By Chet Thompson
July 12, 2018 at 5:00 am ET
Most Americans appreciate that maintaining and building world-class infrastructure is essential to the growth and security of our country. These days, it’s one of the few issues that enjoys bipartisan support, and with good reason. It’s the nation’s web of highways, bridges and roads that drives our economy and provides the freedom of movement we’ve come to expect.
Less obvious is the critical role that energy infrastructure — also known as “midstream” infrastructure — plays in our lives and the well-being of U.S. manufacturing. Midstream infrastructure — the integrated system of pipelines, storage facilities, railroads, ports, waterways and roads — is essential to move the raw materials and products that power progress and ensure that all Americans reap the benefits of our nation’s energy renaissance.
To highlight the critical importance of infrastructure to the refining and petrochemical manufacturing industries, the American Fuel and Petrochemical Manufacturers has released a new study on the state of our nation’s midstream infrastructure. “The Fuel & Petrochemical Supply Chains: Moving the Fuels & Products That Power Progress” takes a detailed look at the midstream infrastructure that moves oil and natural gas from production fields to refineries and petrochemical facilities; supplies gasoline and other refined products to retail outlets; moves feedstocks to petrochemical manufacturing plants that make essential goods; and connects us to markets around the world.
U.S. refiners and petrochemical manufacturers rely on complex supply chains to transport crude oil, natural gas and other feedstocks to their facilities, where they are refined into critical products such as gasoline, diesel, jet fuel, residual fuel oils and ethylene (the building block for an array of chemicals and plastics). These products are then shipped to domestic and international markets, where they provide energy or are used to produce consumer goods.
In 2017, approximately 43.3 million barrels of crude oil, refined products and natural gas liquids, and 79.1 billion pounds of plastic resins moved through U.S. midstream infrastructure networks each day. This supply chain facilitates the manufacturing of life-saving medical equipment, food storage, electronics and other goods.
It also moves the jet fuel, gasoline, diesel and other fuels that power cars, planes and most vehicles. The resiliency of this supply chain allows these industries to be nimble, addressing disruptions efficiently and minimizing impacts on consumers.
From 2010 to 2016, U.S. energy production grew tremendously. U.S. crude oil production increased by almost 40 percent, from 5.5 million barrels per day in 2010 to 8.9 million barrels per day in 2016. In contrast, oil pipeline mileage in the United States grew by only 25 percent during the time.
Consider, too, that refinery utilization was at 90 percent for the third year in a row last year, producing 300 million barrels of gasoline, diesel and jet fuel. Petrochemical manufacturing is growing at levels we haven’t seen in upward of 50 years — an additional $25 billion was invested just last year, with another $150 billion to come. Thus, the development of new infrastructure and proper maintenance of existing infrastructure are essential.
Growth in U.S. energy production has bolstered the American economy, created jobs, reduced the trade deficit and enhanced our energy security. To ensure that we continue to reap these benefits, we must invest in maintaining, modernizing and expanding the midstream infrastructure. This will allow the refining and petrochemical manufacturing industries to thrive and continue to deliver benefits to the American economy, its consumers and our trading partners.
Fuel and petrochemical manufacturers are investing billions of dollars in infrastructure to ensure energy is transported safely, efficiently and in an environmentally responsible manner. Policies that allow our industries to grow this investment, including transparent and stable laws and regulations, permitting reform and free trade are essential to American prosperity.
Federal, state and local governments need to continue working with private industry to provide regulatory certainty and support investments in and improvements to our midstream infrastructure. A robust midstream infrastructure enables a healthy fuel supply chain, preserves our quality of life, improves our energy security and drives progress at home and around the world — worthy investments, indeed.
Chet Thompson is the president of the American Fuel & Petrochemical Manufacturers.
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