By Craig Stevens
April 18, 2018 at 5:00 am ET
American motorists are in for an unwelcome surprise when they hit the road this summer. Gas prices are expected to jump 33 cents in the months ahead to an average of $2.74 per gallon, a 14 percent increase over last year. Drivers will be the ones to feel the pinch each time they fill up, but higher costs will affect nearly every part of consumers’ budgets, from home values to groceries.
Market spectators have been quick to point the finger at the Organization of the Petroleum Exporting Countries and Russia, whose production limits have put upward pressure on global oil prices. Without question, the major cartels’ manipulation has had an impact here in the United States. But lest Russia become the culprit for every piece of unwanted news out of Washington, policymakers should take a hard look at the factors holding back domestic producers from meeting more demand at home.
Domestic energy production belies the steady price hikes consumers are seeing at the pump. In March, U.S. crude oil production had increased 23 percent from July 2016, and this spring, output has repeatedly hit new highs. Likewise, natural gas production is poised to grow 7.5 billion cubic feet per day over last year’s levels, and 2019 is expected to break the records set this year. Combined U.S. oil and gas production is 50 percent higher than any other country.
The remarkable success at home has gone a long way to stabilize international markets and alleviate the grip of the oil oligarchs. But the public is right to be asking why the United States’ steady march toward energy independence isn’t translating when they swipe their credit card.
Although there are many factors at play, one of the biggest barriers between consumers and the energy development happening all around us is a shortage of midstream infrastructure. America’s shale growth has happened quickly, and it has reorganized the flow of energy products. Transportation networks, which take a long time to plan and build, have not kept pace.
As a result, pipeline shortages have created bottlenecks along production fields. The Houston Chronicle reported last month that a “pipeline crunch” is “pummeling” Texas’ Permian Basin, one of the country’s most prolific oil fields. Appalachia’s Marcellus Shale Reserve faces a similar predicament. This winter, heating costs spiked to all-time highs in the Northeast because gas produced in neighboring states could not be redirected quickly.
Policymakers’ reluctance to prioritize midstream supply (a report last year found the regulatory process takes 70 months on average to complete), as well as interest groups’ vocal opposition, has created greater reliance on aging and less reliable transportation networks. In 2015, President Barack Obama’s secretary of energy noted that it will require $250 billion to bring the country’s natural gas pipeline systems into a state of good repair.
The pipeline squeeze isn’t for lack of private investment. Even amid depressed crude prices, builders have demonstrated they are ready to step up to the plate. Developers have begun construction of several important transportation lines across the country, like the Rover Pipeline in Ohio and the Bayou Bridge Pipeline in Louisiana, and more are pending federal approval. Others, like the Mariner East system in Pennsylvania, are awaiting permitting at the state level.
The Trump administration has put its weight behind cleaning up and systematizing the approval process. That’s an important step to provide developers with a clear set of expectations and an assurance that the rules won’t get changed mid-way into a project. The public, too, has an interest in that mission. Pipelines are the safest mode of energy transportation and best protect communities and the environment.
Affordable prices at the pump over the past several years seem to have lulled consumers into a pleasant disinterest about how they are getting their energy. In a recent Gallup poll, the number of respondents concerned about availability and access to affordable fuels fell to an 18-year low. Only one in three said bolstering domestic supplies should be a priority.
If this year’s gas price hike — which follows a rising trend — is an indication, that slumber may soon be interrupted. Now is the time to take action by prioritizing the United States’ energy infrastructure. Doing so will help ensure access to affordable and reliable energy, produced here at home, and keep motorists and the economy running.
Craig Stevens is the spokesman for Grow America’s Infrastructure Now, a national coalition focused on promoting key infrastructure investments.
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