Commentary on Political Economy

Saturday 19 February 2022

 Biden’s Regulators Empower Putin

FERC sets rules that will block new U.S. natural gas pipelines.


Transfer lines are seen at the Dominion Cove Point Liquefied Natural Gas (LNG) terminal in Lusby, Md. PHOTO: GARY CAMERON/REUTERS

We live in strange and contradictory times. President Biden is trying mightily to deter a Russian invasion in Ukraine at the same time his regulators are working to give Vladimir Putin more leverage over global energy supplies. Obsessive climate politics gets more self-destructive by the week.

Opinion: Potomac Watch

WSJ Opinion Potomac Watch

In an act of bizarre timing, the Federal Energy Regulatory Commission (FERC) on Thursday revised its policy for approving natural gas pipelines and export terminals. FERC by law must vouch that projects are in the public interest and won’t have a significant environmental impact. But now the agency plans to include greenhouse gas emissions in this analysis. The vote was 3-2, with two Republican commissioners dissenting.


Here’s the kicker: The pipeline analysis may include emissions from upstream production and downstream consumption even though there’s no reliable way to measure either one. You can bet that regulators beholden to climate activists will assert that every new pipeline will massively increase emissions even though more pipelines are needed to transport natural gas to back up unreliable renewables, especially as nuclear and coal plants shut down. It won’t matter if the piped gas is replacing dirtier coal or helping to keep the lights on.

Climate activists are disappointed because FERC says it doesn’t plan to consider the downstream emissions of LNG facilities, which is the Energy Department’s purview. But FERC also knows U.S. LNG exports will have no impact on downstream emissions. If the U.S. exports less LNG, Europe and Asia will simply buy more gas from Russia or Qatar.

LNG export facilities depend on pipelines to supply them with gas. By blocking pipelines, FERC will effectively block more LNG export projects. The U.S. has seven LNG export terminals and will become the world’s largest exporter this year with the completion of a new facility. Yet many LNG projects are stalled because of pipeline constraints.

The Marcellus and Utica shale deposits in Appalachia contain enormous amounts of natural gas that could be exported to Europe. But almost all approved and proposed LNG export terminals are located on the Gulf Coast because Democratic states and greens have blocked pipelines in the Northeast. Without pipelines, U.S. gas is stuck in the ground.

Mr. Biden’s decision to kill the Keystone XL pipeline destroyed thousands of jobs and damaged Canada-U.S. relations. But oil from Alberta and North Dakota’s Bakken shale can still be transported by rail, truck and existing north-south pipelines whose flows have been reversed.

Pipeline constraints are suppressing production and prices in Appalachia in particular. Prices for Appalachian gas are some 15% lower than on the Gulf Coast. At the same time, spot prices for LNG shipments to Europe this winter were about 10 times more than what gas in the U.S was fetching. LNG is an enormous economic opportunity that FERC is throwing away.

This is probably why Sen. Joe Manchin came out so strongly against FERC on Thursday. “Today’s reckless decision by FERC’S Democratic Commissioners puts the security of our nation at risk,” the West Virginia Democrat said. “The Commission went too far by prioritizing a political agenda over their main mission—ensuring our nation’s energy reliability and security.”

“The only thing they accomplished today was constructing additional road blocks that further delay building out the energy infrastructure our country desperately needs. Energy independence is our greatest geopolitical and economic tool and we cannot lose sight of that as instability rises around the globe.”

He’s right on every point. FERC is diminishing U.S. geopolitical leverage against a revanchist Russia, which supplies about 40% of European gas imports. Russia is rapidly building pipelines and LNG export terminals to make Asia as dependent on its gas as Europe is so it can extort U.S. allies. Moscow is already using gas exports to pressure Japan not to join Western sanctions if it invades Ukraine.

Rest assured, Mr. Putin’s apparatchiks won’t be analyzing gas-project emissions. The climate obsessions of the left have already raised energy costs for hundreds of millions of Americans and are making the electric grid less reliable. Now they are actively aiding and abetting a dictator who may launch the biggest war in Europe since World War II.

Treasury Secretary Janet Yellen and Energy Secretary Jennifer Granholm ought to be screaming at FERC to cease its political war on U.S. gas. But they are either MIA or believe that harming U.S. security to indulge climate virtue-signaling is good policy. FERC may nominally be an independent agency, but its new pipeline obstruction is following Mr. Biden’s executive orders. The buck stops with him.

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