SAUL LOEB/AFP/Getty Images
The arctic blast that’s turning the eastern half of the United States into a giant icebox this week has been good news for oil and coal.
Plants are using the most fuel oil in three years to produce the electricity that’s powering heaters across New England. In the Pennsylvania, Jersey, Maryland energy market, which stretches across the eastern United States from Illinois to Washington, D.C., coal has once again surged past natural gas to become the biggest fuel for power generation. Oil demand there jumped by more than 400 percent.
It marks a rare, albeit temporary, reversal of a broader transformation taking place in America’s power mix: The US shale boom has unleashed record volumes of cheap natural gas, turning that fuel into the country’s biggest source of power generation. But this week’s deep freeze triggered natural gas price spikes across the eastern United States, and generators are taking advantage of the rally to burn cheaper oil and coal.
‘‘Most likely gas prices are too high,’’ said Tai Liu, an analyst at Bloomberg New Energy Finance. At $18 per million British thermal units for natural gas, he said, ‘‘I’d rather run my coal units if I can choose between the two.’’
At one hub in New England, spot gas more than tripled earlier this week to over $35 per BTU, data compiled by Bloomberg show.
The increased coal use could add weight to the Trump administration’s push for bigger payments to coal and nuclear power generators. Energy Secretary Rick Perry has been calling for them to be compensated more for the ‘‘resilience’’ they offer the power grid during extreme weather events — like the polar vortex that tripped plants offline in early 2014.
So far, utilities and grid managers including PJM and New England’s system operator, have reported none of the gas pipeline freeze-ups that plagued plants during the vortex. Coal stocks also froze in 2014. One of the nation’s biggest coal generators, American Electric Power Co., said it has seen no curtailments due to the weather affecting supplies.
The stakes are higher this year as PJM imposed rules that penalize generators who fail to deliver supplies they’re contracted for. Several generators invested in dual-fuel capabilities at plants after the vortex.
The National Weather Service is warning that ‘‘dangerously cold’’ temperatures and strong winds will continue to chill the Northern and Central Plains, Great Lakes, and Northeast into the weekend.
Temperatures won’t reach the same lows seen during the polar vortex, but this latest chill stands to deliver the same — if not larger — boost in heating demand. ‘‘The current forecast is shy of the coldest temperatures observed from that season,’’ Bradley Harvey, a meteorologist at Radiant Solutions, said in an interview. ‘‘But this event is longer-lasting.’’
Late December to early January is set to yield the most gas-weighted heating degree days — a long-standing gauge for heating demand — since 1950, according to Radiant Solutions. Meanwhile, the plunging temperatures across half the country underscored a stark reality for low-income Americans who rely on heating aid: Their dollars aren’t going to go as far this winter because of rising energy costs.
Even before the cold snap, the Department of Energy projected that heating costs were going to track upward this winter, and many people are keeping a wary eye on their fuel tanks to ensure they don’t run out.
Elizabeth Parker, 88, of Sanford, Maine, said she lives in fear of running out of fuel and remains vigilant in monitoring the gauge outside her trailer, just in case, especially during cold weather. She said she is allowed to request a fuel delivery thanks to federal aid, but only when her gauge dips to one-eighth of a tank.
‘‘I couldn’t get along without it,’’ said Parker, who lives with her 93-year-old husband, Robert Parker, along with a cat, a dog, and four birds.
Despite the cold, there was some good news for recipients of federal aid from the Low-Income Home Energy Assistance Program. President Trump released nearly $3 billion, or 90 percent, of the funding in October after previously trying to eliminate the program. But projected energy cost increases will effectively reduce the purchasing power by $330 million, making it imperative that the remaining funding be released, said Mark Wolfe, executive director of the National Energy Assistance Directors’ Association.
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