In a new report, the Chamber of Commerce quantified the economic and job losses arising from limiting natural gas infrastructure development in the U.S. Northeast where several states, including Massachusetts, Connecticut, and New York, have denied construction of natural gas pipelines. According to the report, if no new pipelines are built, it would cost the region over 78,000 jobs and $7.6 billion in GDP by the year 2020,[i] and the displacement of over $4.4 billion in labor income.[ii]
Recent Northeast Gas Pipelines Denied
In New York, Governor Cuomo’s Administration denied permits to natural gas pipelines, after banning hydraulic fracturing in the state. His state could be drilling its own natural gas if it were not for the ban on hydraulic fracturing. Now, the state’s Department of Environmental Conservation has denied certification to the proposed Northern Access pipeline and water permits sought by the Constitution Pipeline.[iii] Cuomo has also fought the Algonquin Pipeline expansion and has been dawdling on an 8-mile spur to a new power plant in Wawayanda.[iv]
In Massachusetts, the Supreme Judicial Court ruled against energy companies having electricity consumers pay for the costs of new natural gas pipelines.[v] Without additional pipelines, New England will be importing higher cost liquefied natural gas (LNG) to its terminal on the Mystic River in Boston Harbor. That terminal is the only LNG facility in the United States importing LNG; the others are being converted to export facilities. New England is over 50 percent dependent on natural gas for its electricity as coal and nuclear plants have been shuttered.
Specifically, the Massachusetts ruling blocks a financing plan for a $3 billion regional gas pipeline, the Access Northeast pipeline project, which was intended to expand the existing Algonquin gas pipeline in Massachusetts, Rhode Island, and Connecticut. Access Northeast was expected to save New Englanders approximately $1 billion a year.
This is the second project to be blocked. Kinder Morgan, the nation’s biggest energy infrastructure company, dropped its plan for the Northeast Energy Direct project because of a lack of assurances that electricity ratepayers would pay for the $3.3 billion pipeline. The Northeast Energy Direct plan would have included a spur line into Connecticut to bring natural gas from the Marcellus shale regions of Pennsylvania.[vi]
Chamber of Commerce Study
The Chamber of Commerce found that the lack of natural gas pipelines in the Northeast was one of the reasons that the Northeast is experiencing high energy prices. Specifically,
- Northeast residents pay 29 percent more for their natural gas than the U.S. average, and 44 percent more for their electricity.
- Six of the 10 states where residents pay the highest prices for electricity in the country are New England states, with Connecticut, Rhode Island, Massachusetts and New Hampshire all above 16 cents per kilowatt hour (national average is 10.42 cents per kilowatt hour)
- Industrial users in the Northeast pay more than double for their natural gas than the U.S. average, and 62 percent more for electricity.
As a result, the Chamber of Commerce conducted a study analyzing the impact of not building recently announced pipeline projects in the Northeast along with the shuttering of nuclear units expected to be retired over the next four years. The natural gas pipeline capacity that would not be built totals 5.1 billion cubic feet per day, which is about 25 percent more than the region’s existing gas capacity. The nuclear plant retirements total 6075 megawatts and would require an additional 1.02 billion cubic feet per day of natural gas to replace their output at peak demand.
Along with the national impact mentioned above, the study evaluated state impacts of denying construction of natural gas pipelines in the region. Specifically,
- New England would lose 22,900 jobs and $2.0 billion in lost state GDP
- Massachusetts would lose 8,700 jobs and $792 million in lost state GDP
- Pennsylvania would lose 21,900 jobs and $2.4 billion in lost state GDP
- New York would lose 17,400 jobs and $1.6 billion in lost state GDP
- New Jersey would lose 11,600 jobs and $1.2 billion in lost state GDP
- Ohio would lose 2,100 jobs and $295 million in lost state GDP
- West Virginia would lose 2,500 jobs and $159 million in lost state GDP
Conclusion
Keep-it-in-the-ground groups are fighting to block virtually every project that could bring additional natural gas into the northeast to ensure that the gas stays in the ground. Their success is not only hurting demand regions where natural gas is needed to keep prices low, particularly when weather is severe, but it is also affecting gas producing states such as Pennsylvania, Ohio, and West Virginia, which are losing access to these markets. The blockage is also limiting jobs and economic growth. A coordinated effort by those affected in the region is needed to ensure that the region has access to cheaper, cleaner, and more reliable sources of natural gas.
[i] State Impact, Northeast needs more gas pipelines, says new report, April 25, 2017, https://stateimpact.npr.org/pennsylvania/2017/04/25/northeast-needs-more-gas-pipelines-says-new-report/
[ii]U.S. Chamber of Commerce, What If … Pipelines Aren’t Built into the Northeast?, April 2017, http://www.energyxxi.org/sites/default/themes/bricktheme/pdfs/20170405_1300_PipelineReport.pdf
[iii] Press Republican, Cuomo outlines concerns on pipeline expansion, April 16, 2017, http://www.pressrepublican.com/news/local_news/cuomo-outlines-concerns-on-pipeline-expansion/article_be008895-4ade-5ead-af72-0e89d0120677.html
[iv] NY Post, Why does Cuomo keep rejecting pipelines New Yorkers could benefit from? April 16, 2017, http://nypost.com/2017/04/16/why-does-cuomo-keep-rejecting-pipelines-new-yorkers-could-benefit-from/
[v] Mass Live, Strong reactions as state’s highest court nixes pipeline funding mechanism, August 17, 2016, http://www.masslive.com/politics/index.ssf/2016/08/reactions_states_highest_court.html
[vi] Hartford Courant, Massachusetts Court Deals Blow To Regional Natural Gas Pipeline, August 26, 2016, http://www.courant.com/business/hc-eversource-withdraws-from-major-pipeline-project-20160825-story.html
