Appalachian Basin

U.S. Chamber Report: Not Building Pipelines in the Northeast Would Be Devastating

The U.S. Chamber of Commerce’s Institute for 21st Energy recently released the fifth installment of its Energy Accountability series: What if pipelines aren’t built into the Northeast? The report finds that such a decision would be devastating to residents in the six New England States: Pennsylvania, New York, New Jersey, Ohio and West Virginia. In addition to higher electricity and heating costs, it would mean nearly 78,400 jobs lost by 2020, more than $4.4 billion in labor income off the table, and the loss of a whopping nearly $7.6 billion in GDP.

Let’s take a closer look:

An abundance of natural gas, but not enough pipelines to move it to consumers

With the Marcellus Shale producing around 19 billion cubic feet (BCF) of natural gas per day and the Utica Shale producing 4 BCF per day, according to the U.S. Energy Information Administration, one would think the Northeast would have some of the lowest energy costs in the country. But the report finds this is not the case:

“According to federal data, Northeast states have some of the highest delivered natural gas prices in the entire country, with residential and commercial consumers paying about 30 percent more overall than the average American household.” (page 14)

That’s because while there is an abundance of natural gas in fairly close proximity, there isn’t currently enough infrastructure to get this gas to consumers, especially in New England. In fact, as the report explains,

“A study by La Capra Associates for the New England Coalition for Affordable Energy found that the lack of new energy infrastructure ‘will cost New England households and businesses $5.4 billion in higher energy costs (in 2014 dollars) between 2016 and 2020.’ The study estimates that the ‘lack of energy infrastructure will reduce household spending by $12.5 billion.’” (page 19, emphasis added)

Some of the reasons for this lack of infrastructure include the ban on hydraulic fracturing in New York, efforts by Keep It in the Ground (KIITG) activists groups to slow the permitting process and spure lengthy litigation, denials to have ratepayers help fund infrastructure projects, and limited underground storage capabilities in New England. Despite this, as more traditional power generation facilities begin to go offline, the demand for natural gas continues to grow – without the infrastructure to accommodate the increases.

The following chart and table from the report show the peak growth demand through 2020, the existing pipeline capacity, and some of the planned projects for the region.

And along with the time it takes to permit and construct these projects, especially given New York’s recent denial of both the Northern Access and Constitution pipelines’ state permits – demand will soon exceed supply, as the following chart demonstrates:

What if all of these and future pipelines are denied permits?

In short, in addition to rising energy costs, the economic impacts of not building needed pipeline infrastructure in the Northeast would be devastating.  The hardest hit state would be Marcellus Shale-rich Pennsylvania, with nearly 22,000 jobs lost, as well as losses of nearly $2.4 billion in total GDP and almost $1.3 billion in labor income. Also in the Marcellus, West Virginia stands to lose out on roughly 2,500 jobs, $124 million in labor income, and $159 million in GDP impacts. Even New York, where there is currently a ban on fracking, would be hard hit with over 17,400 jobs, around $1.6 billion in GDP, and $971 million in employee compensation lost. And over in the Utica, Ohio will lose out on nearly $295 million in GDP and over 2,000 jobs.

In New Jersey, which is unlikely to have the resources to produce its own shale gas, $673 million in labor income and 11,600 jobs would disappear, along with $1.2 billion in GDP. But that’s nothing compared to New England, which would see nearly $2 billion in lost GDP due to higher energy costs and 22,900 potential jobs losses, equating to roughly $1.3 billion in labor income lost. Massachusetts alone would account for 40 percent of the total GDP and jobs losses.

The following charts break these estimates down by year:

Pipelines and related infrastructure are critical to meet the growing demand for natural gas heat and electricity across the Northeast. And as this latest report from the Institute for 21st Century Energy demonstrates, they are also an important factor in growing a healthy economy because of the incredible potential for job creation and with it labor income, as well as tremendous impacts to states’ GDPs. The delay of these pipeline projects are unnecessary, and this report only strengthens the argument that actions by anti-fracking extremists to delay or stop needed infrastructure hurts everyone across New England and the Northeastern United States.

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