The United States is experiencing a revolution that’s fundamentally changed how and where we get the energy that powers our economy. Thanks to strong market competition and continuous innovation, America is now the world’s leading energy producer. Pennsylvanians have a unique opportunity to see even more direct and long-term benefits from this historic transformation, in the form of lower fuel prices, if markets are allowed to work in the interest of consumers here.
The abundant supplies of crude oil now being produced in North America, combined with significant investments by Midwest refiners, are providing consumers to our west with more low-cost, secure, domestically manufactured fuels. Buckeye Partners is working to ensure that Pennsylvanians can share in the benefits of this lower-cost fuel.
Buckeye – which for more than 60 years has invested in Pennsylvania and employs over 400 people across the state – wants to ensure this new opportunity is delivered to families and businesses here. Specifically, we have proposed to the Public Utility Commission (PUC) to reverse a portion of the Laurel Pipe Line, which would bring up to 40,000 barrels a day of more affordable fuel into Pennsylvania.
The compelling factors driving the reversal are clear and straightforward. Our Midwest customers seek additional outlets for their growing production of increasingly lower-cost gasoline and diesel fuel relative to the East Coast. This trend has been building for nearly a decade, resulting in a dramatic drop in shipments on Laurel from the East Coast. This is a big change, driven by clear market forces related to U.S. energy abundance and security. Our project is good for America and good for western Pennsylvanians, who will gain additional access to domestically produced fuels.
We understand that meaningful change – no matter how positive – can meet resistance. Some, including Giant Eagle and Sheetz, have expressed concerns about our market-driven proposal.
First, those opposed to this project falsely imply that because our pipeline flows from the east today, it somehow guarantees competition. Three pipelines supply Pittsburgh from the west, and we expect the large and efficient refineries in that region to provide more lower-cost fuel as they compete for increased business in western Pennsylvania. Independent experts agree, including IHS Markit analyst Rob Smith, who said: “The refiners in that western hub have a pretty good competitive advantage, a lasting one, over the ones to the east, they can outcompete. It is a stronger refining industry in the market. That’s what is the ultimate driving force behind this” proposed partial reversal.
Further, it’s intellectually dishonest to argue that maintaining an increasingly underused pipeline to bring more expensive fuel from the East Coast somehow helps Pennsylvania consumers. In fact, an expert witness for the opposition has told the PUC that our project “would put downward pressure on prices” for consumers as more fuel is delivered from the west. Lower fuel prices are a good thing for Pennsylvania consumers and a good thing for American energy security.
Finally, our opponents make alarming predictions of shortages and price volatility because the Midwest occasionally has to import fuel from the U.S. Gulf Coast. Unsaid is that the Northeast imports three times the volume than the Midwest does, year-round, much of it coming from overseas. Unlike the Midwest, the East Coast is more susceptible to hurricanes and severe storms, like Superstorm Sandy, which lead to widespread fuel outages. And it should be further noted that the Midwest has three times the refining capacity of the East Coast, growing by 10 percent over the past decade while East Coast capacity decreased by 26 percent.
Given these facts and clear market trends that stand to benefit consumers, one might ask: If the current situation is as good as some claim, why aren’t consumers benefiting today from the status quo?
It’s with an eye to the future made brighter by the ongoing and historic American energy revolution that Buckeye is pursuing this critical project that will benefit Pennsylvania consumers and further strengthen our nation’s energy security. We’re committed to delivering on the opportunity that low-cost, secure fuel brings, and to doing our part to see that Pennsylvanians benefit from it.
Bill Hollis is senior vice president at Buckeye Partners, which has regional headquarters in the Lehigh Valley and operations across western Pennsylvania.