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I N N O V AT I O N S • V O L . V I I I , N O. 1 • 2 0 1 6
Energy Infrastructure Investments
Vital to Economic Growth
The United States pipeline system has made headlines following the decision
from the White House to reject the Keystone XL pipeline after seven years of
review and five positive assessments from the State Department. The Keystone
XL may be the most famous pipeline in U.S. history, but it represents just one
link in a vast energy transportation network that serves a vital function in the
U.S. economy.
More than 48,000 km (30,000 mi) of oil and natural gas pipeline have been
built in the United States since Keystone XL was first proposed in 2008. To
fully capitalize on expanded domestic energy production and bring economic
benefits to families and consumers, the United States will need additional
pipeline capacity.
According to a 2013 study by consulting firm IHS, infrastructure investments
in the U.S. oil and natural gas sector – including pipelines – could spur up to $1.15 trillion in new private capital
investment by 2025, support 1.15 million new jobs, and add $120 billion on average to the country’s national GDP.
Substantial economic activity will be generated during pipeline construction, but the long-term impact is also
critical. Greater availability of affordable domestic natural gas for electricity and feedstocks has lowered manufacturing
costs. U.S. industrial electricity costs are now 30 to 50 percent lower than those of the country’s foreign competitors,
according to a study from the Boston Consulting Group. American manufacturing costs could be 2 to 3 percent lower
than China’s by 2018, bringing jobs back to U.S. shores. Expanding the country’s pipeline capacity can expand those
benefits even further.
Conversely, the lack of adequate pipeline infrastructure can be costly.
In New England, infrastructure constraints have cost families and businesses at least $7.5 billion over the past
three winters despite proximity to the Marcellus Shale, according to a recent study from the New England Coalition
for Affordable Energy. Unless the region invests in natural gas and electricity infrastructure, higher energy costs
will undermine the competitiveness of area
businesses, costing the region 52,000 private-
sector jobs between 2016 and 2020.
Pipelines have a stellar safety rate. The most
recent data shows that the United States’ more
than 308,000 km (192,000 mi) of liquid pipelines
transported about 15 billion barrels of crude
oil and petroleum products at a safety rate of
99.999 percent in 2013. Greater public understanding of the facts and advantages of pipelines is key to overcoming
bureaucratic obstacles that can block or delay U.S. pipeline construction, which is one of the most economically
beneficial infrastructure investments the country can make.
Robin Rorick
GROUP DIRECTOR, MIDSTREAM AND INDUSTRY OPERATIONS,
AMERICAN PETROLEUM INSTITUTE (API)
Industry Commentary from Around the World
Substantial economic activity
will be generated during pipeline
construction, but the long-term
impact is also critical.