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Northeast Pipe Blockade Could Cost 78,400 Jobs, $7.6B in GDP By 2020, Chamber Says

Continuing policies that "severely" limit new natural gas pipeline buildout into Northeast markets could cost 78,400 jobs by 2020 and destroy $7.6 billion in gross domestic product (GDP), according to the U.S. Chamber of Commerce.

In a new report published Monday, the chamber "modeled the economic impact of continuing with the status quo, which is best defined as a severely constrained ability to build new energy development infrastructure" into the Northeast.

Looking specifically at the New England states along with New York, New Jersey and Pennsylvania, the report also found that a continuation of current policies would displace over $4.4 billion in labor income by 2020.

Citing federal data, the report noted that residents in the Northeast pay 29% more than the U.S. average for natural gas and 44% more for electricity, with industrial users in these states paying more than double the U.S. average for natural gas and 62% more for electricity.

Meanwhile, nearby producing states like West Virginia and Ohio could also stand to lose out from a blockade on new pipelines into the Northeast, the chamber said. West Virginia could lose 2,500 jobs and $159 million in state GDP, while Ohio could lose 2,100 jobs and $295 million in state GDP.

"While much of the country has benefited from the massive influx of new natural gas supplies entering the marketplace over the past decade, the Northeast has not been able to reap quite as much of the benefit of that trend notwithstanding its proximity to...the Marcellus and Utica," the chamber wrote. "One reason why: the work of activist groups allied with the so-called Keep It In the Ground campaign to oppose and in some cases prevent desperately needed pipeline infrastructure projects from moving forward."

The New England region has been singularly volatile in terms of North American natural gas pricing in recent years, a situation often attributed to a deficiency in pipeline capacity relative to peak winter demand. While the past two winters have been relatively mild, previous winters in the region saw heating and electric demand compete for limited space on pipelines, causing prices to spike.

But even after enduring prices in the $100/MMBtu range at delivery points near New York and Boston during the 2013/2014 winter, the Northeast's regulatory climate has proven inhospitable for new pipeline projects.

As the chamber noted in its report, projects like the Constitution Pipeline and the Access Northeast expansion have sought to address the reliability issues underlying this price volatility but have faced pushback at the state level. More recently, National Fuel Gas Co.’s Northern Access expansion was denied a state permit in New York.

"It's important to note again that the primary impediments to these projects advancing in the Northeast do not originate in Washington," the chamber said. "A coordinated effort by those affected in the region will be required to influence local and state policy-makers to finally end what is in effect a unilateral blockade, one denying residents to cheaper, cleaner, more proximal and more reliable sources of natural gas.

"...Notably, most of this push-back continues to be registered in states that do not have a long history when it comes to pipeline development. Polling data consistently shows that most Northeast residents aren't fully aware of how much more they pay for their energy than everyone else in the country. Common sense suggests they'd be angry if they were."

The efforts to thwart new natural gas pipelines into the Northeast come as demand in the region is poised to increase through fuel switching and nuclear plant retirements, according to the chamber.

"The Northeast currently finds itself on a conflicted path when it comes to natural gas. The demand for natural gas is projected to increase significantly in the near-term, and for the first time ever, that phenomenon has become wholly independent of the weather," the chamber said.

"...Based on the current supply and demand picture, no rational analyst would consider the current situation in the Northeast to be either sustainable or tenable. Something, as they say, has got to give."

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