I grew up in central New York and by default root for New York based sports teams. Because of this, I've always also rooted against any team from Boston, and as a baseball fan this meant I've come to loathe the Red Sox. There is just something special about that rivalry, which is why it was especially heartbreaking for many of us from New York to watch the Boston Red Sox win the World Series this year.
That said, there is more to the Boston-New York rivalry than just sports. With well over eight million people living in New York City it's a huge drain on the region's fuel supply, especially the supply of natural gas. However, current pipeline projects to fuel the region's energy needs really fall short of helping out Boston. While it's not leaving the city out in the cold, it is forcing Boston residents to pay more for natural gas each winter.
As the following map from the Energy Information Agency shows, most natural gas pipeline expansion projects in the near-term are focused on getting more natural gas to New York City and New Jersey.
The largest of these new pipeline projects is Spectra Energy's (NYSE:SE) New York-New Jersey Expansion project. It's just one of a number of projects that will help New Yorkers save money on natural gas as early as this winter. Further, because of this New York City should enjoy rather stable natural gas prices over the next few years. Boston, on the other hand, is likely to see pronounced winter spikes as the following chart projects:
In fact, Boston and the rest of New England won't benefit from America's natural gas boom until the winter of 2016. That's because the Spectra's Algonquin Incremental Market Project won't be in service until November of 2016. At least that's one thing that New Yorkers can comfort themselves with this winter.
What's really interesting about all of this is that New York is the state that's benefiting from fracking despite the fact that it has had a moratorium on the process for several years now. If it allowed fracking from the beginning like Pennsylvania it could have changed the whole landscape of how natural gas pipelines were planned. In fact, it could have been New York's natural gas that is fueling Boston this winter, instead it's still trapped underground.
Instead, companies like Range Resources (NYSE:RRC) and Chesapeake Energy (NYSE:CHK) have concentrated on drilling Pennsylvania's Marcellus shale. In fact, Chesapeake has all but given up on New York State as it recently walked away from many of its leases. It's not that either company is complaining as the returns from drilling in certain areas of Pennsylvania can be more than 100% because of the vast amount of gas each well is capable of producing. That said, these wells are now what will be keeping New Yorkers warm this winter which does go to show that sometimes you can have your cake and eat it too.
America's energy boom is creating lots of winners and losers. One unlikely winner is New York City which will enjoy cheaper heating bills while its rivals in Boston are at the mercy of the market until new pipelines can be completed. So, next time a World Series replay comes on, feel free to turn up the heat to take off the chill of defeat, knowing full well that it will be a lot cooler in Boston this winter.
Three more unlikely winners of America's energy boom
Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Range Resources and Spectra Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.