The White House announced a tentative deal Thursday morning to avoid a national rail worker strike which has threatened to further disrupt an already-struggling U.S. economy. In a statement, President Joe Biden said the deal would provide “better pay, improved working conditions, and peace of mind around their health care costs” for the workers. The tentative agreement still must go to the union workers for a vote, but for now the strike appears to have been at least delayed.
Where energy is concerned, the announcement comes as especially good news for residents in New England states, for whom a prolonged rail strike could prove disastrous. By now, almost everyone is aware of the energy shortages facing Europe as winter approaches, but fewer are as aware of the issues facing the northeastern United States, resulting from a lack of proper energy infrastructure caused by politics around pipelines.
Lack of Needed Infrastructure Defies Common Sense
Reuters reported Wednesday that the looming rail strike could exacerbate energy shortages in the Northeast by cutting off rail shipments of not only natural gas, but of oil and refined products as well. Reuters cites U.S. Energy Information Administration data which “shows that in July, inventories of heating oil and diesel reached the lowest levels in at least three decades.” While oil pipelines originating along the Gulf Coast deliver much of the New England’s oil needs, those volumes must be supplemented by rail transport to fully meet demand.
The New England region also suffers from a lack of critical natural gas pipeline infrastructure. Boston Harbor, roughly 300 miles from the prolific Marcellus Shale natural gas region, is annually host to the spectacle of gigantic incoming tankers carrying liquefied natural gas (LNG) produced in other countries, sometimes Russia.
Northeastern states are prevented from importing cheaper LNG produced in the U.S. by the arcane provisions of the Civil War-era Jones Act, which prohibits foreign flagged vessels – which virtually all LNG tankers are – from moving cargoes between U.S. ports. Those states are also unable to bring cheap Marcellus gas into their region for power generation due the refusal of both the federal government and New York state to allow pipelines to be built from Pennsylvania to the northeast, making New York essentially a land barrier to gas transport, and frankly to common sense.
According to ISO New England, the region generated 46% of its electricity using natural gas during 2021. But during extreme winter cold, when renewable energy sources tend to lose much of their capacity, the grid operator admits that it must resort to using a significant amount of fuel oil for power generation as well. In January of this year, I wrote about the fact that fuel oil accounted for 24% of the region’s power generation during one especially cold day.
This is a situation that exists for no reason other than pure politics. It is completely irrational and unnecessary. So irrational that Reuters notes that “In July, governors of New England states wrote a letter to U.S. Secretary of Energy Jennifer Granholm, warning her that the region faced surging winter heating bills due to lacking natural gas pipeline connectivity.” If Sec. Granholm took any action in response to the letter, it is not evident two months later.
But then, approving and building pipelines does not fit the Biden administration’s Green New Deal agenda, and the overriding narrative attached to it, which Sec. Granholm and other Biden officials recite endlessly in response to any question posed to them. If the people of New England need to suffer during the winter to keep that narrative going, this seems of little concern.
Friedman Lectures Western Policymakers
It’s a situation that is so unnecessary and irrational, in fact, that it drew the attention on Tuesday of Thomas Friedman at the New York Times
Friedman goes on to note that his writings in the Times the past 27 years have been devoted to advocacy for green energy and mitigating climate change, and that he is still “all in — all in — on those ends. But you can’t will the ends unless you’ve also willed the means.” He then correctly points out that, despite all the billions, if not trillions of dollars invested in renewable energy in recent years, fossil fuels still provided 82% of the global energy mix in 2021, and that it is wrong-headed to work, as the Biden administration is doing, to prematurely hamper U.S. fossil fuel production and distribution when those renewable sources remain incapable of adequately replacing them.
Mr. Friedman published this piece on the very day that the White House held an ill-timed celebration of the Orwellian-named “Inflation Reduction Act” (IRA) on the South Lawn. The timing was poor given that Tuesday was also the day it was revealed that year-over-year inflation was 8.3% during August despite a precipitous drop in gasoline and diesel prices during the month. That news caused the stock market indexes to drop by about 4% on that day, with the Dow Jones index falling by more than 1,200 points.
Streamlined Permitting Bill Founders
That celebration also came amid rising uncertainty over the prospects for congressional approval of the side deal made between Chuck Schumer, Nancy Pelosi and Joe Manchin for legislation designed to streamline permitting approvals related to energy infrastructure. Manchin says the language would address permits for critical infrastructure like natural gas pipelines that would carry Marcellus Shale natural gas to New England rather than compressing or liquefying it and moving it on rail cars.
But it won’t be limited to oil and gas. The language would also be designed to speed up permitting for renewable energy infrastructure like thousands of miles of new, high-capacity transmission lines that must be built in the coming decade to carry electricity generated by wind farms located on the Great Plains to industrial and consumer markets hundreds of miles away. It would also address permits for approvals of dozens of new hard rock mining operations for the array of critical minerals that make the renewables and electric vehicles industries possible, and which will have to kick off operations quickly if any such “energy transition” is even feasible.
Last week, more than 70 House Democrats signed a letter of opposition to the bill, which still, at this late date, has yet to be made public. The situation is equally dire in the Senate, where 60 votes will be required to break any filibuster, and Vermont’s Bernie Sanders has already made it clear he will also oppose the language. During an interview on Sunday, Wyoming Republican Senator John Barrasso warned Manchin and Schumer not to count on having enough Republican votes to ensure passage.
Schumer has promised to attach the language – if indeed it ever actually materializes – to the omnibus continuing resolution bill that congress must pass by September 30 to keep the federal government fully open. But keeping that promise becomes problematic if he and Manchin in the Senate, and Speaker Pelosi in the House, can’t find enough GOP support for the permitting language to compensate for Democratic defections and overcome a filibuster.
We can’t have adequate and affordable energy without the ability to move it from where it must be produced to where it must be consumed. We can’t move that energy without the right kind of infrastructure to facilitate it. And we can’t have that right kind of infrastructure unless and until the federal government gets out of the way and issues the needed permits.
Right now, none of those pieces are in place, there is little prospect for them to be in place anytime soon, and it remains unclear whether anyone in the Biden administration really much cares so long as their preferred narrative remains intact.