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.

 


New Anthology on The Economics of the Environment

By Bryan Snyder.

Dollars & Sense’s political economy of the environment anthology, The Economics of the Environment, 2nd ed., incorporates both current material relevant to today’s most controversial environmental issues, while still including many seminal “standard” articles with strong pedagogical value. The articles contained in the anthology are written in a clear and accessible manner and are concise so they will not overwhelm undergraduate readers.

The topics covered in the book include market failure and roles of government, resources and rents, climate change, agriculture and sustainability, and visions of a sustainable future. This reader is designed to accompany a fine text in environmental economics (Goodstein, Harris, et al.). Chapters in the reader, however, will fit nicely with most undergraduate environmental-economics texts, adding real-world context to the often-abstract analytical discussion. It can also be used as a “stand alone” primer to facilitate discussion on a broad scope of environmental issues. Articles from James K. Boyce, Timothy A. Wise, Robin Broad and a host of others make this edition of The Economics of the Environment particularly rich in content and scope. Continue reading…


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…


An Unexpected Journey to Something New in Cleveland

By Jonathan Ramse, I-PhD student in Economics at the University of Missouri-Kansas City. As part of a team with two colleagues, Julia Poznik and Ruchira Sen, Jonathan has been investigating the role of multiple anchor institutions as stakeholders in economic development as a researcher with E3 Network’s Future Economy Initiative.

It has been apparent for some time now that the economic theories and policies considered business as usual have simply failed. But this is no reason to give up hope quite yet. Meet the new economy! There are numerous innovative models, business and strategic plans, community organizers, and agricultural and waste management techniques that are breaking new paths into a better world. This movement of innovation is not centrally planned and not coordinated by a set of power elites, but is springing up organically in different locations across the country and the world. One of those places is Cleveland, Ohio where the Greater University Circle Initiative (GUCI) is shaping a new way of thinking about and a new way of doing urban economic development.

The GUCI is the focus of our team’s case study. The journey there was not one we expected. Like most everything, the research process is buffeted by uncertainty and unexpected turns. As our research team set off to better understand innovations in Cleveland, our intent was to study the Evergreen Cooperatives. However, we found that doors we thought were open to us were in fact closed. Our timing was off as Evergreen was about to embark on a significant internal assessment which made external review unwelcome. This required a little “on-the-fly” adjustment for our team as we shifted the scope and focus of the project to the GUCI. The GUCI is a multi-anchor institution based development model that encompasses Evergreen in addition to several other projects. As a whole, the initiative attempts to align the interests of three wealthy institutions with the impoverished neighborhoods that surround them. Continue reading…


A Role for Online Platforms in the Future Economy

By Anders Fremstad, Ph.D. candidate in economics at the University of Massachusetts Amherst and researcher with E3 Network’s Future Economy Initiative. Anders’ current research focuses on the economics of cooperation and the sharing economy.

The “sharing economy”, which is receiving a lot of attention, is built on a simple technology: online platforms. The internet makes it easier for people to buy a used couch, borrow a power drill, or find a place to spend the night. In economic terms, online platforms reduce the transaction cost of borrowing, lending, buying, selling, and giving stuff. This future economy innovation allows people to better allocate durable goods, so that they flow more freely from people who aren’t using them to people who could put them to use.

There is little data on the economic, social, and environmental impacts of the sharing economy, but established platforms have already transformed the way people consume some goods. Consider Craigslist’s impact on the market for secondhand goods. Craig Newmark first launched Craigslist in San Francisco in 1995, and the website now serves hundreds of locations and the vast majority of Americans. Craigslist changed the way people find jobs and apartments, but its greatest impact has probably on how people buy, sell, and give away used items. Continue reading…


Community Supported Agriculture & the Future of Farm Livelihoods

By Mark Paul, Ph.D. candidate in economics at the University of Massachusetts Amherst and researcher with E3 Network’s Future Economy Initiative. Mark’s current research focuses on the link between sustainable agriculture and development. 

I certainly don’t earn a fair wage, but it’s farming. It’s labor of love

– CSA Farmer

CSAboxesCSA farms are expanding at a rapid pace, with operations in every state and a six-fold increase in farms since 2001, but it is questionable whether this innovative farming model is delivering the goods. Proponents claim CSA are an active process of re-embedding market exchanges in social relations, with benefits to the local food economy that include the availability of healthy fresh local produce, sustainable agriculture production, increase in biodiversity, regional economic development through sustainable supply chains, and a vibrant community space that promotes the sharing of knowledge, ideas, and leisure. But is the CSA delivering on these promises? Continue reading…


Future Economy Initiative – Sheeran

By Kristen Sheeran in regards to E3 Network’s Future Economy Initiative:

Meet the new economy; it’s not the same as the old one. It’s true that communities throughout the United States are still affected by the aftermath of the 2008 economic crisis: foreclosures, unemployment and high inequality are just three of the symptoms. But there’s also something else afoot: an array of innovations taking place nationwide with the potential to change economic life as we know it. The E3 Network is proud to announce the Future Economies Initiative, devoted to carefully documenting, describing and analyzing these innovations around a common framework and set of research questions. Continue reading…


Our RFP is out! Let’s talk “Future Economy”

The E3 Network is awarding grants to economists to apply an analytical framework to case studies of future economy innovations – emerging models of sustainable enterprise at the level of the firm, cluster, industry, community. Grant recipients will apply the framework to a case study of their choosing and submit a report based on their findings. The report will be included in a collection of case studies edited and produced by E3 Network. E3 Network will complement the case study analyses with photography, video, and other story telling support to create a rich online media presentation of emerging economic innovations.


Future Economy Initiative – Goodstein

Guest post by Economist Eban Goodstein in regards to E3 Network’s Future Economy Initiative:

Future Economies Project, Starting Now

Back in 2009, I had the chance to interview two Oregon policy experts about the emergent green economy in that state. The interview is here:

Angus Duncan and Dave Van’t Hoff (starting at minute 3:15) talked to me about the vibrant industry clusters in Oregon that have developed around energy efficiency, solar, biofuels, wind power, sustainable forestry, green building and design.  Add in craft beer brewing, light rail, great fair-trade coffee, and urban chicken-raising, and you get—well—the backdrop for a popular, offbeat TV show. Continue reading…


Future Economy Initiative – Power

Guest post by Economist Thomas Michael Power in regards to E3 Network’s Future Economy Initiative:

This project seeks to rigorously study examples of “new” economic institutions that are attempting to move the American economy in a different, more progressive and productive, direction. We hope to be able to measure the ways in which these “new economy” efforts are succeeding or not. That obviously raises the question of what metrics are appropriate to use in evaluating these efforts to build new economic institutions.

At the most basic level, “success” has to involve mere survival and the capacity to be reproduced so that the new institutions can ultimately actually make a difference in changing the overall economy. But since the point of this type of institutional innovation is to improve economic performance and well-being relative to existing institutions, measurement of those improvements has to be a primary focus on the measurement of performance too. Continue reading…