Based on this week’s international trade reports, there’s continued evidence that new domestic energy production is a bright spot in the U.S. economic recovery. Oil imports are down, domestic production is up, and it’s becoming cheaper to power our economy. But what gets lost in this broader success story are questions about whether we have the right tools to move all this newfound energy.
That makes the recent domestic energy boom the perfect time to revisit whether our infrastructure is prepared for our evolving energy markets.
Throughout the United States, the rise in domestic production creates new trading partners for our metropolitan energy consumers. For example, how often did metro areas trade with Western North Dakota in the 1990s? But today, gas stations across the country represent an economic connection between the booming North Dakota economy and large metro areas. A similar story is taking place throughout the country, ranging from energy producers in Pennsylvania to those in Texas. The result is stronger economic connectivity between major population centers and the country’s more rural areas.
However, as these new trade connections take shape, the country must confront whether our energy infrastructure is prepared to handle all this extra domestic movement. Brad Plumer’s recent piece does a great job outlining some of the technical hold-ups: Gulf Coast refineries can’t handle the lighter, sweeter crude from new fracking reserves, but it’s costly to reach the East Coast refineries that can. The end result is price distortions, with winners and losers on both sides.
Just as troubling are the clear environmental consequences from an unprepared infrastructure network. In just the past few weeks, there has been a major oil-related derailment in North Dakota and another in Eastern Canada. What happens if a similar accident occurs near a major metro area, resulting in widespread damage?
At the end of the day, we can trace these problems back to an energy network tailored to yesterday’s energy markets.
Moving forward, we need to use these new oil-related trade networks as inspiration to remake our energy networks. Do we want to keep moving these new American energy reserves by rail, or should we consider new domestic pipelines? With the continued drop in renewable prices and persistent climate change concerns, how will we update the national electricity grid? The price of harvesting solar power keeps dropping, for example, but we’re simply unprepared to move energy from the sun-filled skies of the Southwest and Southeast to the country’s cloudier regions.
The domestic energy boom certainly delivers big results for the U.S. economy—new jobs across the country, access to cheaper energy, and an improved trade balance—but it would be foolish to stop at the congratulatory stage. New domestic energy production is rapidly recalibrating our infrastructure needs and is a fresh reminder to constantly invest in national-level improvements. Taking a cue from the electrification and pipeline construction craze of the last century, it’s critical we begin to build the energy infrastructure to power this century’s economy.