“Maine’s energy prices are too high,” goes the familiar lament. “It’s why our economy never seems to grow.” That sounds plausible until you learn that although Maine’s energy prices are the lowest in New England, all those other states have economies that are growing faster than ours.
There’s no question that energy prices are higher in the Northeast than in the rest of the country. The reason why has little to do with state policies or the cost of renewable energy and everything to do with subsidies from Washington and geology.
Washington has made massive investments in regions that extract oil and coal from the ground and in infrastructure like the Tennessee Valley Authority and the other dams that energize large parts of the South and West. You’ll drive a long time on Maine’s back roads trying to find an oil rig or a coal mine, so we haven’t gotten any of that help.
Is there anything a state like Maine can do to lower energy costs? Not much, in the short term, but plenty in the long run, if we commit ourselves to a strategy and stick with it.
Some have argued for what you might call the “lower-cost now” strategy, which is all about bringing natural gas and Canadian hydropower to Maine. The problem is that by the time you build the infrastructure to get those things, their price may be higher than other alternatives, making investments in capacity quickly obsolete.
Take a look at what’s happening right now with oil and gasoline prices, which are dropping like a rock. If you follow the short-term approach to its logical extension, we’d need to abandon investments in natural gas pipelines right now and stampede back to oil.
Of course, we won’t do that because we know that oil and gas prices will climb again. But so will natural gas and Canadian energy prices. That’s just basic economics: Whenever enough people rush to grab today’s bargain and thereby create more demand for it, the price invariably goes up tomorrow. Energy is no different.
The drop in oil and gas prices illustrates the danger of putting too many eggs in the short-term basket, and how a rigid policy can tie people in knots.
The folks who have argued for focusing on the lowest short-term price and abandoning longer-term investments in renewables are now finding themselves arguing, in an ironic way, for the very idea they’ve been opposing, which is to look beyond today’s price. Of course, what they mean by taking a “longer view” is three to five years, while renewable-energy advocates are looking at the 10- or 20-year horizon.
Somehow, the decision to focus on natural gas has been presented as a choice between the free market and subsidies, as though building natural gas infrastructure doesn’t require tax credits and ratepayer support. The argument has gone so far that we’re now expected to believe that subsidizing multinational natural gas companies that are hundreds and even thousands of miles away is somehow “pro-business,” while supporting Maine’s renewable-energy companies is “liberal.”
So much for today’s political discourse.
The only proven strategy for dependable lower prices is to produce more energy ourselves. That insulates us from marketplace manipulation and a dependency on others. We may not have oil and coal, but we have plenty of other resources, if we commit to building them up over time.
We already produce more hydropower than any other state in New England. If we made the kind of investments in our hydropower infrastructure that we’re now making in natural gas, we could get more out of existing smaller dams all across the state without harming fish.
We have plenty of wood that isn’t going to lumber and paper mills, and more can be done to use that wood to heat homes and businesses, and generate electricity.
We also have untapped offshore wind and tidal energy with enormous potential.
And we have surprising potential in solar power, which is the only power we can eventually produce at the household scale that requires no massive infrastructure to deliver it from somewhere else.
Maine’s too cold and dark for solar, you say? Hardly. Germany is further north than Maine but gets over 30 percent of its energy from solar. We get as much solar exposure as southern France does.
So why aren’t we doing more to support Maine’s own energy? Part of the blame has to be laid at the feet of politicians who over-value a quick fix today over patient and wiser investments for tomorrow.
Alan Caron is a partner in the strategic consulting firm of Caron and Egan. He can be contacted at: