The Big Picture: Pipeline Economics 101
Yesterday’s reprieve for Standing Rock water protectors is a triumph of justice and a shining example of the power of nonviolent collective action. The U.S. Army Corps of Engineers denial of an easement for the Dakota Access Pipeline to cross Lake Oahe has been too long in coming, Human rights abuses by state officials and law enforcement officers failed to erode the resolve of Native Americans and their allies and instead served to focus increasing worldwide attention on indigenous land rights, water pollution from fossil from infrastructure, and climate change.
A lot could be written about the economics of pipelines. In the wake of the Standing Rock victory a good place to start may be the very big picture of why pipelines are constructed and the shift in our society’s use of resources that must occur in order to stop this and other pipelines before they break ground. There are two true answers for why pipelines are constructed, each of which requires very different political actions to address:
1. We use fossil fuels to meet our needs and wants. We use oil and natural gas to heat our homes, gasoline to fuel our vehicles, and coal, oil, and natural gas to power our lights, appliances and electronics. Until we shift all of our uses of energy to renewables there will be demand for the petroleum products that pipelines transport and for new pipelines. Want to put the pipeline developers out of business? Here are the three key shifts from current energy use that will make that happen:
· Make all of our uses of energy as efficient as possible. Raise awareness of the energy efficiency programs available in your state and lobby your elected officials to introduce additional mandatory measures as well as programs that specifically address the needs of renters, multi-family housing, and low-income families. An added bonus: Families and businesses that weather-proof buildings and switch to more efficient appliances, heaters and air conditioners save money on their utilities bills.
· Add renewables to our electric generation supply. Yes, taking action to shut down fossil fuel power plants, starting with the worst polluters, is also part of the big picture. But here’s the thing about renewables: once they are built they out-compete fossil fuel generators in terms of operating costs. The more renewables that are built the less profitable fossil fuel resources become. Renewable generation is kryptonite for coal, oil and natural gas power plants. Look into options for homeowners to make small investments in community solar and wind installations, and lobby your elected officials to introduce and support pro-renewable legislation.
· Electrify our transportation and heating sectors. Given current technology our best bet for reducing demand for the fossil fuel used for cars and furnaces is to switch to electric and run our electric sector on renewables. The latest vintage of electric vehicles have batteries that allow a range of several hundred miles. The past decade has also brought a tremendous advance in ‘heat pump’ technology that can be used both to heat and cool homes. Lobby your elected officials to introduce rebates for electric vehicles and heat pumps along with measures to install public electric vehicle charging infrastructure.
2. Fossil fuel shareholders have their own desires that don’t always follow consumer demand. Economists from all walks of the political spectrum have observed the need for destruction and failure to grease the wheels of capitalism. With progress, consumer demand shifts and businesses that are heavily invested in the out-dated technologies (unless they can change with the times) become comparatively uneconomic and must go the way of the dinosaurs. It would, however, be naïve for us to imagine that businesses deeply entrenched in 20th-century fuels and technology—like pipeline developers and coal mining consortiums—will fade away without a fight. The tremendous push in the United States today to build pipelines and other fossil fuel infrastructure foreshadows these death throes. Once built, the economic argument for using this infrastructure becomes more favorable. In a few decades, however, looking back, we’ll call these “investments” stranded assets and in most states utility customers will be on the hook for paying utilities back for these myopic choices. Make sure that your elected officials understand the difference between what’s good for business investors and what’s good for working families.
There’s a lot of work to do to prevent new pipelines all over North America, and to force polluters to clean up the messes made by pipelines that are poorly designed, poorly constructed, or falling apart due to age and lack of maintenance. At the same time, if we’re ever going to get a step ahead of pipeline construction it’s never too soon to advocate for efficiency, renewables, and electrification, and to make the public aware of profit motives of pipelines developers that have nothing to do with the public good.
Agree with me? Disagree with me? Please post a comment below.
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