The LNG boom in the United States is helping households pay less for electricity, Energy Secretary Rick Perry told Fox News.
“We’re driving down the cost of electricity in most places in America,” he said. “[With the exception of] some places like New York that forbid natural gas pipelines from being built across their state,” the Energy Secretary said, adding that New York currently had one of the highest costs of energy per kilowatt-hour.
“There are points in time where New Yorkers are having to look for different forms of energy and they’re going to old inefficient fuel-oil to drive that,” Perry also said, adding these alternatives were both more expensive and less environmentally friendly than LNG.
According to Perry, the U.S. domestic market is receiving about seven billion cu ft of LNG equivalent daily, and this will soon rise by another 3 billion cu ft after a terminal in Louisiana begins operating.
Indeed, natural gas has been steadily displacing coal in power generation plants. It has also been getting cheaper as production booms and demand lags behind even if it is growing strongly, too. On several occasions this year, natural gas prices in the Permian slipped below zero because of the amount of excess supply.
U.S. natural gas prices are trending lower because of this gap between supply and production, and this must have had an impact on utility bills in many parts of the United States.
On an average rate, there does not seem to be much difference in electricity bills in 2017 and this year. However, there are significant variations by state. For example, while in Idaho, the average rate per kWh is just $0.1058, in California it is $0.1990. Louisiana households pay $0.0937 per kWh but those in Massachusetts pay $0.2111 per kWh.
Cheap gas is certainly an important factor in bringing utility prices down. How far down it can bring them on its own, however, remains a question with as many answers as there are states.
By Irina Slav for Oilprice.com
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