When dealing with major challenges, too many elected officials scramble for Band-Aid solutions rather than tackle the root of the problem. That’s certainly been the case with today’s high energy costs, to which the Biden administration and other officials have responded by pinning blame on Vladimir Putin and throwing various short-term fixes at the wall, just to see what will stick.
But we cannot fix the real problem by merely ramping up oil imports from Canada, implementing a gasoline tax holiday, or allowing expanded sales of higher-ethanol gasoline during the summer driving season. It is also insufficient to dip into the nation’s strategic petroleum reserve.
To stabilize and lower energy prices for the long haul, policymakers must take lessons from this latest global crisis and focus on the long term, especially when it comes to energy infrastructure.
That was the key message from a report released earlier this month by the U.S. Energy Information Administration. The EIA examined a scenario under which no new natural gas pipeline capacity is built between 2024 and 2050. The consequences for consumers and the climate were quite damaging; such a scenario also eviscerated our potential to provide secure and reliable energy to allies around the world.
Under this no-pipeline scenario, energy prices will surge even higher. U.S. natural gas prices recently hit their highest intraday level in over 13 years as American drillers struggle to meet high worldwide demand. Without additional interstate pipeline infrastructure, EIA projects that the Henry Hub spot price for natural gas will rise an additional 11%. Unfortunately, the administration has done nothing to promote the kind of pipeline infrastructure build-out that we’ll need to support natural gas development adequately. In fact, we’ve been moving in the opposite direction, with large interstate natural gas pipeline projects such as the Atlantic Coast Pipeline, the Penn East Pipeline, and the Constitution Pipeline being shelved because of heightened legal and public pressure.
Second, higher natural gas prices will result in higher carbon emissions. Although they may provide an opportunity in some instances for carbon-free power sources such as solar and wind, they are also likely to resurrect coal-fired power — in the EIA’s own words, the agency forecasts "increased coal-fired power generation, which would be more carbon intensive than the natural gas-fired generation it displaces.” That’s exactly the opposite result from what the Biden administration is trying to achieve.
Third, inadequate investments in energy infrastructure will mean less geopolitical security for the U.S. and the world. Without sufficient pipelines and export terminals, the U.S. won’t be able the meet the call to provide additional volumes of natural gas to Europe. American LNG is already critically important to Europe and should play an increasing long-term role in Europe’s energy security and decarbonization goals.
Already, the U.S. has worked with our European allies to reduce their dependence on Russia, which supplied 40% of European gas last year. Within a year, the European Union wants to reduce its imports of natural gas from Russia by two-thirds. To help hit that target, the Biden administration and the European Union agreed that the U.S. would “strive to ensure” that at least 15 billion additional cubic meters reach Europe this year. With a goal of shipping 50 billion cubic meters of LNG to Europe annually through at least 2030, we’ll need increased infrastructure and a serious commitment to expand the global role of American LNG.
This means reviewing our policies on LNG export facilities and permits to non-free-trade-agreement countries. In March, the U.S. Department of Energy took a step in that direction, allowing two current operating facilities, Sabine Pass and Corpus Christi, to export LNG to non-free-trade nations, including all of Europe. The department then followed it up with a similar authorization for two projects under development. In the months ahead, even more needs to be done.
Band-Aid approaches aren’t going to secure our energy future. Nor should discussions about setting the right course fall along party lines. Instead, policymakers must consider real, long-term solutions to address our energy needs. That means not just taking advantage of vast U.S. energy supplies, but building the necessary infrastructure that will allow us to reduce prices, address climate change, and increase energy security around the world.
Jeffrey Kupfer, a former acting deputy secretary of energy in the George W. Bush administration, is president of ConservAmerica and an adjunct professor of policy at Carnegie Mellon University’s Heinz College.