New England is Facing a Gas Shortage that Could Threaten Many this Winter. What can be Done?

With winter fast approaching, many New England states and their residents are at risk of not having enough fuel to meet their heating and power generation needs.^[1] Several factors have driven New England to this position. First, New England relies more heavily on heating oil and liquified natural gas (“LNG”) than other regions and the states do not have enough gas pipeline capacity to service this demand.^[2] As such, New England is competing in a global market for the dwindling supply that remains due to challenging access to U.S. gas production.^[3] Second, prices for distillates and LNG have spiked this year due to the war in Ukraine, decreased domestic refining capacity, and other supply disruptions.^[4] As a result, fuel prices in New England are projected to soar with costs for heating oil users expected to increase by twenty-seven percent compared to last winter’s costs and costs for natural gas users expected to increase by twenty-eight percent.^[5] If this winter is ten percent colder than projections, those costs could be forty percent and fifty-one percent higher, respectively, than last year’s costs.^[6] Although the potential for controlled power outages is low,^[7] these higher prices will burden many New England residents, particularly those already struggling to pay their bills.^[8]

With such a threat looming, the question is: what can be done? In the short term, New England states are trying to get enough fuel into their states, and one hurdle they are looking to overcome is the Jones Act. The Jones Act is a statute that requires American-flagged and -staffed ships to be used for commerce between U.S. ports.^[9] This provision has driven up gas costs and prevented domestic shipments due to a complete lack of compliant LNG ships.^[10] So, some New England power companies are asking for the Biden administration to provide a blanket waiver.^[11] The issue: blanket waivers are only authorized where necessary to meet military needs.^[12] Otherwise, waivers must be issued on a case-by-case basis at the request of the affected energy industry.^[13] States may coordinate with industry and may issue letters of support for such waivers, but are otherwise not directly involved in the process. Such a waiver was recently issued to an LNG company in Puerto Rico for emergency shipments following Hurricane Fiona.^[14] So, there is an avenue for New England states to plead their cases successfully, but only for discrete shipments. If the energy industry in New England, with the support of the states, were able to receive waivers more easily, it could open up the ability to get fuel more easily from domestic sources, potentially lowering costs and mitigating the risk of outages and shortages. Some utility companies are also calling on the Biden administration to make emergency declarations under the Natural Gas Policy Act or the Defense Production to allow for an increase in short-term domestic production and contracting for emergency supplies of natural gas.^[15]

In the short term, these mechanisms will likely help New England face the upcoming winter. But, as many have pointed out, this recurring fear of fuel shortages each winter^[16] highlights the need for New England to reduce its dependence on traditional fuels for electricity production^[17] and also electrify homes to reduce reliance on delivered fuels for heating.^[18] Many New England states have strong renewable goals in place, which could reduce electricity costs by thirteen percent over the next three decades and reduce the volatility associated with oil and gas dependence.^[19] In the short term, New England needs to ensure it is able to get enough supply of critical fuel into the region to meet the demands of the winter. In the long term, New England states should continue striving to better diversify their generation sources.

^[1] See generally Scott Disavino & Laura Sanicola, Frigid Winter? New Englanders will pay through frozen noses for oil and gas, Reuters (Nov. 2, 2022, 4:18 PM), https://perma.cc/KMH7-BC75.

^[2]  Id.

^[3] Id.

^[4] Id.

^[5] Winter Fuels Outlook, October 2022, U.S. Energy Info. Admin., (Nov. 8, 2022), https://perma.cc/A2AJ-H4AH.

^[6] Id.

^[7] Disavino & Sanicola, supra note 1.

^[8] See Miriam Wasser & Mara Hoplamazian, Why electricity prices are rising unevenly across New England, WBUR (Sept. 8, 2022), https://perma.cc/FHB4-5B2H (discussing how low-income residents have less ability to make their homes more energy efficient or procure renewable energy to lower their dependence on utility-sourced power).

^[9] 46 U.S.C. § 50101.

^[10] The Jones Act, energyby5 (Mar. 31, 2022), https://perma.cc/236G-G2GQ; see also Joseph Morton and Benjamin Hulac, US shipping rules complicate bid to ban Russian oil and gas, Roll Call (Mar. 8, 2022), https://perma.cc/PPQ8-PBA9.

^[11] Morgan Evans, Eversource CEO Urges Biden to Waive Jones Act as New England Facing Possible ‘Severe Natural Gas Shortage’, Nat. Gas Intel. (Nov. 7, 2022), https://perma.cc/FP6B-586R.

^[12] Statement by Secretary Mayorkas on the Approval of a Jones Act Waiver for Puerto Rico, U.S. Dep’t of Homeland Sec. (Oct. 16, 2022), https://perma.cc/8PHZ-8SDE.

^[13] Id.

^[14] Id.

^[15] Evans, supra note 11.

^[16] See generally Disavino & Sanicola, supra note 1; Harsh Weather Conditions Could Pose Challenges to New England’s Power System This Winter, ISO New England (Dec. 6, 2021), https://perma.cc/5GJR-NV98; Andrew Cline, Pipeline Constraints Could Put New England At Risk In Extreme Weather, ISO Warns, Patch (Dec. 11, 2020), https://perma.cc/BQ3L-CSU3.

^[17] Jess Nahigian, We need to move away from reliance on natural gas, CommonWeatlh (Sept. 17, 2022), https://perma.cc/Y73D-3MNP.

^[18] Saul Griffith, From Homes to Cars, It’s Now Time to Electrify Everything, YaleEnvironment360 (Oct. 19, 2021), https://perma.cc/MM2M-PU8X.  

^[19] Wasser & Hoplamazian, supra note 8.