Americans Need More Oil and Natural Gas Pipelines

Americans Need More Oil and Natural Gas Pipelines
Dale G Young/Detroit News via AP, File

Unfortunately, the "Keep It in the Ground" movement has devolved into blocking more U.S. oil and natural gas production and demand by blocking the pipelines that transport these two crucial energy sources that account for 60-65% of all U.S. energy supply. This is a very dangerous anti-shale push. 

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 indispensible 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. 

Hoplessly 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:

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. 

Predictions for future U.S. oil and natural gas production continue to increase.

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. 

Jude Clemente is the Editor at RealClearEnergy. 

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