Building out our energy infrastructure can help speed economic recovery

Except for the back-and-forth between President Trump and Democratic nominee Joe Biden about Biden’s stance on hydraulic fracturing, energy policy has not been much of an issue in this year’s election campaign. The Democrats are talking up climate change, but despite wildfires and floods this issue doesn’t appear to be resonating with voters. Not surprisingly, in the face of the coronavirus-induced recession, the state of the economy is by far the No. 1 issue in the upcoming election. 

To date, Congress has passed several coronavirus-related stimulus bills, totaling $2.6 trillion, in an effort to keep the economy afloat. But most of this spending has been dedicated to replacing income lost by households and businesses. Very little has been allocated to capital spending, which will be critical for sustaining a post-pandemic economic recovery. Indeed, since the onset of the pandemic, private and public capital outlays have fallen more than 11 percent.   

Despite the pandemic, America remains the leading oil- and natural gas-producing nation and is an important exporter of both fuels. Though renewables such as wind and solar are making some modest inroads, fossil fuels will remain America’s — and the world’s — primary energy sources for at least the next 30 years. Building out America’s energy infrastructure can ensure that we remain the world’s dominant supplier, and will provide a much-needed boost to the economy.

Unfortunately, many environmental organizations and other groups opposed to fossil fuels are pushing back against these investments, especially in the case of pipelines. Lawsuits against both operating and proposed pipelines have multiplied, and anti-carbon activists are pressuring pension funds, university endowments, and foundations to “divest” their portfolios of companies engaged in the production and transportation of oil and gas.  

The Keystone XL pipeline has become the poster child for “keep it in the ground” advocates.  Proposed more than a decade ago to bring heavy crude oil from Alberta, Montana and North Dakota to refineries on the Gulf Coast, the northern leg of this $8 billion pipeline, despite thorough environmental assessments and approvals by President Trump, remains in limbo because of recurring federal and state lawsuits.     

The Dakota Access Pipeline (DAPL), which began moving oil from North Dakota to Illinois in 2017 after several years of litigation and property destruction by some opponents, could be shut down at the end of this year in response to a lawsuit claiming the U.S. Army Corps of Engineers violated federal environmental law when it granted an easement to Energy Transfer LP to construct and operate a portion of the pipeline beneath South Dakota’s Lake Oahe, a crucial drinking-water source for the Standing Rock Sioux tribe. Should that happen, nearly half of North Dakota’s oil production would be stranded and Midwestern refineries would lose more than a half-million barrels of oil per day.

This past July, the Atlantic Coast Pipeline, slated to bring natural gas from the Marcellus shale formation in Pennsylvania and West Virginia to communities in the Southeast, was canceled entirely in the face of costs that had risen from about $5 billion when it was launched to as much as $8 billion this year and the likelihood of further delays and cost increases from legal challenges by landowners and environmental groups.   

In New York State, it is virtually impossible to build a transmission pipeline. For example, after an eight-year battle, the proposed Constitution Pipeline that would have delivered cheap natural gas from the Marcellus to the New York City gateway was canceled early this year. New York also rejected the proposed Williams Pipeline that would have carried natural gas from Pennsylvania through New Jersey, running beneath New York Harbor and the Atlantic Ocean before connecting to an existing pipeline system off Long Island. 

With the Indian Point Nuclear Power Plant that provides nearly a quarter of New York’s electricity ordered to close next year, the region desperately needs more natural gas for power generation. The clear losers are New York area residents who already pay 43 percent more for electricity than the national average.  

A recent study by the Consumer Energy Alliance has documented more than $13.6 billion of “shovel ready” projects that are bottled up in litigation, permit delays, and other forms of push-back by environmentalists. About 66,000 jobs paying an average of $117,000 are at risk, and state and local governments face the prospect of losing more than $280 million in annual revenue while already suffering huge shortfalls because of the pandemic. Spending on pipeline construction also can have a large multiplier effect by spurring demand in manufacturing and other industrial sectors in the energy supply chain.  

By itself, the construction of long-delayed pipelines won’t bring our economy back to full strength. But what is important for full economic recovery is ensuring that America remains the world’s dominant energy producer. Building pipelines, liquefied natural gas and crude oil export terminals, and other types of energy delivery infrastructure can help keep us No. 1.

Bernard L. Weinstein is associate director of the Maguire Energy Institute and adjunct professor of business economics in the Cox School of Business at Southern Methodist University.