U.S. must adapt to new energy landscape
By Chris Lafakis
Posted: Sun, May. 20, 2012, 9:27 AM
philly.com
excerpt:
When markets fail to serve the national interest, government must step in. It has done so many times in connection with the nation’s energy and transportation infrastructure, providing loan guarantees for nuclear power, awarding tax credits for oil drilling, and building the interstate highway system. It should do so again so that oil can be piped from the center of the continent to refineries on the East and West Coasts.
A pipeline from the oil transshipment hub of Cushing, Okla., to Los Angeles could make midcontinental oil supplies available to West Coast refiners; similarly, a pipeline from Chicago to Philadelphia would give East Coast refineries access to oil from Alberta’s tar sands and North Dakota’s Bakken shale. Growth in Canadian and U.S. oil production will ensure that these pipelines run at full capacity.
Such pipelines would be a costly investment, requiring federal incentives to bridge the gap between private resources and the public interest. While the government should not spend more than is needed, it needs to do as much as is necessary to integrate the nation’s energy markets.
Government support could be modeled on the Obama administration’s proposed national infrastructure bank. Washington would partner with private investors to provide cheap long-term financing, loan guarantees, or a small amount of equity. The government would also accelerate the approval process, minimizing investor uncertainty.
Integrated regional energy markets would mean lower and more stable gasoline prices on the East and West coasts and increased U.S. energy independence. There would be fewer refinery closures, more jobs in pipeline construction, and, as a side benefit, higher prices for crude produced in Canada and North Dakota.
If the government found it necessary to own a minority stake in the new pipelines, it could earn revenue via pipeline transportation fees and could divest its interest once the pipelines were built.
====
The free market has failed to build a crude oil pipeline from Cushing, Okla. to Los Angeles
so it time for the Feds to do it because they know best where pipelines need to be built. ;-} |
