It's hard to imagine as we swelter in the summer heat, but many countries are going to be in real trouble this winter. Wars, rebel activities, and geopolitical struggles will mean a possible energy crisis throughout Europe and Asia.
In the Ukraine and other places in Eastern Europe and Asia, it could be a cold, dark winter. Gas and oil shortages and supply disruptions may mean that some folks literally freeze to death.
It's one thing to watch these struggles from afar. It's something else entirely when it hits closer to home.
And this winter, there may be a genuine energy crisis in New England...
The Homegrown Energy Crisis
Please understand that I have a strong emotional stake in everything that happens in New England. It's an area that has a warm place in my heart, and for good reason.
I was raised in Massachusetts, went to school there and in New Hampshire, and cut my teeth professionally with my first consulting gigs in Maine. Being a lifetime Red Sox fan is always thrown into the mix as well.
Saint Anselm College Alumni HallOne of my degrees was earned on the picturesque campus of Saint Anselm College just outside Manchester, N.H. Coincidentally enough, my alma mater figures prominently in the upcoming crisis.
Yesterday, a meeting took place there highlighting a problem that has been intensifying for some time throughout the region.
As the Concord Monitor proclaimed in its July 2 edition, "New England is facing an energy crisis that will drive up consumers' electricity bills, and the states need to come together for a solution."
That was the official reason for the New England Council hosting a three-hour session at my alma mater. The council acts as a regional business association.
But the crisis goes way beyond commerce or business development. It could affect not only every business, but every home and every person in New England.
This is getting more serious quickly... for everyone. And here's why.
"The lights did not go out this past winter," said Rhode Island Office of Energy Resources' Nicholas Ucci during the session. "That doesn't mean that they can't."
And he's no Chicken Little proclaiming that the sky is falling. State officials from New Hampshire, Massachusetts, Maine, and Rhode Island all agreed that this winter is going to be a difficult time for New Englanders, especially if it's a long, cold one.
Which it usually is in this part of the country.
The problem is that the region faces many energy challenges: not enough natural gas pipeline capacity, an aging power grid, and insufficient backup supply. The energy infrastructure hasn't kept up with the growing demand in the region.
Everybody has understood for a while now that a new energy infrastructure has to be built. But that's easier said than done.
Building a new energy infrastructure would require a multistate commitment. It also means that the businesses and average folks who pay the already high electricity and heating rates would have to agree to finance it.
As you might imagine, so far there's been plenty of disagreement. But at least some initial progress has been made.
The region has been planning for this winter (and beyond) since December, in an initiative endorsed by the six New England governors. The planning is being coordinated by the New England States Committee on Electricity, a nonprofit that represents all of the states in the region.
So far, the group has discussed two very different projects to bring more energy into the region.
The first would construct a new gas pipeline network, while the second would build transmission lines to carry low-carbon electricity, most likely from Canada. As the Monitor noted, the latter initiative would also help many of the New England states meet their clean energy standards. (New Hampshire, on the other hand, still needs to come up with a set of standards.)
There's been no mention yet of how much all of this is going to cost. But New England really doesn't have much choice. The situation isn't going to get any better, and the occasional rolling brownouts the region has experienced recently will only get worse.
Yet in all of these meetings and crisis talk, something very important is missing.
While the media and pundits focus on the price tag and who funds what, a fundamental and seminal question needs to be asked.
Does New England spend billions replicating and refurbishing the old ways of doing things, or does it decide to replace that with something else?
As we all know, sometimes pressing needs lead to new ideas and new points of view. This could be an opportunity to rethink how the region meets its energy needs.
Now, I'm not saying that people living in New England should sit on their hands waiting for an energy "silver bullet." They can't afford to do nothing until the breakthrough that will change their lives appears. Natural gas and electricity will have to be the answer, at least in the medium term.
But what should they consider for a long-term solution?
There certainly won't be any moves to build new nuclear reactors, especially after the very public fight to close the nation's first and oldest nuclear power plant at Rowe, Vt. Nor should New Englanders expect much help from solar. Wind farms are still a possibility, despite the environmental and political donnybrook about windmills destroying the view off of Martha's Vineyard.
No matter what the region decides, in the long run this is going to change people's lives. In New England, that's very difficult. After all, the region started one revolution, and almost seceded from the resulting union 20 years later. The "Live Free or Die" on New Hampshire license plates is there for a reason.
However, change is inevitable, and most people recognize it. Band-Aid solutions are no longer sufficient. The basic system has to be overhauled. Quality of life may be at stake, and the cost of that life is already a factor.
But there is an opportunity here nonetheless. It involves using proven energy sources, such as gas and electricity, combined with new ways of sourcing that energy. It's also an opportunity to add new energy sources to the mix, such as liquefied natural gas (LNG), biofuel, selected renewables, maintenance-free (and localized) nuclear batteries, fuel cells, and other sources. Many of these can be integrated into the existing distribution channels (natural gas and transmission lines), which would help contain costs.
Ever since Oil & Energy Investor began, I have been talking about the essential energy balance that America needs to develop. America's energy future has to include far more energy sources than we rely upon today. More importantly, those sources must be interchangeable to avoid disruptions.
New England may be the canvas on which America's energy future is painted.
This potential energy crisis presents a challenge here, to be sure. Still, that's nothing new for my fellow New Englanders. There has always been a spirit of determination in that neck of the woods.
Just look at any Norman Rockwell painting.
More from Dr. Kent Moors: After more than four decades, America is getting back into the oil export business again. And the end of the U.S. oil export ban is going to be a windfall for these companies...
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.