U.S. CHAMBER OF COMMERCE

Energy Blog

Energy Blog

US Chamber of Commerce Blog

Sean Hackbarth U.S. Energy Secretary Ernest Moniz.U.S. Energy Secretary Ernest Moniz. Photo credit: Andrew Harrer/Bloomberg.

On Capitol Hill, Energy Secretary Ernest Moniz pitched the need for energy infrastructure improvements found in his department's Quadrennial Energy Review (QER).

Specifically Secretary Moniz was selling natural gas pipelines modernization, but let me quote two selections from the QER that apply more generally:

These [transmission, storage, and distribution (TS&D)] infrastructures simply have not kept pace with changes in the volumes and geography of oil and gas production. The Nation's ports, waterways, and rail systems are congested, with the growing demands for handling energy commodities increasing in competition with transport needs for food and other non-energy freight, and much of the relevant infrastructure--pipelines, rail systems, ports, and waterways alike--is long overdue for repairs, not to mention modernization.

And

Industry has responded to the infrastructure gap by expanding pipeline capacity where it can; reversing flow direction on other pipelines; converting natural gas lines to oil; and seeking new "workaround" solutions to transportation bottlenecks by moving increasing amounts of oil by truck, barge, and rail.

Hmm. What shovel-ready project could help ease the "growing demands for handling energy commodities?" What could help ease some of the energy bottlenecks the QER cites?

Before I answer that question, here's a Reuters story from 2014 [h/t Hot Air] [emphasis mine]:

The energy boom of the last decade that has boosted oil and gas production in the United States has outpaced the development of critical infrastructure to transport the raw and refined materials, U.S. Energy Secretary Ernest Moniz said on Thursday.

...

"The core approach, really, is that our infrastructure needs to build out," Moniz said in an interview with Reuters Insider.

"Here we have a case, especially with the production in North Dakota, where the Bakken shale (output) zoomed from essentially nothing to past 1 million barrels a day," he said.

By now you should know where I'm going. An answer to some of the problems the QER lays out is the Keystone XL pipeline. Not only will it move Canadian crude oil, but also transport oil from North Dakota and Montana to Gulf Coast refineries. But it's been caught in a regulatory web spun by anti-energy activists.

The pipeline is ready to be built, and based on the logic of the Energy Department and Secretary Moniz, it's very much needed. President Obama simply needs to end the years of delays and approve it.

Sean Hackbarth Jim Doolittle at the Doolittle/Wagner Ranch.

A pair of political scientists looked at opinion data on the Keystone XL pipeline and discovered something interesting: The closer you get to the pipeline's proposed route the more support you find for it.

"Proximity to the pipeline leads to a greater likelihood of favoring the pipeline," Timothy Gravelle and Erick Lachapelle write in Energy Policy. The Washington Post's Chris Mooney reports, partisan differences dissipate:

The study actually found that locally, the issue was less partisan and that there was more Democratic or liberal support, in comparison with how those on the left feel about Keystone XL on a national level.

Mooney continues:

One possible reason, the researchers suggest, is that on the local level, the pipeline received much more media coverage, with more of a focus on costs and benefits alike for local communities.

While there's strong support for it, anti-energy groups have turned the project into a cause celebre, using it to boost membership and raise money.


For opponents traipsing off to protest in Washington, D.C., the pipeline is an abstract issue about the environment and energy policy. But along the pipeline route, it a tangible kitchen table issue involving local jobs, local economic growth, and local tax gains.

That's what I experienced last fall, when I talked to people along the proposed route.

Here's an excerpt from meeting with pipeline supporters in Winner, South Dakota:

Over a lunch of hamburgers and sandwiches, local business leaders and community officials told us about the lost opportunities for economic development in their area because of the pipeline's delay.

According to John Meyer, owner of Office Products Center, the Keystone XL pipeline "would be a good economic shot in the arm" for Winner. "So many times we are bypassed due to no interstate, not enough power, no natural gas, employee base, and so on."

He explained that the pipeline's pump stations will need a lot of electricity, and transmission lines will be brought in to accommodate that demand. Those lines will let Winner market itself to other industries that also rely on them. The area will be able to "add wind farms now that we have the transmission line" Meyer said, "increasing the property tax base and creating permanent jobs."

I visited the Doolittle/Wagner Ranch, also in South Dakota:

Jim tells us that the Keystone XL pipeline will be a "big significant increase from a tax standpoint." It's expected that Buffalo and Harding County will get $3.9 million in property tax revenue in the first full year of the Keystone XL's operation, a 145% increase. But because of the delay, the local community is missing out on using the tax revenue for a new athletic facilities and other school improvements.

It will also have a "big permanent impact as well," Jim adds. To power the pump houses that will push the oil along, new electricity facilities will have to be built. Jim explains that permanent jobs will be created to maintain those facilities.

To the pipeline's critics, Jim noted, "Pipelines aren't a new concept." Americans have lived for decades with thousands of miles of pipelines below their feet.

And I spoke with Mona Madler, a resident of Baker, Montana, where the pipeline will transport Bakken crude oil:

Baker residents have lived and thrived with oil for decades. I asked Madler what she'd say to Keystone XL pipeline opponents. "They don't know the whole story," she answered. Canadian oilsands have been imported into the United States for decades. Some of it might have become the gasoline in opponents' gas tanks.

In these instances, local residents put the pipeline in the context of their own communities. The people who would be most affected have weighed the costs and benefits and come out in favor of it.

Sean Hackbarth

EPA's carbon regulations faced its first court test.

Even though the final rule isn't expected until this summer, Murray Energy and 15 states are suing EPA, arguing that it doesn't have the statutory authority to regulate carbon emissions from existing power plants under a rarely-used part of the Clean Air Act--Section 111(d)--when those plants are already being regulated under another part of the law--Section 112.

The New York Times does a good job explaining the legal intricacies of these cases. Much revolves around a "clerical error" in a 1990 amendment to the Clean Air Act.

Simply put, EPA is using this as an opportunity to expand its authority beyond what Congress intended.

Don't take it from me. Just ask Constitutional scholar Laurence Tribe, who taught President Obama at Harvard Law School. He has said EPA's carbon regulations are "constitutionally reckless," and its power grab is akin to "burning the constitution."

The agency has a penchant for doing stuff like this. In a 2014 case involving greenhouse gas regulations, Supreme Court Justice Antonin Scalia scolded EPA for "laying claim to extravagant statutory power over the national economy" without Congressional authority.

Congress is where the public debate should take place on the costs and benefits of reengineering the country's power grid. It shouldn't be left up to EPA's creative statutory interpretations.

Put aside the legal questions. EPA's carbon regulations aren't feasible. State leaders don't think they are technologically achievable, and power grid operators say the plan will cost billions of dollars and threatens power grid reliability.

Also, as Karen Harbert, President and CEO of the U.S. Chamber's Institute for 21st Century Energy, told a House Science Committee, it will have negligible global impact:

Even the EPA, she declared, admits that the promised U.S. restrictions will have "no discernable impact" on the global environment. In written testimony,  she amplified that even the drastic cuts the EPA is about to mandate for U.S. power plants would be "offset by Chinese carbon dioxide emissions in about three weeks."

In short, it's all pain for no gain.