Groups warn of spikes in Midwestern energy prices if Line 5 is shuttered

[December 02, 2021]  By Bruce Walker

(The Center Square) – Michigan energy rates are continuing to trend upward, already increasing 1.324% between last December and December 2021, according to analysis provided by ElectricChoice.

Several state and nationwide groups are warning this upward drift will intensify if Gov. Gretchen Whitmer and Attorney General Dana Nessel are successful in shutting down the Line 5 pipeline that transports approximately 540,000 gallons of hydrocarbons daily across the Straits of Mackinac.

"Gas prices and home heating costs are soaring and Gretchen Whitmer’s only answer is to make them even higher,” Tori Sachs, executive director of the Michigan Freedom Fund, told The Center Square. “If Whitmer shuts down Line 5, she would devastate local families who count on it to provide heating fuel when the temperature drops. Whitmer’s fight to shut down Line 5 would send costs soaring for Michigan manufacturers, and it would lead to the loss of many jobs."

The U.S. Energy Information Agency’s (EIA) Winter Fuels Outlook for the 2021-2022 season released its forecast for this winter. The EIA projects this winter will confront energy consumers with a 54% spike in propane prices; a 43% rise in heating oil prices; and a 30% jump in the price of natural gas. All told, the EIA anticipates 41% of U.S. homes will spend 6% more than last winter, while homes relying solely on propane will spend 54% more this winter.
 

"Democrats and Republicans from around the Midwest region back Line 5 and the Great Lakes Tunnel,” Sachs said. “Dana Nessel should immediately drop her legal push to shut down Line 5, and Gretchen Whitmer should protect local families instead of engineering a massive energy crisis."

Line 5 has been in operation since 1953, and Whitmer made shutting it down a major part of her 2018 gubernatorial campaign, citing environmental concerns. On Tuesday, she announced she would pull her legal challenge against the dual pipelines from federal court in order to pursue the case in a state court. Enbridge Inc., the Canadian company that owns and operates Line 5, has asserted the case belongs in federal court, due in part to an international treaty signed between the United States and Canada in 1977.

“Michigan residents are already facing a tough winter because of profoundly bad state and federal energy policy decisions that restrict safe, affordable, and reliable energy sources while promoting expensive, weather-dependent sources,” Jason Hayes, environmental policy director at the Mackinac Center for Public Policy, told The Center Square.

“Tuesday’s announcement that Michigan’s federal case against the Line 5 pipeline is being dropped and refocused on state level litigation helps Gov. Whitmer and Attorney General Nessel avoid an embarrassing loss in federal court and ensures the final decisions about the future of Line 5 are dragged out beyond next year’s election,” Hayes continued. “Changing legal strategies like this looks a lot like a delay tactic aimed at extending the Governor’s long-term campaign against the reliable energy sources that Michiganders need to stay safe and warm.”

Members of the United Steelworkers Local 912 pose during a protest against Gov. Gretchen Whitmer's plan to shut down the Line 5 pipeline. 

By Scott McClallen | The Center Square

The American Petroleum Institute (API) noted demand for hydrocarbons continues to rise. Citing figures provided by the U.S. Energy Information Administration, petroleum demand was 21.8 million gallons per day during the week of Nov. 21, 2021. That’s a 3% jump over the same time period in 2019.

“We have the highest prices now since 2014 for crude oil and many petroleum products, and since 2008 for natural gas, and propane relates to both,” R. Dean Foreman, API chief economist, said in a statement.

“The biggest change since pre-COVID really has been the trajectory of domestic production. Without an abundance of it and without the infrastructure critically throughout the region to provide it – plus decreased inventories and increased reliance on oil imports – that’s historically been a recipe for upward pressure on prices, and that’s where we are today.”

Forman added Line 5 provides “a half-million barrels per day of supply that’s been reliable for more than 65 years and it’s absolutely critical to the region’s supply.”

The Consumer Energy Alliance released a report earlier this year that concluded shutting down the pipeline would also impose additional costs beyond energy price increases, including:

·$20.8 billion loss in economic activity;
·$8.3 billion reduction in combined Gross State Product;
·$2.36 billion foregone labor earnings in salaries, wages and benefits;
·33,755 lost jobs; and
·$265.7 million lower annual state tax revenues.

Whitmer’s legal maneuvering has been met with approval by some environmental groups, including the National Wildlife Federation, Michigan League of Conservation Voters and the Michigan Department of Natural Resources (DNR).

"Michigan state courts should have the right to determine what happens in our Great Lakes," DNR Director Dan Eichinger said in a statement. "No oil company should be able to dictate to Michiganders what happens in our sovereign lands and waters.”