Here’s an example of how the benefits of the shale energy boom radiate beyond the oil and gas industry. The Wall Street Journal reports that Home Depot opened only one store [subscription required] this past fiscal year, and it was in Minot, North Dakota, near the Bakken shale formation.
Home Depot went there because energy production is driving economic growth:
"If you had said to me seven years ago, you'll be opening a store in Minot, North Dakota, I would have asked, Why?" Chief Executive Frank Blake said in an interview. "One of the great stories of the U.S. is the shale oil development, and it's happening in areas where we don't have a lot of stores now."
Michael Glazer, CEO of Stage Stores, wishes his company had stores in North Dakota right now. He told the newspaper:
There's a correlation between the energy boom and county employment rates. And wherever energy comes in, jobs follow and people spend more at our stores.
He also posted a map showing that every county in the state saw at least 14% per-capital personal income growth from 2007-2012.Map: Per-capita personal income growth, 2007-2012
It’s no wonder Home Depot has expanded there.
Other major retailers see these trends as well:
Home Depot is among a number of retailers including Wal-Mart Stores Inc. and GameStop Corp. targeting oil and gas towns in North Dakota, Texas and Louisiana, in an otherwise dour environment for retail real estate.
Natural Gas Intelligence reports that cities in or near energy-rich areas are growing the fastest, according to a Census Department study:
Of the nation's 10 fastest-growing metropolitan statistical areas, six were within or near the Great Plains and near to some of the country's largest oil and gas fields, including Odessa, TX; Midland, TX; Fargo, ND; Bismarck, ND; Casper, WY and Austin-Round Rock, TX.
The same was true of micropolitan statistical areas, those ranging in size from 10,000 to 50,000 people, near oil and gas development. Seven of the fastest growing micro-areas were located in or near the Great Plains, with Williston, ND, ranked first in growth, followed by Dickinson, ND, and Andrews, TX.
Jobs and economic growth created by increased domestic energy production are drawing people to these cities. Businesses follow.
States that aren’t sitting on top of energy deposits also benefit from the shale energy boom, according to a 2012 report by IHS for the U.S. Chamber’s Institute for 21st Century Energy. For example:
Among non-producing states, fabricated metal manufacturing in Illinois, software and information technology in Massachusetts, and financial services and insurance in Connecticut are examples of central players in the US unconventional oil and gas supply chain.
The report noted, “By 2035, unconventional oil and gas will add almost $475 billion dollars to the economies of the lower 48 US states.”
As seen by what’s happening in North Dakota, this growth will also ripple outward into the broader economy.
In a split decision, the D.C. Circuit Court of Appeals ruled that EPA doesn’t have to consider compliance costs and potential economic harm in the development of its Utility MACT (A.K.A. the “Blackout”) power plant rule that will take effect next year.
While the majority agreed with EPA’s argument that it could ignore the nearly $10 billion in annual costs it estimates the rule will cost, in a strong dissent, Judge Brett Kavanaugh highlighted the legal and practical irrationality of the court’s decision [emphasis mine]:
Suppose you were the EPA Administrator. You have to decide whether to go forward with a proposed air quality regulation. Your only statutory direction is to decide whether it is “appropriate” to go forward with the regulation. Before making that decision, what information would you want to know? You would certainly want to understand the benefits from the regulations. And you would surely ask how much the regulations would cost. You would no doubt take both of those considerations – benefits and costs – into account in making your decision. That’s just common sense and sound government practice.
So it comes as a surprise in this case that EPA excluded any consideration of costs when deciding whether it is “appropriate” – the key statutory term – to impose significant new air quality regulations on the Nation’s electric utilities.
And EPA’s failure to do so is no trivial matter. The estimated cost of compliance with EPA’s Final Rule is approximately $9.6 billion per year, by EPA’s own calculation. To put it in perspective, that amount would pay the annual health insurance premiums of about two million Americans. It would pay the annual salaries of about 200,000 members of the U.S. Military. It would cover the annual budget of the entire National Park Service three times over. Put simply, the Rule is “among the most expensive rules that EPA has ever promulgated.”
The majority opinion in the case emphasized that, despite EPA’s unwillingness to consider costs as a factor in determining whether or not to regulate, the agency concluded that the impacts would be minor anyway:
[EPA’s final rule concluded that] “the estimated number of early retirements,” of [electric utility steam generating units] “that may result from this rule is . . . less than 2 percent of all U.S. coal-fired capacity” in 2015.
Only the impact won't be minor. To put it nicely, EPA lowballed it.
EPA published the final Utility MACT rule in December 2011. Just over two years later, the Energy Information Administration published an analysis estimating that the regulation’s enforcement deadline will result to 54 gigawatts of coal retirements—18% of all U.S. coal-fired generating capacity.
In a very short period of time, EPA’s own projection was shown to be off by nearly an order of magnitude. EPA’s record on such electricity market projections is worth keeping in mind as the Obama Administration prepares to issue major new greenhouse gas rules on existing power plants later this year.
Heath Knakmuhs, Senior Director of Policy at the U.S. Chamber’s Institute for 21st Century Energy said in a statement:
Today’s D.C. Circuit opinion unfortunately affirms EPA’s position that it does not need to take into account the grossly disproportionate cost impacts of its Utility MACT rule. Nevertheless, EPA should not ignore the dramatic impact that this overbearing rule is already having on the composition of America’s electricity mix. Instead of maintaining our competitive electricity price advantage to help grow our economy, EPA rules such as the Utility MACT rule will raise our electricity rates and stifle economic development. What’s more, the Utility MACT rule could seriously compromise the reliability of our electric grid, placing millions of Americans at risk. Because of Utility MACT, plants are now slated for closure that were needed during this past winter to keep homes heated—with no backup sources available. All American families and businesses should be deeply concerned about EPA’s overbearing and excessive regulatory push.
The U.S. Chamber filed an amicus brief in White Stallion Energy Center v. EPA in support of those challenging the Utility MACT rule.
William Yeatman has thoughts on Judge Kavanaugh's dissent.
EPA regulations will force a Kentucky electricity provider to shut down two coal-fired power plants, Platts reports:
East Kentucky Power Cooperative plans to deactivate all four units at its 196-MW Dale coal-fired power plant in Clark County over the next year, but the two largest units, while inactive, will be "maintained in place" for a possible restart, a spokesman for the generation and transmission co-op said Friday.
In a statement, East Kentucky Power Cooperative blamed EPA:
None of Dale Station’s four coal-fueled units currently meets the provisions of the federal Mercury and Air Toxics Standards (MATS) rule, which goes into effect in April 2015. Compliance with the rule would require cost-prohibitive measures.
This is part of the continuing attack on coal, a reliable and abundant energy source. In large part due to the MATS rule, the Energy Information Administration expects nearly 20% of coal-fired power plants (60 GW) to be scrapped by 2020.
As you can see in this graphic from the U.S. Chamber’s Institute for 21st Energy, states that rely on coal the most have lower energy prices.Chart: Top coal states have lower energy prices.
However, EPA rules like MATS, proposed regulations on greenhouse gas emissions for new power plants, and anticipated regulations on greenhouse gas emissions for existing power plants will decrease coal use, making electricity less affordable.
Last week at the U.S. Chamber, FirstEnergy president and CEO Anthony Alexander said:
I believe state and federal policymakers are manipulating the supply and demand, and distorting markets for electricity, to further advance the “war on coal.”
With plants closing across the country, it’s hard to argue with him.
— America's Power (@AmericasPower) April 15, 2014
A top union leader has had enough of Keystone XL pipeline opposition in Congress and isn’t going to take it anymore.
Terry O'Sullivan, the general president of Laborers' International Union of North America (LIUNA), lashed out at House Members who sent a letter to Secretary of State John Kerry opposing the Keystone XL pipeline, declaring that they will “feel the power” of the union this November.
O’Sullivan responded to the letter by sending a letter of his own to union members in their Congressional districts:
To all proud, strong, and united LIUNA brothers and sisters, I say, enough is enough! Our members and their families are angry, disappointed, and disillusioned with out-of-touch, job-killing politicians who choose to side with environmental extremists over work for our members. These so-called “friends” of ours are destroying good-paying work opportunities with family-supporting benefits, at a time when LIUNA members are trying to put food on their tables, keep roofs over their heads, and maintain middle-class lifestyles.
For every action, there is a reaction, and our reaction to this frontal assault on our way of life needs to be loud and clear: If you do not stand with us, we sure as hell will not stand with you!
Five Environmental Impact Studies conducted by President Obama’s own State Department have all been clear: building the Keystone XL Pipeline won't significantly increase the amount of greenhouse gases released into the atmosphere. It is outrageous that Congressman [x] chooses to ignore the facts in order to fight against the jobs of hard working LIUNA members. Indeed, it seems that Keystone XL Pipeline opponents will never accept any facts that don’t support their opinion.
You know better than anyone that unemployed construction workers desperately need the work that would be generated by the Keystone XL Pipeline. For thousands of LIUNA members, this isn’t just another pipeline, it’s a lifeline!
Yet many pipeline opponents dismiss these jobs—your jobs—as “dirty,” “temporary,” and of little “real” value to our economy. To them, the work you do, and the careers you have chosen, can and should be sacrificed in favor of a radical environmental agenda that will do nothing to reduce the dangers of climate change.
[Y]our member of Congress has chosen to side with hard-core anti-Keystone organizations rather than with hard working LIUNA members and their families.
Both labor unions and the business community want this project approved. Both understand that the Keystone XL pipeline will create thousands of jobs and grow the economy. It shouldn't be held hostage to in O'Sullivan's words a "radical environmental agenda."
North Dakota’s oil boom has been spectacular. The Energy Information Administration reports, “In the three years since 2010, North Dakota's crude oil output has grown 177%.”
Because energy producers have successfully tapped the Bakken shale formation with hydraulic fracturing, North Dakota’s share of U.S. oil production has risen considerably and has pushed U.S. proved oil reserves to its highest level in 36 years.State oil production: 2008-2013
According to the Motley Fool, we should expect this success to continue:
[A]ccording to oil and gas industry analyst Wood Mackenzie the Bakken and Three Forks formations still hold $118 billion in remaining value. That value will be realized as energy companies unlock the nearly 20 billion barrels of oil that are expected to be recovered over the life of the play.
The last thing we need is the federal government killing this revolution with punative taxes and duplicative regulations. There’s no reason to mess with the good things happening in North Dakota.