Sunday, April 10, 2005

Higher Energy Costs or LNG: How Hysteria is Trumping Economic Sanity

In an editorial yesterday, the ProJo, referencing a story by Lolita C. Baldor, brought attention to the non-option of an offshore LNG terminal as an alternative to the expansion of existing, or construction of new, LNG storage facilities somewhere in coastal New England. While many New England coastal communities (in predictable fits of "nimbyism") have championed this alternative, in particular a facility off of Gloucester, Mass., they didn't seem to predict that fisherman would be opposed to an offshore facility smack dab in the middle of important fishing grounds. Of course, at the forefront of those championing the "Gloucester Solution" have been all of our Rhode Island pols, most notable Sen. Lincoln Chafee and Attorney General Patrick Lynch (Gov. Carcieri has also backed off of his earlier support of expanding and modernizing Providence's KeySpan facility). According to Baldor's piece:
Mayor John Bell has a curt response to his Rhode Island neighbors.

''Good try," said Bell. ''But it's not going to solve the problem. It's just going to transfer the problem to another coastal community. The ports should be working together, not working against each other."

The offshore LNG proposals -- at least two have been mentioned for Gloucester and one for Long Island Sound off Connecticut -- are not an easy substitute for onshore facilities, such as those proposed for Providence and Fall River.

''There are certain aspects of onshore facilities that offshore facilities have a hard time duplicating," said J. Mark Robinson, director of energy projects for the Federal Energy Regulatory Commission during a meeting with Rhode Island officials.

That view irks Rhode Island officials, who say they believe the federal commission considers KeySpan's plan to expand the existing waterfront terminal at Providence's Fields Point as a leading option.

''We've been told that it's not viable to go offshore," said Rhode Island Attorney General Patrick Lynch. ''I don't agree with that."
Yes, I'm sure AG Lynch is much more knowledgable in the ins and outs of the LNG industry, including transporting, transferring and storage than those both within the industry and in government agencies familiar with said industry. [Sarcasm heavily implied]. Again, from Baldor's piece:
Unlike onshore terminals, the offshore platforms have no storage space for large amounts of gas in its liquid form -- something federal officials said New England needs in order to meet periods of high-energy demand or emergencies. Because of the region's geology, natural gas cannot be stored underground in New England, so it must be stored in its liquid form in above-ground tanks.
The ProJo editorial added:
Further, bad weather could often make offshore facilities unusable. Only one offshore LNG facility exists so far in this country -- off Louisiana's Gulf Coast, where the weather is generally calmer and waves lower than in New England. (Yes, it gets hurricanes, but we get hurricanes and nor'easters.)
They then explained that the problem is rooted in an unrealistic demand for cheap energy without sacrificing the aesthetics of the "quaint" New England coastline. ProJo thinks a good energy scare would wake people up. I'm not so sure.

In today's ProJo, editorial board member Robert Whitcomb painted a clearer picture of the attitudes of the Ocean State's LNG opponents.
Save the Bay, as well as local and state politicians, mostly takes an escapist view of our waterfront, which is at the core of southeastern New England's urban center -- although the promotional rhetoric makes it sound as if criminally cute Nantucket should be the model.

To hear some people speak, you'd think that expensive condo towers, tour boats, sailboats (three months a year), nature walks, pricey restaurants, young singles' bars, and Save the Bay's fancy new Fields Point headquarters would produce a bonanza for the city -- that the waterfront could be turned into some sort of quasi-suburban maritime theme park that would bring in a wave of money from around the world.

Sorry, but Providence also needs a working port, and industry. It needs well-paying blue-collar jobs -- not just places for brokers to hang out after work.

Restaurants and condos are fine, but they tend to follow the creation of wealth, not precede it.

...Wealth is created from manufacturing, value-added trade, and intellectual property. The other stuff [service industries] mostly recycles what we already have. . . . Providence officials and others should look to leverage their working port, albeit grossly underused in recent years -- that is, if they want to make our region more prosperous. Tax revenues from the port would help pay such public expenses as the cost of cleaning up Narragansett Bay's turbid waters.

Providence's first great wealth came from foreign shipping -- just what those who today demand a yuppie waterfront don't want. But consider that the international trade that built many of College Hill's great houses produced much of the money that pays Save the Bay's bills now.
Whitcomb does laud Save the Bay for the fine work they do, as do I, but economic reality must be recognized.

Save the Bay and others have attempted (and mostly succeeded) to stifle any discussion on the economic benefit of allowing one LNG tanker a week to transit Narragansett Bay to service the LNG facility in Providence. (HINT: 1 ship = 2000 trucks, which would you rather have, 2000 trucks on the roads or one ship coming up the Bay?). Right now, the energy shortage and ways to alleviate it are not being addressed, lost as they are amidst the rhetoric of terrorist threats and catastrophic explosions.

The best place to expand Rhode Islands LNG capacity is at the current facility. While I realize there is a debate going on concerning the modernization of the facility and the capabilities of KeySpan, I expect these to be resolved. No one wants a fundamentally unsafe facility. The Coast Guard will make its recommendations concerning the true risks of a terrorist attack on the facility. Other government entities will also weigh in. However, even if it is found to be a viable option by the Federal Government, I don't for one second thing that AG Lynch, who is suing KeySpan, will let that stop his opposition. (In this, I smell political opportunism).

The question is, what prices are Rhode Islanders willing to pay to have no facility at all? It is easy to be taken in by emotional scaremongering rhetoric full of "what-ofs" and "maybes" and "it could happens." The fact is, no catastrophic explosion of modern LNG tanker has ever occurred (yeah, I know, there's always a first time...For a recap of the typical "talking points" of the LNG debate, see here).

We cannot live in an insulated and expect things to also be reasonably priced. There is a trade off. More energy storage facilities will lower prices as greater capacity can deal with greater demand more effectively. Home heating bills will go down and, more important, the energy costs paid by business and government will go down. Hopefully, prices and taxes, respectively, would lower as a result. (Though I seriously doubt the latter case!) However, if New Englanders continue on to insist on refusing to allow any type of progressive energy policy, be it LNG, wind farms or nuclear power, then they will have no one to blame but themselves for the resulting high energy prices and for the generally elevated cost of everything else. To quote from Cool Hand Luke (off the top of my head), "If that's the way he wants it, he gets it. Some men you just can't teach."

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