Like Cheap Natural Gas? Obama’s Clean Power Plan Will Regulate It Out of Existence

By:  Isaac Orr

 

 

 

 

 

 

 

 

U.S. households are saving hundreds of dollars a year because natural gas prices are low, but that’s about to change. A study by NERA Economic Consulting has found new regulations on power plants mandated by the Environmental Protection Agency’s Clean Power Plan (CPP) will increase natural gas prices to 2007 levels, virtually guaranteeing these savings will soon be wiped out.

A study by the Brookings Institution found natural gas prices have plummeted as horizontal hydraulic fracturing, also known as horizontal “fracking,” has caused U.S. natural gas production to skyrocket to all-time highs, making the United States the world’s top producer of natural gas.

Record-high production caused natural gas prices to fall from $8.03 per million cubic feet (mcf) in 2007 to less than three dollars today. As a result, U.S. natural gas consumers will save $181 to $432 per person, depending on which part of the country they live in. For a family of four living in Ohio, the savings add up to $1,036 of their money they get to keep. People change car insurance providers to save substantially less money than that.

Unfortunately, these savings will soon go up in smoke because of CPP.

The goal of the Obama administration’s new regulations is to reduce carbon dioxide emissions by 30 percent of 2005 levels by 2030. Because wind and solar account for less than 5 percent of U.S. electricity generation, despite receiving decades of subsidies and billions of taxpayer dollars, this goal can be accomplished only by shutting down coal-fired power plants and replacing them with natural gas-fired electricity generation.

This transition has already begun. In April of this year, natural gas accounted for more electricity generation than coal for the first time ever, with natural gas generating 31 percent, compared with 30 percent for coal. Regulating coal out of our energy portfolio will have serious negative consequences because it means abandoning a reliable, abundant, and affordable source of energy. The Obama administration’s ideological war against coal means demand for natural gas for electricity generation will continue to grow, with the goal of the CPP to increase the use of natural gas to account for an average of 70 percent of the electricity generated in each state, causing natural gas prices to climb back up to approximately $7.80 per mcf and essentially incinerating the savings U.S. consumers currently enjoy.

Those who argue the power plant rules are needed to avoid the negative effects of climate change should reconsider their position.

EPA’s own climate models show the regulations will reduce the amount of projected warming by a negligible .018 C, an amount below the margin of error in the calculations. In other words, these regulations will cost billions of dollars to implement, will significantly increase the costs of natural gas and electricity, will hurt low-income families the most, and Will have no positive impact on the environment whatsoever.

EPA officials argue we need the rules in order to set an example for the rest of the world. That brings to mind something our mothers told us: “If your friends all jumped off a bridge, would you jump off too?” The big carbon dioxide emitters, such as China and India, are listening to Mom and are not going to jump with us. On the contrary, they’re building new coal-powered plants every day.

Low natural gas prices made possible by horizontal fracking are a tremendous boon for families struggling to make ends meet, but even these low prices are barely compensating for the significant, long-term damage being inflicted upon our energy system by the Obama administration’s reckless war against affordable energy. By the time people realize the impact of the Clean Power Plan regulations, it may be too late to reverse the damage.

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