Activists vs. consumers

When political obsession steers decision-making about energy, consumers suffer. A new study by the US Chamber of Commerce's Institute for 21st Century Energy (ITCE) estimates the economic consequences of politically motivated limits on energy transportation and economic activity thwarted by lawsuits and regulation in the US Northeast (p. 33). The totals for 2017-20: $7.6 billion in lost economic growth, $3.8 billion in lost employee compensation, and 78,400 job-years not created.

Much of the effect reflects price elevation in states dependent on pipeline gas and LNG from elsewhere. Residential energy users in the Northeast already pay 29% more than the US average for gas and 44% more for electricity. Industries there pay more than double the national average for gas and 62% more than the average for electricity.

Pipelines stalled

Even if planned pipelines advanced and LNG imports grew, the ITCE study shows, capacity to deliver gas would barely exceed peak wintertime demand. But pipelines aren't advancing.

The study cites two setbacks last year typical of growing resistance to pipeline construction: the Williams Constitution Pipeline in New York and the Spectra Energy Corp. (now Enbridge Inc.) Access Northeast project in New England. State regulators denied the Williams project a water-quality permit matching one granted earlier by federal officials. The Spectra-Enbridge pipeline, an expansion of the Algonquin transmission system serving power plants in Massachusetts, Connecticut, and Rhode Island, stalled after the Massachusetts Supreme Judicial Court disallowed recovery of construction costs from ratepayers.

The Constitution decision represented capitulation to environmentalist pressure by Democratic New York Gov. Andrew Cuomo and followed his administration's earlier ban on hydraulic fracturing. Plaintiffs in the Access Northeast lawsuit included advocacy groups, one of which boasts on its web site, "We're stopping unnecessary new natural gas pipelines and making sure new gas power plants don't sink our region's climate goals."

Massachusetts Atty. Gen. Maura Healey welcomed the Access Northeast decision and encouraged distributors to withdraw from purchase agreements. A year before the court decision, she supported a study concluding Massachusetts needed no more pipeline capacity. The state, she argued, could meet its energy needs through lower demand and improved efficiency.

She's right-but not in a way most Massachusetts energy users will like. Demand falls when costs rise. And costs will jump in the absence of energy-system upgrades. The ITCE study cites work by La Capra Associates, now Daymark Energy Advisors, for the New England Coalition for Affordable Energy estimating constriction of energy infrastructure will lift energy costs for New England households and businesses during 2016-20 by $5.4 billion.

For its own projections of economic effects, the ITCE study accounts for the price effects of limits on gas transport as well as the lost-opportunity costs of foresworn pipeline work and, in producing states, gas sales and drilling investment. In New England, the state hit hardest by costs associated with failure to expand pipeline capacity is Massachusetts. During 2017-20, the study says, lost economic opportunity, mostly from high gas and power costs, will total $792 million. The total for all New England states is $2 billion.

Lost economic opportunity in New York during the study period totals $1.6 billion, according to ITCE, of which $1.4 billion reflects elevation of gas and electricity costs. In New Jersey, those factors account for 95% of 4-year economic costs totaling almost $1.2 billion. Of all Northeastern States, Pennsylvania suffers most under a no-new-pipeline scenario, with nearly $2.4 billion in lost economic growth. There, of course, the costs of stymied production and pipeline investment are high. Estimated lost-opportunity costs total $295 million in Ohio and $159 million in West Virginia.

Defending work

These are regional effects of global importance to the oil and gas industry. Pipelines are now front-line targets in a misguided campaign against hydrocarbon energy. Success in that effort, manifest in costs of work not performed, thrills only an activist minority while hurting everyone.

The challenge for industry is to defend work and limit the damage.