Amid Oil Price Crash, Natural Gas Is Also Under Attack

0
33

The big news related to the oil and gas business over the past few weeks has obviously been related to the crash in . First, the global demand destruction by the spread of the coronavirus knocked the price for West Texas Intermediate down below $45/bbl, and then the joint by Russia and Saudi Arabia to flood the markets with cheap crude shattered it down into the low-$20s. No one knows where this might end – some even think the price could go negative as global crude storage becomes completely full.

Mostly forgotten amid all of this distressing oil-related news has been the fact that U.S. had already become depressed last year, with the NYMEX price falling below the $2 per MMBtu level before anyone had ever heard of the coronavirus. This was due both to a situation of chronic over-supply that has persisted for half a decade, and to the decision by the anti-fossil fuel lobby and the policymakers they influence to conduct a policy-related war on natural gas beginning a couple of years ago.

Nowhere is this war on natural gas currently more apparent than in the state of Illinois, where the legislature is currently considering what it calls the Jobs Act (CEJA). Pitched by some in environmental media as a “100% ” bill, others think that the legislation is actually designed to unfairly tilt the state’s power-generation playing field in favor of Exelon and its fleet of nuclear power plants.

Article continues below Advertisement...

A study released in December of last year by Monitoring Analytics notes that Exelon and its five nuclear plants in the state would stand to receive millions of dollars in subsidies under this bill in the form of Zero Emissions Credits (ZECs) that would be rolled into the rates paid by utility customers. As noted by the Illinois State Chamber of Commerce, which opposes the CEJA, “ prices would increase $414.4 million” as a result of this legislation during 2021 and 2022.

This kind of tinkering in energy markets seems to always end up in an effort to determine winners and losers, based on who has the most powerful lobbying team. It’s fair to note that this bill continues to work its way through the legislative process in Illinois despite the existence of a grand jury announced in December, involving both the FBI and the SEC.

As reported by Utility Dive, “The U.S. Attorney for the Northern District of Illinois is reportedly pursuing pertaining to interactions between multiple ComEd and Exelon lobbyists and executives, and a range of Chicago and state level public officials.” One of the bill’s sponsors, Democrat Rep. Ann Williams, promised the bill would move forward, stating that “Any inappropriate, unethical or even illegal behavior will not impact our efforts. The utilities’ role may be less, due to these ongoing headline issues, but the Clean Jobs Coalition and other groups pushing for renewables will drive this.”

But the bill’s tilting of the playing field in favor of Exelon’s nuclear fleet would disadvantage not only natural gas facilities, but also wind, solar and other forms of renewable power generation. And the effort by legislators to pick winners and losers by intervening into energy markets with the costly ZECs will be paid for by utility customers, who always end up footing the bills for this sort of market-distorting effort.

For natural gas, the legislation – like so many other similar efforts all over the country – represents an attempt to deny market share to the form of power generation that has played the major role in decreasing U.S. emissions by displacing retiring coal plants. In markets not distorted by the efforts of policymakers, combined cycle natural gas plants are highly-competitive with nuclear and renewables. It’s only in artifically subsidized markets that that edge is lost.

Natural gas is a at the end of the day, one that can’t afford to be consistently on the losing end of market-distorting public policies like the CEJA. Yet, it always seems to end up there.
Source: Forbes

Source: Investing.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here