Americans Need More Oil and Natural Pipelines
We surely know that a lack of pipelines in the six New England states, New York, and California have installed much higher energy costs. These states, for instance, have the highest electricity prices in the country, at least 50% above the national average. Their goal has become an insidious chain reaction: to increase energy prices.... to lower demand... to lower greenhouse gas emissions.
This is a national
concern because more money is the basis of American health and economic
prosperity. Nearly 75% of U.S. economic growth is contingent on consumer
spending, so higher cost energy for an indispensable good such as electricity
inevitably equates to "Americans having less money." Higher cost
energy is bad for our families because it reduces their discretionary income,
which is the basis of their health: "Rich Americans live up to 15 years
longer than poor peers." Higher cost energy is bad for our businesses
because it negates the competitive advantage that the U.S. shale
revolution has provided them.
To illustrate, higher
cost energy is a fundamental reason why Chief Executive magazine
regularly ranks New York and California respectively as 49th and 50th
for "best states for business," with the New England states not far
behind. Surely, other states don't want to follow that same destructive path.
Further, what makes their
anti-pipeline stance so illogical is that these states themselves still use oil
as their primary transportation fuel and gas as their primary source of
electricity - overwhelmingly so. So by blocking pipelines they simply have
to turn to outside sources of supply, too often foreign sellers.
For example, Saudi
Arabia is now the main source of foreign oil for California, lacking
the pipelines and policies to connect with neighbor Canada. And for
the past two winters, Everett LNG terminal in Boston has been taking gas
imports from Russia because it doesn't have the pipeline capacity to get
flowing shale supply from Pennsylvania, West Virginia, and Ohio during the
high demand season. This is about as non-sensical as energy policy can
get. Russia is a sanctioned U.S. country and nearby Appalachia now
produces 37% of U.S. gas, holding the Marcellus shale play - probably the
largest gas field in the world.
Hopelessly
out-of-touch, anti-pipeline positions devastate U.S. energy security
and force us to turn to a precarious international market that is controlled by
politically riskier OPEC and Russia. And not building pipelines also
erodes our environmental security. For example, Pennsylvania has
proven how more natural gas can help drastically lower emissions in the
power sector. Gas is also the required backup fuel for intermittent wind
and solar power, for those frequent times when "the wind doesn't
blow" and "the sun doesn't shine." Indeed:
- "Thanks
to Natural Gas, U.S. CO2 Emissions Lowest Since 1985."
- "Why
New York's Fracking Ban For Natural Gas Is Unsustainable."
- "Record
U.S. Oil And Natural Gas, Falling Methane Emissions."
- "Natural
Gas Is The Flexibility Needed For More Wind And Solar."
Especially in these
current shale boom days, certain states purposefully lacking access to
domestically produced oil and gas is a the epitome of "bad energy
policy." Since 2008, U.S. crude oil production has boomed 140%, with gas
production up 55%. And even more is coming (see Figure). Over the past four
years alone, for instance, the U.S. Department of Energy (DOE) has upped its
forecast for U.S. oil production in 2040 by 50%, with the gas production
forecast up nearly 20%.
In other words, each time
we model out to predict how much oil and gas we will producing, we see
more and more production. Indeed, already supporting over 10.3 million
jobs, this ongoing boom for the U.S. oil and gas industry will add millions
more. "U.S. Oil And Natural Gas Led For New Energy Jobs in 2018."
The anti-pipeline states
should know that they will continue to face increasingly stiff competition for
supply, making more pipelines even more critical to support their own
usage. For example, DOE reports that
natural gas will add 235,000 MW of new U.S.
generation capacity in the coming three decades, or nearly 10 times more than
what wind and 34% more than solar additions. And increasingly, U.S. oil and gas
will be going global via an export boom to an oil- and gas-thirsty world.
Already the largest oil and gas producer, the U.S. could become the
largest international oil and gas seller before 2025.
The good news is that
there is some $32 billion in new gas pipeline investment coming to
Appalachia, with 23 Bcf/d in new takeaway capacity (for comparison, the whole
area today produces 33 Bcf/d). This will help out other states increasingly
turning to gas to lower costs and emissions, so it would be a shame for
close-by New England and New York in particular to continue to miss out.
Policymakers must take
note: higher cost California, New England, and New York demonstrate exactly
what happens when an area of the country stands opposed to new oil and gas
pipelines. "What Happens When You Don't Build Natural Gas
Pipelines?"
The reality, of course,
is that "pipelines are safer, cheaper, and greener." Surely as
vital as building new bridges and roads, the need for bigger and
better pipelines is an essential part of the $1.5 trillion infrastructure plan
that has bi-partisan support.
U.S. and state energy policies must remain practical or foreign suppliers will benefit. According to DOE's Annual Energy Outlook 2019, oil and natural gas will still supply over half of U.S. energy through at least 2050. Constructing the domestic infrastructure needed to support this reality is absolutely essential.