On Pipelines and Private Infrastructure: Will Common Sense Overcome Radical Politics in 2017?

By at 14 December, 2016, 7:31 am

gas pipe line

by Raymond J. Keating-

President Barack Obama and his administration seem to have little use for private-sector needs regarding infrastructure. Specifically, it’s obvious that they don’t like high-profile oil pipelines.

There was President Obama’s decision not to approve the Keystone XL Pipeline project. As opposed to so many dubious and wasteful federal government-funded infrastructure endeavors – that is, bridges to nowhere – the Keystone pipeline is a private infrastructure undertaking that would meet a clear market-driven need. The 1,200-miles pipeline would move crude oil from Canada and the U.S. Bakken region to Steele City, NE, and from there on to Cushing, Oklahoma, then on to Gulf Coast refineries via the completed portion, known as the Gulf Coast Pipeline.

And now we have the government’s move against the Dakota Access pipeline. This 1,172-mile pipeline would connect the Bakken and Three Forks production areas in North Dakota to Patoka, Illinois, where crude would travel via existing pipeline to the Midwest and Gulf Coast. While the project had been approved by the government and a federal judge ruled against a request by the Standing Rock Sioux Tribe to halt construction, the Obama administration made an announcement to halt the construction of the nearly-complete pipeline.

Again, this is a sound, market-driven, privately funded infrastructure project opposed due to extreme green politics.

Politics Prevail Over Common Sense Projects

In early December, an Obama appointee, as reported by NBC News, denied an easement approval for the pipeline “despite Army Corps of Engineers recommendations that it be granted.” NBC went on to report: “An Army Corps of Engineers official said that they ‘fully support the Army’s decision,’ but confirmed that they did recommend that the pipeline construction be allowed. The official said that the continued construction of the Dakota Access pipeline ‘met the requirements and legal standing’ but that they ‘stand by the administration’s decision.’”

Energy Transfer Partners, the company building the pipeline, correctly noted that this was “a purely political action.” Regarding the person making the decision to reject the easement, NBC noted, “President Barack Obama appointed [Jo-Ellen] Darcy to be Assistant Secretary of the Army (Civil Works) in August of 2009.”

Like the Keystone project, the Dakota Access pipeline has been the target of environmental activists and protestors who oppose the production and use of fossil fuels. And the Obama administration has proven itself in assorted ways – from political rhetoric to proposed tax increases to increased regulation to the denial of pipeline projects – to be the most hostile White House in history toward domestic energy production.

Pipelines Under a Trump Administration

There is real hope that this will change in a Trump administration.

First, the energy agenda he laid out during the campaign looks to remove obstacles to U.S. domestic energy production. His energy plan and Contract with the American Voter called for opening “onshore and offshore leasing on federal lands, eliminate moratorium on coal leasing, and open shale energy deposits”; rescinding “all job-destroying Obama executive actions. Mr. Trump will reduce and eliminate all barriers to responsible energy production, creating at least a half million jobs a year, $30 billion in higher wages, and cheaper energy”; lifting “the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal”; and lifting “the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward.”

That last point seems to include the Dakota Access pipeline. According to a statement released on December 1, U.S. Senator John Hoeven (R-ND) said: “The Obama administration should approve the easement for the Dakota Access Pipeline without delay, and also provide assistance to state and local law enforcement. Because the Obama administration continues to delay that decision, we have met with President-elect Trump’s transition team on a range of issues, including the need for the new president to issue an easement for the project. Today, Mr. Trump expressed his support for the Dakota Access Pipeline, which has met or exceeded all environmental standards set forth by four states and the Army Corps of Engineers.”

Also, on December 5, The Wall Street Journal reported: “‘With regard to the Dakota Access Pipeline, that’s something that we support construction of and we’ll review the full situation when we’re in the White House and make the appropriate determination at that time,’ said Jason Miller, a spokesman for Mr. Trump.”

Small Business Drives the Energy Industry

Moving ahead with Keystone and the Dakota Access pipelines, as well as removing other governmental barriers to domestic energy production – including oil, natural gas and coal – would be very good news for the small businesses that overwhelmingly populate major energy sectors of our economy. Consider that in 2014 (latest Census Bureau data):

• 90.2% of employer firms among oil and gas extraction businesses had less than 20 employees;

• 77.5% of employer firms among drilling oil and gas wells businesses had less than 20 workers;

• 80.7% of employer firms among support activities for oil and gas operations businesses had less than 20 employees;

• 59.2% of employer firms among oil and gas pipeline and related structures construction businesses had less than 20 workers;

• 52.9% of employer firms among oil and gas field machinery and equipment manufacturing businesses had less than 20 employees;

• 61.5% of employer firms in the coal mining sector had less than 20 workers;

• 67.3% of employer firms among support activities for coal mining businesses had less than 20 employees;

• 53.9% of employer firms among petroleum and coal products manufacturing businesses had less than 20 employees.

The energy business is very much about small business. And moving away from an agenda dictated by misguided and radical politics to policymaking guided by sound economics would a most welcome development for small businesses, U.S. workers, and, of course, consumers in general.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP: The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.


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