Other Voices

August 26, 2014

It’s time to update lagging U.S. energy infrastructure

Companies are eager to invest; feds must get out of the way.

The United States recently passed Russia and Saudi Arabia to become the world’s top energy producer, thanks to innovative drilling techniques that have allowed us to extract oil and natural gas from previously impregnable shale formations.

But our nation’s infrastructure for transporting, storing and delivering energy hasn’t kept up with production.

Consider the most obvious example: the Keystone XL Pipeline. The $5.3 billion pipeline would connect U.S. refineries in Texas to the oil sands in Alberta, Canada, creating an estimated 42,000 high-paying construction jobs. And yet it has been awaiting presidential approval more than five years.

Or consider the Williams Companies, a Tulsa-based energy firm that has invested almost $5 billion in transportation projects that are still awaiting federal approval.

The company is no stranger to the government’s staggeringly slow review process: It waited seven years for the approval of just four miles of pipeline to supply Brooklyn with natural gas.

Maine’s Downeast liquefied natural gas (LNG) pipeline, which would provide imported natural gas to New England, has been awaiting federal approval since 2006.

And the Oregon LNG pipeline, which would be able to both import and export natural gas, has been awaiting approval since 2008.

The list of stalled energy infrastructure projects is long and getting much longer.

Without an adequate energy infrastructure, other means of transportation have stepped in to fill the gap.

Rail has picked up some of the slack, transporting over 400,000 carloads of crude oil last year compared to just 9,500 in 2008. Its primary benefit is that railroads reach areas where pipelines have yet to be built.

And while rail can transport oil faster than pipelines, it’s also more expensive: It costs between $10 and $15 to ship a barrel of oil by rail versus about $5 by pipeline.

In addition, using rail to transport oil has delayed the shipment of other products, such as time-sensitive agricultural goods.

And now the federal government has proposed upgrading safety measures on rail cars that haul flammable liquids, which could limit their availability even more.

Rail was always a stopgap solution; it simply can’t replace the needed additional pipeline networks.

The good news is that the energy sector is ready, willing and able to shoulder the financial burden of expansion.

Companies are eager to invest billions of their own — not taxpayers’ — dollars in shovel-ready projects that will create thousands of high-paying jobs to expand and increase the nation’s energy infrastructure.

Energy development has been crucial to America’s economic growth in recent years. The feds have the power to ensure that economic success has only just begun, but only if officials stop standing in the way of a needed infrastructure expansion.

Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Lewisville. mmatthews@ipi.org

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