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Research & Commentary: Lack of Pipeline Infrastructure Hurts Northeast Families, Businesses

June 12, 2017

Pipeline Opposition Could Cost 78,000 Jobs, $7.6 Billion In GDP, $4.4. Billion In Labor Income In Northeast By 2020

A report released in April 2017 by the U.S. Chamber of Commerce’s Institute for 21st Century Industry, the fifth in its Energy Accountability Series, takes a look at the costs political opposition to new pipeline infrastructure projects is having on the residents of New England, New Jersey, New York, and Pennsylvania, finding this opposition could lead to the loss of greater than 78,000 jobs, $7.6 billion in GDP, and $4.4 billion in labor income in the region by 2020 if no new lines are constructed.  

The hydraulic-fracturing, commonly called “fracking,” revolution has transformed the energy outlook of the United States over the past decade. Because of the fracking revolution, natural-gas production has skyrocketed. As of 2015, 66 percent of the natural gas produced in the United States has been recovered via fracking techniques. The increased produced has caused prices to drop precipitously.

However, “despite the historic increase in natural gas production, as well as the economic and environmental advantages that have come with it,” the study notes, “infrastructure development has not proceeded at a similar and corresponding pace, particularly in the high-density Northeastern United States.”

Specifically, there are not enough pipelines in the Northeast, which limits the region’s supply of natural gas. “While much of the country has benefited from the massive influx of new natural gas supplies entering the marketplace over the past decade,” the report continues, “the Northeast has not been able to reap quite as much of the benefit of that trend notwithstanding its proximity to major producing formations like the Marcellus and Utica [shale basins.]”

There are 18 pipeline projects in the Northeast currently in the planning stages: three interstate that will travel into the Northeast, six interstate within the Northeast, and seven intrastate. Unfortunately, the study’s authors fear that “if past is prologue, we should expect that many of these projects will never be able to acquire the approvals they need to get off the ground.” They then site the Constitution Pipeline as a cautionary tale. The pipeline, which had been approved by federal regulators, was denied a water-quality permit by regulators in New York in April 2016, blocking the transportation of 600 million cubic feet of natural gas per day between the Marcellus shale and New England.

Because supplies of natural gas are limited, prices are necessarily driven up. Families in the Northeast pay residential electricity prices that are 44 percent higher than the U.S. average. Residential natural gas and industrial electricity prices are also 29 percent and 62 percent higher in the Northeast, respectively. Except for Pennsylvania, which is slightly below average, and Maine, which slides in at 11th place, all the states featured in the report are in the top 10 in the United States for having the highest average retail electricity prices. All six New England states also rank in the top 10 of a WalletHub study for total energy costs.

Higher electricity costs disproportionally hurt low-income families, who naturally spend a larger percentage of their money keeping the lights on. Adding pipeline infrastructure would lower electricity prices, thereby raising living standards, stimulating long-term economic growth and creating a substantial increase in net jobs.

Living standards increase because lower-cost electricity frees up money for consumers to purchase additional goods and services, which improve people's lives. Economic growth and net job numbers would also increase, because the newly available money spent on goods and services would spur job growth throughout the economy.

The rise of shale gas as a replacement for coal has been primarily responsible for the United States now enjoying its lowest level of carbon-dioxide emissions since 1989, and the U.S. Energy Information Association estimates the continuing switch of electricity-generation fuels to fracking-produced natural gas is responsible for 63 percent of the drop in U.S. energy-related carbon-dioxide emissions over the past decade. The natural gas hydraulic fracturing has enabled us to exploit is cost-effective and abundant, and it can help ensure the United States is the world’s largest energy producer well beyond the 21st Century. Making sure these natural-gas pipelines get built would provide much-needed economic relief for northeastern families and businesses.

The following documents provide more information on natural gas.

What If … Pipelines Aren’t Built in the Northeast?
https://www.heartland.org/publications-resources/publications/what-if--pipelines-arent-built-in-the-northeast
This study is the fifth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what continued opposition to new pipeline infrastructure projects in the Northeast would mean for the residents and businesses of those states. This opposition could lead to the loss of greater than 78,000 jobs, $7.6 billion in GDP, and $4.4 billion in labor income in the region by 2020.

What If … Hydraulic Fracturing Was Banned?
https://www.heartland.org/publications-resources/publications/what-if-hydraulic-fracturing-was-banned
This study is the fourth in a series of studies produced by the U.S. Chamber of Commerce’s Institute for 21st Century Energy. It examines what a nationwide ban on hydraulic fracturing would entail. The report’s authors found by 2022, a ban would cause 14.8 million jobs to “evaporate,” almost double gasoline and electricity prices, and increase natural gas prices by 400 percent. Moreover, cost of living expenses would increase by nearly $4,000 per family, household incomes would be reduced by $873 billion, and GDP would be reduced by $1.6 trillion.

What If … America’s Energy Renaissance Never Happened?
https://www.heartland.org/publications-resources/publications/what-ifamericas-energy-renaissance-never-actually-happened
This report by the U.S. Chamber of Commerce’s Institute for 21st Century Energy examines the impact the development of shale oil and gas has had on the United States. The report’s authors found that without the fracking-related “energy renaissance,” 4.3 million jobs in the United States may not have been created and $548 billion in annual GDP may have disappeared since 2009. Electricity prices would also be 31 percent higher and gasoline prices 43 percent higher.

2016’s Most and Least Energy-Expensive States
https://wallethub.com/edu/energy-costs-by-state/4833/
This study by WalletHub compares the total monthly residential energy bills in each of the 50 states and the District of Columbia using a special formula that accounts for electricity, natural gas, motor fuel, and home heating oil.

The Local Economic and Welfare Consequences of Hydraulic Fracturing
https://www.heartland.org/publications-resources/publications/the-local-economic-and-welfare-consequences-of-hydraulic-fracturing
This comprehensive study published by the National Bureau of Economic Research says fracking brings, on average, provide $1,300–$1,900 in annual benefits to local households, including a 7 percent increase in average income, a 10 percent increase in employment, and a 6 percent increase in housing prices.

Hydraulic Fracturing a Game-Changer for U.S. Energy and Economies
https://www.heartland.org/publications-resources/publications/hydraulic-fracturing-a-game-changer-for-us-energy-and-economies?source=policybot
In this Policy Study from The Heartland Institute, Heartland Research Fellow Isaac Orr explains the advantages and disadvantages of smart drilling and its alternatives. Orr reviews the background and potential of hydraulic fracturing in the United States and puts that potential in the context of the supply of and demand for oil and gas. He addresses the environmental impacts of hydraulic fracturing, both positive and negative, as well as the public safety issues raised by activists, such as potential harm to drinking water supplies. Orr also discusses how oil and gas production is regulated at the state and national levels and suggests appropriate policies for the industry.

Bill McKibben’s Terrifying Disregard for Fracking Facts
https://www.heartland.org/publications-resources/publications/bill-mckibbens-terrifying-disregard-for-fracking-facts?source=policybot
This Heartland Institute Policy Study, written by Research Fellow Isaac Orr, examines how methane emissions are measured, reports the effect those emissions may have on global warming, and discusses several falsehoods journalist Bill McKibben repeats from the discredited movie Gasland. It also evaluates the available fracking alternatives and discusses the relatively small impact new methane-emissions rules enacted by the Environmental Protection Agency will likely have on Earth’s climate.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at john@heartland.org or 312/377-4000.

Author
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
TBenson@heartland.org