The Wall Street Journal reports that the construction industry could be winners from America’s energy boom:
While spending on construction of residential and non-residential buildings still hasn’t returned to 2008 levels, the oil and gas industry grew throughout the crisis and is picking up the pace even more as the economy recovers. [Consulting firm] FMI expects spending on buildings and other structures to grow at 7-8% in the coming years, but for oil and gas construction, the growth rate is predicted to more than double that.
The report expects "more than $330 billion will be spent on oil- and gas-related construction during the next four years, nearly double the amount that has been spent in the past four years."
The report centers on construction companies having enough skilled workers, like welders, to meet rising construction demand. However, my concern involves permitting uncertainty. We’ve seen how the Obama administration has delayed approving the Keystone XL pipeline for over five years. Does this “embarrassing” fiasco scare off companies from taking on future energy infrastructure projects that involve getting permits from the federal government? If so, then the energy boom won’t be as beneficial to a construction industry that’s still recovering from the Great Recession.
Here’s a link to FMI’s report.
UPDATE: Speaking of the Keystone XL pipeline, the Washington Examiner tweeted this fitting political cartoon:
— Washington Examiner (@dcexaminer) April 28, 2014
The Washington Post editorial board excoriated the Obama administration for holding up the Keystone XL pipeline [emphasis mine]:
If foot-dragging were a competitive sport, President Obama and his administration would be world champions for their performance in delaying the approval of the Keystone XL pipeline.
Last Friday afternoon, the time when officials make announcements they hope no one will notice, the State Department declared that it is putting off a decision on Keystone XL indefinitely — or at least, it seems, well past November’s midterm elections. This time, the excuse is litigation in Nebraska over the proposed route, because that might lead to a change in the project that various federal agencies will want to consider. The State Department might even decide to substantially restart the environmental review process. This is yet another laughable reason to delay a project that the federal government has been scrutinizing for more than five years.
As for the pipeline’s routing, planners and regulators have already considered all sorts of options through Nebraska, and they already shifted the route once. Neither route posed environmental concerns of a sort that would justify concluding that Keystone XL is outside the national interest. It is bizarre to imagine that a new route from an even more careful process in Nebraska would significantly increase environmental concerns.
The administration’s latest decision is not responsible; it is embarrassing. The United States continues to insult its Canadian allies by holding up what should have been a routine permitting decision amid a funhouse-mirror environmental debate that got way out of hand. The president should end this national psychodrama now, bow to reason, approve the pipeline and go do something more productive for the climate.
That will leave a mark.
UPDATE: This political cartoon illustrates how these delays have become a farce.
Oil production on the Fort Berthold Indian Reservation in North Dakota has become so large that it would rank among the top 10 oil producing states in the nation, a tribal leader said Tuesday.
Tex Hall, chairman of the Three Affiliated Tribes — Mandan, Hidatsa and Arikara — said the more than 1,000 wells in the Fort Berthold Indian Reservation produce in excess of 180,000 barrels of oil a day. Compared directly with state production, that puts them among the top 10 oil producers in the nation.
"It's a modern day gold rush. It's a modern day Deadwood, South Dakota," he said in a video statement that was broadcast at the tribe's third annual oil and gas expo at the 4 Bears Casino in New Town, North Dakota.
The tribes are also building an oil refinery to process Bakken oil.
Energy development is working for North Dakota, and with the right energy policies found in Energy Works for US produced by the U.S. Chamber’s Institute for 21st Century Energy, it can work all across the country.
While some environmental groups applauded the latest delay of the Keystone XL pipeline, unions whose members would be building it ripped the administration. Sean McGarvey, President of North America’s Building Trades Unions, AFL-CIO, called it “a cold, hard slap in the face for hard working Americans who are literally waiting for President Obama's approval and the tens of thousands of jobs it will generate.”
Laborers' International Union of North America (LIUNA) general president Terry O’Sullivan was more colorful, saying, "It’s clear the administration needs to grow a set of antlers, or perhaps take a lesson from Popeye and eat some spinach."
The Keystone XL pipeline isn’t the only energy issue dividing anti-energy environmental groups and unions who want jobs for their members. Over the weekend, the Associated Press reported that development of shale energy using hydraulic fracturing had strong union support in Pennsylvania:
"The shale became a lifesaver and a lifeline for a lot of working families," said Dennis Martire, the mid-Atlantic regional manager for the Laborers' International Union, or LIUNA, which represents workers in numerous construction trades.
Martire said that as huge quantities of natural gas were extracted from the vast shale reserves over the last five years, union work on large pipeline jobs in Pennsylvania and West Virginia has increased significantly. In 2008, LIUNA members worked about 400,000 hours on such jobs; by 2012, that had risen to 5.7 million hours.
In his Keystone XL statement, McGarvey head of the building trades union asked a good question:
Why does President Obama continue to side with radicals instead of the middle class that, twice, put him office, and supports this project by a significant majority?
Out of work American union members would like to know.
The continued delays on permitting the Keystone XL pipeline—the latest of which came last Friday—illustrate clearly why America needs a streamlined permitting process.
Keystone has become the poster challenge for delays and lost opportunities. For well over 5 years, American workers have been idled, while our nation continues to import oil from unfriendly nations that could have been displaced by Canadian oil from Keystone XL.
Keystone is just the latest in a slew of projects that has been held up by the current system. In fact, every year that major projects are stalled or cancelled because of a dysfunctional permitting process and a system that allows limitless challenges by opponents of development, millions of jobs are not created. For example, 351 stalled energy projects reviewed in one 2010 study had a total economic value of over $1 trillion and represented 1.9 American jobs not created.
The Chamber has been a strong and consistent voice in favor of a better process. In fact, our Institute for 21st Century Energy’s new Energy Works for US platform contains “Modernize the Permitting Process for Our Nation’s Infrastructure” as one of its 9 core planks. Specifically, the Energy Institute recommends a 2 year time limit on the State Department review process for proposed international projects (such as Keystone) as well as legislation to streamline and enhance coordination of the regulatory review, environmental decision-making, and permitting process for major construction projects. The recommendation would prohibit requiring more than one Environmental Impact Statement and one Environmental Assessment per project (except for supplemental documents). The Energy Institute also makes specific recommendations related to the permitting of electricity infrastructure, which is also a critical problem.
Some elements of the Chamber’s recommendations have been included in legislation. For instance, the Chamber and business community have endorsed H.R. 2641, the “Responsibly and Professionally Invigorating Development (RAPID) Act of 2013” and S. 1397, the “Federal Permitting Improvement Act of 2013.” These bills would help address the endless regulatory process that is stifling investment and hurting our energy infrastructure.
Democrats, Republicans, the White House, and the business community all agree that we must remove needless red tape that stalls and often kills major development projects: For this to occur, permit streamlining is a must.