has warned us ad nauseam over the past several decades.
How dare you burn fossil fuels? So, stop it you all with your wasteful gas-guzzling SUVs and your expectations of cheap tourist flights, your meat-eating ways, your needs for electricity on demand. There is no Planet B!
The Theory of Effective Pain
The Joe Blows, the nice folk, the salt of the earth, do listen to the protestations of the experts. They patiently curtail their use of energy; they pay higher prices for everything (since the price of energy seeps into every good and service consumed) and they make do. They share their roads with cyclists who are anointed with climate halos. But that is not enough, it is never enough. And one day, they come for your winter heating device and command: you really do need to wean yourself off natural gas and oil. And for those of you who like cooking with natural gas stoves, only strict regulations to switch to electric cookers will suffice.
But as with Marie Antoinette’s dismissive advice to eat cake if you cannot afford bread, it can only lead to a social explosion. So, the Green party gets walloped in the polls, and deservedly so. And the US Republican party comes up with a House bill that counters the EPA move to ban gas stoves and launches actions against those that push ESG investments.
The theory of effective pain carries a falsifiable hypothesis as Karl Popper, that methodologist of good science, requires. The theory of effective pain states that while frogs can indeed be slowly boiled without their awareness, they will not just die a boiling death. There will come a point of inflection, when the frog jumps out of the boiling pot. Indeed, since we are not talking of frogs but of people, when they get past that point of inflection, their rage and fury will have consequences. The Greens, the climate cultists, will be punished at the polls in some form or fashion. Enough is enough, the Joe Blows will say. It is our world, and we shall claim our place in it.
Long Live The Common Man
We are hopefully reaching critical mass. The pampered ideologues, the laptop classes, those sporting their luxury beliefs as their badge of climate virtue, rule the roost but for not much longer. The time is nigh, and the claims of false prophets shall be put to trial in the people’s court. Long live the rule of the just and the rational. Long live the common man!
New England home heating and electricity prices are on the rise with no end in sight. Consumers paid record high energy bills last winter, even though the winter was not unusually cold. Shortages of natural gas and green energy policies will drive New England prices higher and raise the chance of electricity blackouts.
Residential energy bills in New England this year were the highest in history. The combination of electricity and natural gas heating bills exceeded $1,000 per month for an average-sized house in Massachusetts, even though winter temperatures in New England were warmer than average.
Eighty percent of homes in New England, which includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, heat with fuels from oil and gas. The hydrocarbon fuel share of home heating is natural gas (39%), fuel oil and kerosene (33%), and propane or liquid petroleum gas (8%). Homes also use electricity (16%) and other sources (4%) for heat.
Natural gas is also the leading fuel for generation of electricity. New England power comes from natural gas (43%), nuclear (21%), imports (17%), hydroelectric (6%), renewables (12%), and other generators (1%). But New England residents now pay higher prices for natural gas than the rest of the nation and gas prices are rapidly rising.
For the last decade, the State of New York blocked the construction of natural gas pipelines as part of efforts to decarbonize. For example, the Constitution Pipeline project was cancelled in 2019 after an eight-year battle. Plans called for the pipeline to connect natural gas fields in Pennsylvania to the gas network in Schoharie County, just west of Albany, New York. Because New York is blocking pipeline delivery, New England is forced to import liquified natural gas (LNG) for home and electrical power generation.
New Englanders now pay more than twice the price for natural gas than most other US residents pay, and that gap is growing. During peak periods, the Citigate Massachusetts price for gas now rises to more than $10 per million BTU, much higher than the US average Henry Hub typical price of $3-4 per million BTU. Because pipeline capacity is low, New England must import up to 30 percent of its gas by LNG tanker and pay high world market prices. During the recent global energy crisis, Massachusetts was paying $40-$50 per million BTU for imported LNG.
New England electricity prices are also among the highest in the nation. In 2022, power prices for all six of the New England states were over 20 cents per kilowatt-hour, and all in the top ten for state electricity prices. Massachusetts residential customers paid 26.1 cents per kW-hr, surpassed only by prices in Hawaii and California.
The risk of electricity blackouts in New England is rising. The Interstate Natural Gas Association of America sent a letter to President Joe Biden last November, warning that the region “does not have sufficient pipeline infrastructure” and is “at risk of an energy shortfall.” ISO New England, the non-profit organization responsible for reliable electricity in New England, wrote a similar warning letter to Energy Secretary Jennifer Granholm last summer, stating, “during the coldest days of the year, New England does not have sufficient infrastructure to meet the region’s demand for natural gas for both home heating and power generation.” But government leaders and environmental groups oppose further expansion of natural gas infrastructure.
The Federal Energy Regulatory Commission and ISO New England have proposed a shift in LNG pricing to allow purchase and stockpiling of natural gas in New England to prevent a winter fuel shortage. This price shift would raise consumer prices and is opposed by New England states and environmental groups. The pipeline capacity shortage and inadequate gas stockpiles have set the stage for electricity blackouts in the region during the next severe winter.
New England state governments remain committed to construction of offshore wind turbines and providing incentives for electric heat pumps as part of a misguided effort to fight climate change. But these programs, if completed, will not make the grid more reliable and will further boost energy costs.
New England homeowners, better get yourself a backup electric generator and prepare for further rises in home heating and electricity prices.
“New England home heating and electricity prices are on the rise with no end in sight. Consumers paid record high energy bills last winter, even though the winter was not unusually cold. Shortages of natural gas and green energy policies will drive New England prices higher and raise the chance of electricity blackouts.”
Residential energy bills in New England this year were the highest in history. The combination of electricity and natural gas heating bills exceeded $1,000 per month for an average-sized house in Massachusetts, even though winter temperatures in New England were warmer than average.
Eighty percent of homes in New England, which includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, heat with fuels from oil and gas. The hydrocarbon fuel share of home heating is natural gas (39%), fuel oil and kerosene (33%), and propane or liquid petroleum gas (8%). Homes also use electricity (16%) and other sources (4%) for heat.
Natural gas is also the leading fuel for generation of electricity. New England power comes from natural gas (43%), nuclear (21%), imports (17%), hydroelectric (6%), renewables (12%), and other generators (1%). But New England residents now pay higher prices for natural gas than the rest of the nation and gas prices are rapidly rising.
For the last decade, the State of New York blocked the construction of natural gas pipelines as part of efforts to decarbonize. For example, the Constitution Pipeline project was cancelled in 2019 after an eight-year battle. Plans called for the pipeline to connect natural gas fields in Pennsylvania to the gas network in Schoharie County, just west of Albany, New York. Because New York is blocking pipeline delivery, New England is forced to import liquified natural gas (LNG) for home and electrical power generation.
New Englanders now pay more than twice the price for natural gas than most other US residents pay, and that gap is growing. During peak periods, the Citigate Massachusetts price for gas now rises to more than $10 per million BTU, much higher than the US average Henry Hub typical price of $3-4 per million BTU. Because pipeline capacity is low, New England must import up to 30 percent of its gas by LNG tanker and pay high world market prices. During the recent global energy crisis, Massachusetts was paying $40-$50 per million BTU for imported LNG.
New England electricity prices are also among the highest in the nation. In 2022, power prices for all six of the New England states were over 20 cents per kilowatt-hour, and all in the top ten for state electricity prices. Massachusetts residential customers paid 26.1 cents per kW-hr, surpassed only by prices in Hawaii and California.
The risk of electricity blackouts in New England is rising. The Interstate Natural Gas Association of America sent a letter to President Joe Biden last November, warning that the region “does not have sufficient pipeline infrastructure” and is “at risk of an energy shortfall.” ISO New England, the non-profit organization responsible for reliable electricity in New England, wrote a similar warning letter to Energy Secretary Jennifer Granholm last summer, stating, “during the coldest days of the year, New England does not have sufficient infrastructure to meet the region’s demand for natural gas for both home heating and power generation.” But government leaders and environmental groups oppose further expansion of natural gas infrastructure.
The Federal Energy Regulatory Commission and ISO New England have proposed a shift in LNG pricing to allow purchase and stockpiling of natural gas in New England to prevent a winter fuel shortage. This price shift would raise consumer prices and is opposed by New England states and environmental groups. The pipeline capacity shortage and inadequate gas stockpiles have set the stage for electricity blackouts in the region during the next severe winter.
New England state governments remain committed to construction of offshore wind turbines and providing incentives for electric heat pumps as part of a misguided effort to fight climate change. But these programs, if completed, will not make the grid more reliable and will further boost energy costs.
New England homeowners, better get yourself a backup electric generator and prepare for further rises in home heating and electricity prices.
—————-
Steve Goreham is a speaker on energy, the environment, and public policy and an author of three books on energy, sustainable development, and climate change.
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Global warming, climate change, all these things are just a dream come true for politicians. I deal with evidence and not with frightening computer models because the seeker after truth does not put his faith in any consensus. The road to the truth is long and hard, but this is the road we must follow. People who describe the unprecedented comfort and ease of modern life as a climate disaster, in my opinion have no idea what a real problem is.
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