The stalemate over a new national infrastructure package appears to be nearing a close, as the Senate voted this week to begin work on a nearly $1 trillion plan. The infrastructure proposal remains at the center of President Biden’s efforts to jump start the sluggish economy and get people back to work. The “American Jobs Plan” aims to modernize our crumbling infrastructure system by fixing 20,000 miles of highways and roads, rebuilding bridges and upgrading airports and transit systems. Another critical aspect of our nation’s infrastructure – although largely privately financed – are our nation’s energy pipeline system.
Over the past few years, a small but vocal group of opponents have protested the construction of pipelines – primarily as part of their broader opposition to U.S. energy development. The “keep it in the ground” movement ignores the reality that our nation’s economy continues to need 800 million gallons of crude oil and trillions of cubic feet of natural gas every day, and that the vast majority of that supply is transported coast to coast through 2.6 million miles of pipeline. We rely on easy access to those resources to heat our homes, cook our food and get to our jobs—in short, we need them to go about our daily lives. Pipelines also help power our economy - providing thousands of good-paying jobs, contributing millions in tax revenue, and fueling the entire supply chain.
Our nation’s pipeline network is also essential to increasing our energy security. America is in an energy boom unimagined several decades ago as new hydraulic techniques let developers safely extract oil and natural gas from the ground, thus allowing us to decrease our dependence on unstable foreign sources. According to a recent ICF report, “Increased imports of Canadian crude oil in tandem with booming domestic production have allowed U.S. refiners to significantly reduce crude oil imports from OPEC and other overseas suppliers.” Pipelines transported a significant portion of that crude oil and the authors note that “with the completion of new pipeline capacity,” there could be further reduction in imports.
Two recent incidents underscore both these points and provide a valuable lesson. First, the recent cyberattack on Colonial Pipeline, which led to fuel shortages and long gas lines, showed the consequences of removing pipelines from the energy equation. Second, one of the world’s busiest waterways was brought to a standstill when a large container ship became stuck in the Suez Canal and caused serious disruptions to global trade. The energy market was particularly hard hit—a reminder that we must shore up our own infrastructure for such unexpected events.
The lesson? We need to encourage investment and development in energy infrastructure projects like pipelines. But to do so successfully, public and private investment must go hand-in-hand and collaboration must prevail. All the players—lawmakers, regulators, developers, and contractors—need to work in tandem for the project to be successful.
A recent lawsuit is a prime example of how one player can throw a wrench into a major pipeline project and cause an unnecessary delay. During the construction of the Rover Pipeline in Ohio, a contract dispute arose between the contractor U.S. Pipeline and the developer Energy Transfer, resulting in the former filing a lawsuit. However, as attorney A.J. Ferate noted in a Law 360 column, U.S. Pipeline took the dispute a step further and “also abandoned the job, leaving Energy Transfer with millions of dollars of incomplete and defective work on its hands.”
Energy Transfer ultimately prevailed in court, but the case serves as a cautionary tale of the need for collaboration. It also shows the risks that companies like Energy Transfer take on infrastructure projects such as Rover where millions of dollars are on the line. If burned one too many times, they may become reticent about investing the money and resources into future projects. That would not bode well for the nation’s energy future.
President Biden is right to focus on our nation’s infrastructure, but pipelines are an integral part of that system and shouldn’t be the odd man out.
George Landrith is president of Frontiers of Freedom, a public policy think tank.