Let’s Be Smart About America’s Energy Potential
The United States is at the center of a global energy revolution. Driven by advances in extracting oil and gas from shale rock in Texas, North Dakota, and New Mexico, America is now the world’s largest oil producer. By 2025, it will likely be the biggest energy exporter, surpassing Saudi Arabia and Russia. This energy revolution has fueled economic growth, created thousands of high-paying jobs, and narrowed the trade deficit. It’s no exaggeration to say America today is closer to energy independence than at any point since the 1950s.
Yet this revolution is at risk of stalling. Despite a 200% increase in US oil production and a 40% jump in natural gas output since 2010, construction of the pipelines needed to move products to consumers has lagged. While new projects are coming online at a record rate, opposition to key pipelines threatens to leave the U.S. energy market fragmented. For consumers in New York, Massachusetts, and other states that continue to block new pipeline construction, the result is higher energy prices, less reliable power grids, and reduced cost-competitiveness for local industries relative to other states.
Opponents of pipeline projects like the Williams pipeline in New York and others elsewhere (Keystone XL, Dakota Access, Access Northeast, etc) are often too quick to dismiss the economic, social, and environmental benefits of pipelines and the opportunity costs of not building them. Earlier this year, the Empire State used the Clean Water Act to shut down a nearly $1 billion natural gas pipeline that would have connected the state’s power plants with gas-rich fields in Pennsylvania and Ohio, and reduced the average price of electricity in New York City which currently stands at 21.0 cents per kWh, 54 percent higher than the national average (13.6 cents per kWh).
This is an clear abuse of Section 401 of the Clean Water Act which allows a state to block the construction of a pipeline by refusing to grant the project a water quality permit. I used to oversee my state’s water quality permitting program, and I am a fierce defender of state’s rights. But I’m also a fierce defender of standards that are objective, and question the use of the Clean Water Act when it is invoked in an arbitrary manner that does nothing to protect the environment. Fortunately the Trump Administration has proposed a rule change will streamline the regulatory process and effectively limit a state’s ability to block projects at the last minute.
When it comes to the costs and benefits of pipelines, it is important to think dynamically and consider the trade-offs necessary to advance the national interest. Investing in modern energy infrastructure enables the US to provide long-term, low cost, reliable energy to consumers, which in turn makes domestic industries like manufacturing and agriculture more cost-competitive relative to foreign rivals.
Take, for example, the Trans-Alaska Pipeline System, which transports crude oil from fields on the North Slope to tankers in Valdez. Revenues from the oil flowing through the pipeline support local governments and indigenous communities, and make up roughly 80 percent of the state of Alaska’s operating budget. That money goes to pay for airports, roads, hospitals, police, schools, and much more.
Pipelines also increase US energy exports, lowering the trade deficit and allowing the US to be less reliant on imports from unstable regions in the world. This is undeniably a boon for America and our allies. As the Energy Crisis of 1973 demonstrated, an America reliant on energy imports is a weak America. Those who advocate for a ban on all oil and gas leases on public lands and any new pipelines would see us return to a reliance on energy imports from countries like Russia, Venezuela, and Iran and others that oppose US interests and values.
In my grandparents’ day, a quiet revolution took place in the American southwest. A partnership between the federal government and industry built two pipelines from Texas to refineries in the Midwest and the East Coast. Dubbed “Big Inch” and “Little Big Inch,” the two pipelines allowed the US to transport oil, gasoline, diesel, kerosene, and heating oil from where it was produced to where it was needed most. Today, historians say the two pipelines “aided almost beyond estimation” to the Allied Victory in World War Two.
Looking forward, our nation’s future is bright. But in order to take full advantage of our energy potential, we must prioritize investment in our pipeline network to safely and efficiently deliver the fuels that Americans rely on every day.
Mead Treadwell is former Lt. Governor of Alaska, and a seasoned investor in both conventional and alternative energy.