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March 14, 2008

Study: Area electric, natural gas prices higher than average

January was the first time in a decade that average Baltimore-Washington electricity prices exceeded those of the nation, says a new government report. Blame deregulation and a shortage of generation in central Maryland.

A kilowatt-hour for Baltimore-Washington consumers cost 12.3 cents in January, 6 percent higher than the national average, said the Bureau of Labor Statistics. (Baltimore Gas and Electric residential customers paid half a cent more.) Price caps kept electricity artificially cheap for the area in the early 2000s, but those have expired. Now BGE and other utilities must bid on the open market for juice, whose price has been elevated by high fuel costs and charges to import it from other regions.

Baltimore-Washington customers also pay more than the nation as a whole for natural gas, but that gap has narrowed, the report said. The region paid 15 percent more for gas than the country did in January — the smallest premium in 10 years. Last year we paid 21 percent more than the nation; in 2006, 24 percent more.

Local natural gas prices depend on inventories and weather. Apparently a relative glut of supply and lack of demand kept local prices more in line with national ones. Increasing pipelines and regional liquefied natural gas ports could shrink this difference even more.

Posted by Jay Hancock at 10:32 AM | | Comments (1)
        

Comments

Electricity prices will continue to increase as will natural gas prices. The population is growing and we depend on electricity for comfort, security, industry and economic prosperity. More clean coal plants, and more nuclear plants are needed. The last coal or nuclear plants built have been decades ago, yet population and electricity growth has continued. My take on "How we made it this far", is, that as industry has shut down, in part due to ever increasing energy costs, the "excess power" once used by industry has been made available to power new housing developments and other residential and growing commercial electric load.
The solution is to build more new electric generating capacity and do it with Domestic sources of energy. Coal, Oil, Nuclear and Natural Gas. There are restrictions to drilling for oil or gas off the east coast or in ANWR. Some politicians have railed against carbon consumption and opposed new coal plants on the basis of "Manmade Global Warming" or trace metals. The sad truth is, these are positions that work against our economy, against America's best interest and against National Security. Worse yet, the "Manmade" Global Warming" is a huge Hoax that is strictly political. Pollutants such as mercury will be handled as required, as Nitrous oxides and sulfur emmissions were cleaned up. My fear is that in the summer of 2008 or 2009 we will have "Blackouts" and natural gas prices will escalate even higher as more and more electricity is being produced by natural gas fuel. America, not only Maryland, is going to pay a high price for Environmental Extremism that is based on misguided politicians and Junk science. This is serious and the Politicians have not completed their homework to lead our nation to having a secure energy future. Renewable power should be used where practical. Conservation should be practiced by all of us. The dirty little secret of wind power, solar power or biomass, is that all of these renewables will cost far more to generate electricity. Further, there is not enough renewable sources to replace existing old coal plants, let alone offset demand for increasing power generation. Also, we need electric power 24/7. Wind and solar obviously are not 24/7? Where is our common sense?
Your high electricity costs are just the start of this energy crisis. The prognosis for America's secure energy future is not good. Our economic prosperity, and including our present economic slowdown is energy related. My grandchildren's future is in jeopardy. It is about time for leaders in America to face up to our needs and be honest with the general public and get on with removing hurdles for building new plants.
Richard F. Storm, P.E.
Albemarle, NC

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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