Who Needs the Dakota Access Pipeline?

by Frank Ackerman, member green economist of the E3 network

reposted from CommonDreams

A packed Seattle City Council chamber cheers passage of the bill to drop Wells Fargo as its bank last week. (Photo: Ken Lambert / The Seattle Times)

The final link of the Dakota Access Pipeline (DAPL) can now be built, thanks to a recent decision by the Army Corps of Engineers (although the Cheyenne River Sioux have filed a last-minute suit to stop it). In light of the disappointing but unsurprising federal approval of the pipeline, it is worth pausing to ask who and what DAPL is good for.

Who needs the pipeline? There are four main answers: three are silly and one is dangerous.

Silly answer #1 is that the ravenous ego in the White House needs a continual flow of evidence that he is always a winner and his enemies are all losers. Indian tribes and environmentalists can get in line next to Muslims and Mexicans as obstacles, which he shall overcome, to the huge success of making America some kind of great again.

Answer #2, only slightly less silly, is that Energy Transfer Partners (ETP), the company that built the pipeline, has $3.8 billion invested and won’t earn a dime on it unless the pipeline is finished. ETP is a well-connected company – at least until recently, Rick Perry was on its board of directors and Donald Trump was one of its stockholders. Surely that’s irrelevant to the recent decision.

But it is well established in economic theory that people who make bad investments should lose money on them. Milton Friedman, the forefather of conservative free-market economics, was emphatic on this point. As Friedman might have asked, why is DAPL a worthwhile investment that deserves to make money? Who actually needs this pipeline?

Answer #3 is only silly if you pay attention to the numbers. Building a pipeline creates jobs. Good, high-paying jobs making and laying pipe. In fact, building anything creates jobs. Building a bridge to nowhere or a pipeline that no one needs will create jobs – but building things that people need can create even more jobs. An in-depth study of alternatives to the proposed Keystone XL pipeline found that the host states could gain many more jobs by investing in much-needed infrastructure for clean water and natural gas distribution.

Moreover, almost all the jobs created by building DAPL have already happened, because the pipeline is almost complete. It makes no sense to count past jobs as future benefits. If construction jobs are an important benefit of the pipeline, I hope you enjoyed them; they’re all but over. Once a pipeline is completed and in operation, it needs very few workers to keep it going.

Finally, the dangerous answer is that DAPL would be useful to keep oil flowing if the price of oil was much higher than it is today. The danger involves the factors that might cause higher prices. But first, a little back story.

DAPL was planned in early 2014, at a time when the price of oil had been above $80 per barrel, often closer to $100, for the past several years. Oil production in North Dakota was booming, and there were early signs of a shortage of pipeline and rail capacity to carry the state’s oil.

Then, in the second half of 2014, the price of oil collapsed. Since the beginning of 2015, the price of oil has been below $60 per barrel, occasionally far below. Oil production in North Dakota has slumped, and the volume of oil carried out of the state by pipeline or rail transport has plunged so low that there is no hint of a capacity shortage.

North Dakota is among the most expensive on-shore locations for oil production in North America. Several oil experts have estimated that the break-even price for North Dakota oil is $60 per barrel or more. In my own study of the state’s data, I found that North Dakota oil production tends to go up when the price has averaged more than $61.50 per barrel for the last few months. The flip side is that North Dakota output tends to drop when the price of oil lingers below $61.50 – as it has done for the last two years, ever since early 2015.

So DAPL will only be needed for oil transport if the price of oil goes, and stays, much higher than it is today. Here comes the dangerous part: suppose that an out-of-control White House was inflaming conflict in the Middle East, threatening bad relations or even war with major oil producing nations. If OPEC countries cut off oil shipments to the United States, the price of oil will soar, North Dakota’s oil boom will resume, and DAPL will become key to Fortress America’s oil supplies.

Normal diplomacy would prevent that, of course. But normal diplomacy is so 2016.

 


Oregon Clean Fuels Program

By Robin Hahnel

Roughly one-third of Oregon’s greenhouse gases come from the transportation sector. In 2009 the state legislature passed House Bill 2186 authorizing the Oregon Environmental Quality Commission to adopt rules to reduce the average carbon intensity of Oregon’s transportation fuels to 10 percent below the 2010 emissions. However, the oil industry fought against regulation from the get-go, and lobbied heavily to allow the bill to sunset in 2016, which would have re-established the industry’s monopoly over fuel choice in Oregon. A broad coalition of environmental organizations, led by Oregon Climate Solutions, lobbied successfully in 2015 for the passage of Senate Bill 324. This allowed the  Department of Environmental Quality to fully implement the Clean Fuels Program in 2016.

The Clean Fuels Program aims to lower carbon emissions in the transportation sector in Oregon by 10 percent over 10 years – from 2010-2020. It requires oil companies to blend low-carbon biofuels, or to purchase credits that support electric vehicles, natural gas, and other cleaner fuel alternatives to reduce emissions. And since Oregon has abundant clean fuels available from farms, forests, and waste disposal facilities, the program creates market demand for local fuel alternatives.

The oil industry is the most powerful opponent — with the deepest pockets and well placed political assets – which environmentalists face in our battle to de-carbonize before it is too late. Because the clean fuels program is aimed directly at big oil, it challenges the organizational and political skills of environmental organizations in Oregon as never before. The real story lies in the educational campaign waged to inform the general public and rebut false claims from industry spokespersons and the strategy used to form the broadest possible coalition of organizations in support of SB 324. Various coalition partners pressured and worked with State Representatives, State Senators, the Democratic Party leadership, and the Governor’s office to defeat endless attempts to water down and derail the bill, which did not cease even after it was passed and signed into law!


Innovative Low-Carbon Urban Infrastructure: A View from Vancouver

Marc_books-Oct08Marc Lee is a Senior Economist with the British Columbia office of the Canadian Centre for Policy Alternatives and researcher with E3 Network’s Future Economy Initiative. Marc joined the CCPA in 1998, and is one of Canada’s leading progressive commentators on economic and social policy issues. Since 2008, Marc has been the Co-Director of the Climate Justice Project (CJP), a research partnership with the University of British Columbia, funded by the Social Sciences and Humanities Research Council. 

The narrative on climate change this fall is a familiar one: global greenhouse gas emissions hit another record high last year; extreme weather events are causing record damages; and yet we face an impasse in global negotiations for a new climate treaty, and a relentless push for ever more fossil fuel extraction – seemingly because there is no alternative. On the other hand, demands for action at events like the Peoples’ Climate March, and the growing calls for divestment from fossil fuels, there is a growing movement joining the climate scientists in their call for humanity to change course. But this movement needs more good news stories to counter-balance the gloom, and to start reimagining a sustainable and equitable future.

Around the world cities have asserted a leadership role in wrestling with climate action. Where I live, in Vancouver, British Columbia, my federal and provincial governments are deep in denial, enamoured by fossil fuel riches, but my city aspires to be the greenest of them all. Cities ostensibly have a more limited policy toolbox than senior governments, yet decisions on land use planning, buildings and urban infrastructure can have a powerful long-term impact on their carbon footprint.

My case study looks at Vancouver BC’s Neighbourhood Energy Utility, and its repurposing of district energy as a key ingredient in urban planning and greenhouse gas mitigation.  At its core, district energy is primarily the use of centralized boilers to provide heat and hot water to multiple buildings. It’s comparatively technocratic and boring, with appeal among engineers and energy economists. And it’s old, with examples of steam systems (powered by fossil fuels) in downtowns across North America going back more than a century. Continue reading…


Rent in a Warming World

By Jim Boyce, originally posted at Triple Crisis.

What’s rent got to do with climate change? More than you might think.

Rent isn’t just the monthly check that tenants write to landlords. Economists use the term “rent seeking” to mean “using political and economic power to get a larger share of the national pie, rather than to grow the national pie,” in the words of Nobel laureate Joseph Stiglitz, who maintains that such dysfunctional activity has metastasized in the United States alongside deepening inequality.

When rent inspires investment in useful things like housing, it’s productive. The economic pie grows, and the people who pay rent get something in return. When rent leads to investment in unproductive activities, like lobbying to capture wealth without creating it, it’s parasitic. Those who pay get nothing in return. Continue reading…


Climate Change, Nukes, and Geoengineering

By Robin Hahnel.

On November third James Hansen signed an open letter addressed to environmental organizations urging them to demonstrate “real concern about risks from climate damage by calling for the development and deployment of advanced nuclear energy.”

Like Hancoolingtowersen and some notable long-time environmentalists who have recently come out in support of nukes, I am desperate. I am desperate because, like them, I know we we have very little time left to pull off the greatest technological “re-boot” in human history, turning global fossil-fuel-istan into global renew-conserve-istan before it is too late. That is why I recently sent my own open letter to those in the climate justice movement who argue that green capitalism is an oxymoron and climate change can only be solved by economic system change. In my view those who argue that greener capitalism is a false hope and not worth pursuing have no sense of time. They have no sense of how fast irreversible climate change is coming compared to how fast we can marshal support for economic system change. However, I find it sad that people like Hansen are caving on nukes when we do not need dangerous or new technologies to solve the problem. Continue reading…


Fixing old water and gas pipelines would create far more jobs than building Keystone XL

By Brendan Smith, Kristen Sheeran, and May Boeve

In the coming months, President Obama will decide whether to approve the permit for the Keystone XL pipeline, which would transport crude tar-sands oil from Alberta to the Gulf of Mexico. We know that the pipeline would greatly aggravate climate change, allowing massive amounts of the world’s dirtiest oil to be extracted and later burned.

The payoff, say supporters such as the U.S. Chamber of Commerce, is a job boom in construction industries, which are currently suffering from high unemployment. Earlier this month, Chamber of Commerce CEO Tom Donohue called on the president “to put American jobs before special interest politics.”

If you believe headline-grabbing challenges such as Donohue’s, the president is painted into a corner on the KXL pipeline — trapped by a stagnant economy and an ailing environment.

Continue reading…


The Keystone Pipeline Debate: An Alternative Job Creation Strategy

New research shows that replacing failing infrastructure in Keystone XL states creates more and better jobs than the proposed pipeline

Replacing aging wastewater, drinking water, and gas distribution pipes in Montana, South Dakota, Nebraska, Oklahoma, and Texas can create more jobs and better jobs in the pipeline and construction industries than the proposed Keystone XL pipeline, according to a new report released today by E3 Network and Labor Network for Sustainability.

The Keystone XL pipeline has been touted as a means to address America’s job crisis. This new report, The Keystone Pipeline Debate: An Alternative Job Creation Strategy, shows that we can create five times more jobs than Keystone XL by investing in much needed water, sewer, and gas infrastructure projects in the five states along the proposed pipeline route. The study finds that meeting water and gas infrastructure needs in the five states can create more than 300,000 total jobs. Every dollar spent on gas, water, and sewer infrastructure in those states generates 156% more employment than the proposed Keystone XL pipeline. Continue reading…


E3 Network’s Future Economy Initiative

In diverse communities across the US, new economic practices and models are emerging to challenge business-as-usual. These bold experiments in the new economy vary widely and exist across multiple scales, from neighborhood collaborative consumption initiatives, to cooperative financing models, to new social enterprise structures, to regional economic development processes, and more. At their core, these approaches are motivated by and responses to rising social inequality, environmental degradation, and persistent economic decline.

These innovations may forge the foundation for a more resilient and equitable future economy, yet evidence regarding their impact has been mostly anecdotal. E3 Network is launching our Future Economy Initiative to catalyze research by economists on new economy models and innovations. The Initiative’s goal is to create an analytical framework for evaluating the social, economic, and environmental impacts of new economy models and for documenting the variables contributing to their emergence, success, and limitations.

Later this year, E3 Network will announce a competitive request for proposals from economists to apply the new framework to US-based case studies of the new economy. Right now, we invite input from economists interested in helping us to frame the analytical approach and/or identify promising examples of new economy models appropriate for case study analysis. To encourage wider discussion around new economy research, we encourage you to share your input in the form of a blog post (800 words or less) that we will post here on the E3 blog. Please comment below and send your blog entry or other suggestions via email to director@e3network.org. You can also find us on twitter at @e3network – let the conversation begin!

Continue reading…


Uncovering the Real Cost of Carbon

By  and Thomas Sterner. Originally posted on EDF Voices.

Last week, the Obama administration released new energy efficiency standards for microwaves, along with an update to the government’s official Social Cost of Carbon (SCC) figure. What do those two things have to do with each other? Well, the efficiency standards will help the planet by cutting the energy needs of microwaves, which will in turn save consumers money. And the new SCC numbers show just how expensive our addiction to fossil fuels has become.

The SCC is used to estimate the damages from carbon emissions (and the benefits from reducing those emissions) for the purposes of regulatory benefit-cost analyses. The central estimate for the SCC is now around $35 per ton of carbon dioxide pollution emitted today.

That’s the administration’s estimate of the damage—to human health, ecosystems, and the economy—caused by every ton of carbon dioxide emitted into the atmosphere. The average American emits about 20 tons each year.

Continue reading…