U.S. CHAMBER OF COMMERCE

Energy Blog

Energy Blog

US Chamber of Commerce Blog

Sean Hackbarth Snow drift almost covering a parking meter in Boston.Photo credit: Jan Mark Holzer. Licensed under a Creative Commons Attribution 2.0 Generic license.

Just in time for the return of the polar vortex, for the first time in six years natural gas pipeline capacity will increase in the Northeast.

Lack of pipeline capacity has plagued New England for years. As a result, consumers pay high electricity prices and see natural gas price spikes when the weather turns cold, like the 2014 polar vortex.

eia_naturalgas_prices_2007-2016.png  2007-2016.Natural gas prices at Henry Hub and Algonquin Citygate: 2007-2016.Natural gas prices at Henry Hub and Algonquin Citygate: 2007-2016.Source: Energy Information Administration.


A few hundred miles away lay the natural gas-rich Marcellus Shale, the second largest natural gas field in the world. But there aren’t enough pipelines to move the energy to consumers.

Even with the new pipeline projects going online, “pipeline project delays were the dominant trend in 2016 for the US northeast natural gas market,” Argus Media reports.

For instance, even though it was approved by federal regulators, New York State has blocked the Constitution pipeline, denying families and businesses access to abundant shale gas, because Governor Cuomo opposes fracking.

This is despite strong public support for energy infrastructure:

The [Pennsylvania Manufacturers Association] and the National Association of Manufacturers survey of 500 registered voters between Nov. 28 and Dec. 3 found 87 percent believe government and private industry investment in energy infrastructure will have a positive impact on the state's economy. That includes 92 percent of Republicans and 80 percent of Democrats and 85 percent of people that identified themselves as environmentalists.

An assortment of tactics are used by “Keep it in the ground” energy opponents to block pipeline construction:

They use the court system, regulatory system, protests and social media to delay and create anxiety over the potential impacts, said William Kovacs, senior vice-president for environment, technology and regulatory affairs at the U.S. Chamber.

“They have the ability to use the courts to sue and delay a project for so long that they bleed the financing out of (it),” he said.

The most attention-grabbing of tactics lately involve opposing oil pipelines.

After the Keystone XL pipeline fight came the battle over the Dakota Access Pipeline filled with arrests and violence. With the Obama administration capitulating in both cases, “Keep it in the ground” extremists hunt for their text target—and warmer weather .

Like Florida:

“Not prepared for cold?” the sign reads, “Help stop the Florida Sabal Pipeline.” The posting was one of several stuck to message boards and buildings in the Sacred Stones protest camp in North Dakota, near the Dakota Access Pipeline. With winter beginning and temperatures dropping, some of the protesters are considering leaving the camp for warmer climes, and one group is hoping to persuade them to join another pipeline protest further south.

Set to be completed in 2017, the Sabal Trail Pipeline will carry natural gas through Alabama and Georgia into central Florida, where it will be used to generate electricity. Ground has already been broken on the project and work is proceeding rapidly. In March, the company obtained a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (FERC), which allows it broader leeway to use eminent domain to acquire land needed for the project.

And energy-rich West Texas:

Protesters were arrested in West Texas on Tuesday morning near a pipeline being built from the Permian Basin to Mexico.

Members of the Big Bend Defense Coalition were protesting Dallas-based Energy Transfer Partners construction of the Trans-Pecos Pipeline in Alpine. The Brewster County Sheriff’s office arrested two: coalition founder Lori Glover and Alpine resident Roger Siglin.

“We must protect our water, challenge corporate greed, and come to our senses on the truth of fossil fuels and climate change,” said Glover, who had chained herself to the project’s gate.

Former oil field worker Arajoe Battista chained himself to a fence there but was not arrested, the sheriff’s office said.

The Big Bend Defense Coalition is hoping to rally troops to Alpine, in the middle of the Chihuahuan Desert, about 70 miles north of Big Bend National Park. Residents moved there to be closer to nature and escape big business, protesters said.

Energy opponents are unlikely to persuade Americans to covert to their extreme ideology, but it shows they’ll continue searching for opportunities.

 

It also reminds us that we need to reform how we approve energy infrastructure. Permitting processes at all levels of government need to be better coordinated and streamlined, while allowing the public to have plenty of input.

At the same time, governments can’t abandon the rule of law—like President Obama did with the Dakota Access Pipeline--and pull the rug out from under businesses that follow the rules.

A growing economy will need energy, and America is awash in it. We’ll need enough energy infrastructure to support the opportunity at hand.

Sean Hackbarth Construction of the Dakota Access Pipeline near in New Salem, North Dakota.Construction of the Dakota Access Pipeline near in New Salem, North Dakota.Photo credit: Tony Webster. Licensed under a Creative Commons Attribution-ShareAlike 2.0 Generic license.

A month ago, I wrote:

President Barack Obama just took the rule of law, crumpled it up, and tossed along a riverbank in North Dakota.

He continues to treat the rule of law like wastepaper by putting up another (likely temporary) blockade in front of the Dakota Access Pipeline.

On Sunday, the Army Corps of Engineers refused to issue an easement to allow pipeline construction under the Missouri River, declaring it will “explore alternate routes for the pipeline crossing.”

In June, the Corps approved the easement but didn't finalize it. 

What changed was the pipeline became a symbolic issue for anti-energy, “Keep it in the ground” protesters, like Bill McKibben. Since this summer, thousands have encamped on federal land in North Dakota and have been ordered to leave by December 5. According to local law enforcement, these protesters are “armed, hostile” and not peaceful, and they inspired attacks on other pipelines in four states.

In September, a federal judge saw that proper procedures were followed in allowing approving the project and refused to stop it. But the Obama administration immediately pressed the pause button. Two months later, President Barack Obama telegraphed what the Corps just did by saying the pipeline should be re-routed—even though a federal judge noted that the pipeline’s path was modified 140 times and would run adjacent to a natural gas pipeline that’s been in the ground for over 30 years.

What's interesting is the Corps never admits that it shouldn’t have approved the pipeline in the first place. It states:

[T]his decsision does not alter the Army's position that the Corps' prior reviews and action have comported with legal requirements.

In other words, the review process was followed correctly--just like a federal judge confirmed months ago. Nevertheless, the Corps (i.e. the White House) arbitrarily changed its mind.

Business and Labor Unhappy

Energy Transfer Partners, the company building the DAPL, called the move, “a purely political action,” adding:

This is nothing new from this Administration, since over the last four months the Administration has demonstrated by its action and inaction that it intended to delay a decision in this matter until President Obama is out of office.

Both business groups and labor blasted the decision.

Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st  Century Energy, said:

The Obama administration sent a clear message: if your special interest-funded protest is loud enough and has enough celebrities tweeting their support, then the rule of law and the facts no longer matter.

Terry O’Sullivan, General President of the Laborers’ International Union of North America, called the decision, “short-sighted, gutless, and irresponsible.”

Blocking the final portion of construction of #DAPL after it is 93% complete & fully reviewed is a short-sighted & irresponsible decision

— LIUNA (@LIUNA) December 5, 2016

Administration Attacks the Rule of Law

This action certainly was a thumb in the eye to the rule of law. To borrow from Professor Richard Epstein, the rule of law is a set of “known, consistent, and certain rules” that are applied in a neutral manner by the government. It's one way our society functions.

There's an implicit agreement: Government establishes a process for getting permission to build a major infrastructure project like a pipeline. If businesses follow those rules it should be assured of a definitive, rational decision. Both business and government function as partners.

Energy Transfer Partners spent years talking to local residents and Native American tribes. They worked with governments at all levels to demonstrate that the pipeline would be safe. They negotiated with private land owners to build the pipeline on their land. They made changes to the pipeline to protect the environment and culturally-sensitive lands.

The company followed the rules, only to have the Obama administration pull the rug out from under them to placate anti-energy activists like McKibben who thinks a modern, 21st Century economy can function without access to abundant energy.

Changing the rules in the middle of the game is fundamentally unfair, the AFL-CIO explained in November: 

Once these processes have been completed, it is fundamentally unfair to hold union members’ livelihoods and their families’ financial security hostage to endless delay. 

Uncertainty Has Consequences

Such decisions have ripple effects--mostly unseen. Other companies are watching.

They know that what’s happening with the Dakota Access Pipeline can just as easily be done to a natural gas pipeline or an electric power line --even if it links to a wind or solar farm. Any type of energy infrastructure investment is at risk from ad-hoc agency decisions that reject the rule of law.

Such uncertainty has consequences. Fewer needed energy projects will be attempted because the regulatory and permitting risk is too high.

As a result, it will be harder to move energy from where it’s produced to where it’s consumed. That means higher costs for families and factories. It also means higher transportation costs for energy producers, less investment in production, and fewer jobs created in the sector.

Hopefully this could be a fragile, temporary win for the anti-energy crowd. A Trump spokesman said the incoming administration supports the Dakota Access Pipeline and will review the Corps’ decision once it takes office next January.

Trump spox @JasonMillerinDC on DAPL: “That is something that we support construction of” says will review Army Corps decision after Jan 20

— Zeke Miller (@ZekeJMiller) December 5, 2016


Nevertheless, it’s a bold reminder that how we permit infrastructure projects needs serious reform. The first place to start is having a White House that stops playing politics with our infrastructure needs while respecting the rule of law and the fairness and certainty it provides.

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Does America need an "All of the Above" energy strategy? Find out here. This Chamber Explainer will get you up to speed.

 

Thomas J. Donohue Oil pump jack in North Dakota.An oil pump jack just outside of Watford City, North Dakota. Photographer: Matthew Staver/Bloomberg.

In the final months of the Obama administration, we’re seeing a flurry of regulatory activity as the president seeks to push his agenda until the last possible moment. Among those regulations is a new offshore leasing plan from the Department of the Interior that would tightly restrict offshore oil and gas development, keeping as much as 90% of the U.S. Outer Continental Shelf off limits for exploration. Doing so would place an extreme, anti-growth environmental agenda ahead of the best interests of the American economy and energy security.

Imagine the potential of U.S. energy if our leaders began actively working to advance it, not thwart it.

The U.S. Chamber of Commerce has called on the incoming Trump administration and the new Congress to immediately replace this regulation with a plan to fully utilize our offshore energy resources. These resources are essential to spurring economic growth and promoting energy security. Unfortunately, the proposal to largely ban offshore drilling is only the latest in a long series of misguided policies by the Obama administration—and there may be even more in its final days. Any continuation of those policies will further undermine one of America’s greatest assets: our abundant natural resources.

The U.S. Chamber’s Institute for 21st Century Energy has produced the Energy Accountability Series, a collection of reports detailing the dire consequences of undercutting America’s energy revolution. For example, if fracking was banned, the reports found that it would cost America 14.8 million jobs and $1.6 trillion in annual GDP by 2022. If energy production was banned on federal lands and waters, America would risk losing 380,000 jobs, $70 billion in annual GDP, and $11.3 billion in government royalties.

Energy remains one of the bright spots for America’s economy despite the restrictive policies of the last eight years. Just last month, America became a net exporter of natural gas for the first time in 60 years even though the administration has done all it can to restrict fracking and eliminate it on federal lands. Imagine the potential of U.S. energy if our leaders began actively working to advance it, not thwart it. We could see new technologies, new discoveries, and increased capabilities in our energy sector.

The Chamber is encouraged by the president-elect’s pledge to eliminate the restrictions that have prevented the United States from taking full advantage of its abundant resources. With the right policies, we can create millions of jobs, billions of dollars in economic growth, and billions more in government revenues and royalties. The Chamber and its Energy Institute will continue to fight for a positive, forward-looking energy policy in the final days of the current administration and into the next.

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Does America need an "All of the Above" energy strategy? Find out here. This Chamber Explainer will get you up to speed.