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Do pipeline economics add up?


There are three arguments over the proposed Mountain Valley Pipeline and they all start with the letter “e” — environmental, eminent domain and economic.

The first two seem pretty easy to understand. Natural gas is cleaner than coal. Or it’s dirtier than coal, when you factor in the fracking that brings it to the surface. Likewise, it’s either wrong for private property to be condemned for a private company’s benefit — or necessary for the greater good of society.

The environmental argument is more fact-based, even if the facts are disputed. The eminent domain argument is more a matter of philosophical preference. The economic arguments, though, are more complicated, so let’s delve into them.

Let’s deal with the “pro” side first. Gov. Terry McAuliffe — otherwise a green-friendly Democrat — says that to create more jobs in rural Virginia, we need cheap energy (among other things) and natural gas pipelines help provide that.

That argument is best viewed through the lens of Franklin County, a county with no natural gas at present. Roanoke Gas has long wanted to provide service there but it’s been cost prohibitive to run lines from Roanoke. Now comes the Mountain Valley Pipeline, whose route would take it through Franklin County’s new 550-acre business park. Roanoke Gas — whose parent company has a 1 percent stake in the pipeline — says it would like to tap into the MVP there (and also in Montgomery County).

The opposition argument that the MVP would provide no benefit to the region seems to founder here. Wouldn’t a tap in Franklin County mean the business park would be more marketable? It would sure seem so. One of the things that attracted the Eldor auto parts plant to Botetourt County was the presence of a natural gas line nearby.

Of course, there’s no guarantee that a natural gas tap would attract new employers. The Greenfield Center sat mostly vacant for 20 years before Eldor and the Ballast Point brewery committed there this year. The economy moves slowly, sometimes in geological time. What we have here is the prospect of jobs, not the actual jobs themselves.

Patricia Tracy of Blacksburg summed up one opposition argument a few weeks ago in a letter to the editor: “Should tens of thousands of citizens along the pipeline route welcome the destruction of their water supplies for the sake of a few theoretical jobs in Franklin County?”

You can dispute whether water supplies really will be destroyed, but her basic formulation is one that Star Trek fans will recognize as Vulcan philosophy from Mr. Spock: “The needs of the many outweigh the needs of the few.” If you look at things that way, then the question becomes: Who are the many and who are the few?

Pipeline opponents paid for a study by Keg-Log Economics of Charlottesville which took a more holistic view of the local economy. That study warned that the pipeline would hurt the economies of the localities it runs through. It would do so, the study said, by depressing property values of land near the route, which in return would reduce local tax collections. More significantly, it also warned that the pipeline would result in “dampened economic development” because the quality-of-life argument that many localities use would be impaired by a pipeline scar running across the mountains.

Over an eight-county region from southern Western Virginia to Franklin County, Key-Log estimated one-time costs of $65.1 million to $135.5 million: “These one-time costs comprise lost property value and the value of ecosystem services lost during construction.” It then goes on to look at the recurring costs of the pipeline — again, measured in lower property value and diminished tourism and other business opportunities that might not happen. It comes up with a total economic impact — in reverse — of $14.5 billion to $15.3 billion.

That’s huge. Is it real?

Perhaps this is why economics is sometimes called “the dismal science.” The math on all sides may be real, but ultimately we’re talking here about forecasts and projections.

The logic on both sides seems sound: If there’s a pipeline gap in Franklin County, that business park will be more likely to attract employers than if there isn’t. Likewise, if we’re promoting ourselves as an outdoors capital, then our outdoors are less marketable if there’s an ugly pipeline path clear-cut over the mountains.

But how real is either outcome? The only honest answer is we just don’t know. Nobody knows.

Key-Log quotes former Franklin County Supervisor David Hurt, who works in real estate: “Mountain views are a major selling point. With the proposed route over Cahas Mountain being visible for miles around, it will make many properties within view of the mountain less desirable with diminished market value.” Key-Log projects that would cut the county’s property tax collections each year by $79,900 to $100,900.

The counter-argument: Maybe that’s so, but what if development spurred by the gas tap at the business park balanced that out?

The rebuttal to that: What if they didn’t?

In any case, FERC repeatedly dismisses the Key-Log report by saying the company “did not present any facts or data to support its claim.”

The Key-Log report contains some other specific impacts: “Woodall Blueberries, an organic blueberry farm located in nearby Craig County, predicts the pipeline will destroy the farm’s business because customers will take their business elsewhere. According to the owners, the farm relies on the scenery and tranquility of the area as much as the fresh blueberries. In addition, Briarwood Development LLC, estimates a 20-year projected loss of income of 3.4 million on their investment properties in Giles County.”

The counter-argument: Maybe blueberry buyers in Craig (and property owners in Giles) simply wouldn’t notice the pipeline route and nothing would happen.

Or perhaps: Sorry, manufacturing jobs in Franklin County are better for the economy than a blueberry farm in Craig County or a real estate development in Giles.

Or maybe they aren’t.

Ultimately, there is no quantifiable answer here. This is a choice between two different economic views. That would make for a fascinating political choice, if this were something to be decided at the ballot box. The catch here is this is a decision that will be made by federal regulators in Washington, not by any of us.

The Roanoke Times

6 Comments on "Do pipeline economics add up?"

  1. Coffeeguyzz on Sun, 27th Nov 2016 12:48 pm 

    Kinda weird that the anti fossil fuel folks are starting to refer to Star Trek to ‘strengthen’ their arguments. Brings the concept of ‘Jumping the shark’ to a new level.

    ‘Scars’ across the mountains?
    Ever hear of fire breaks? The clear cut paths situated throughout virtually every forest in the US?

    The folks in New England are, collectively, ‘walking the walk’ in turning their backs on fossil fuels by rejecting natgas pipeline build out.
    While I think they are nuts, I give them a great deal of credit for both passionately embracing what they think is best and, most significantly, implementing same in public policy.
    This, despite placing their inhabitants in precarious physical situations during prolonged cold snaps, as well as accepting the recognized economic degradation wrought by high utility pricing.

    You anti fossil fuel folks, and, indeed, all of us, may get to observe – in a real world setting – just how workable a hydrocarbon-restricted environment functions.

  2. Apneaman on Sun, 27th Nov 2016 2:03 pm 

    Coffeeguyzz, maybe they are concerned about more than just a pipeline threatens their water and local economics. Maybe they are worried because 40% of the lower 48 is in serious drought less than one month before winter. They could also be concerned that many parts of the SE are on fire, and have been for weeks and millions are choking on the drifting smoke – highly unusual for wildfire season to extend all the way to late November to say the least. They might also be concerned about the 13 multi Billion dollar AGW jacked weather disasters so far in 2016 in the US. I guess a head up ass denier like you is not concerned eh? Why would you be since it’s all a hoax.

    You anti reality folks, and indeed all of us, ARE going to experience just how painful a destabilized climate and environment functions.

    Many already have – destroyed homes, cars, business, injuries, death, busted up infrastructure, local economic loss. You and your loved ones turn is coming. Same for all of us.

    That pipeline, in the big picture, looks like small potatoes to me, but I don’t live there.

    I get 40% from eyeballing he lower 48 drought map. Looks about 40%ish to me.

    United States Drought Monitor

    US Drought Monitor: 98 percent of Alabama locked in severe drought

    “The latest federal estimate shows nearly the entire state of Alabama is in a severe drought.”

    “The severity of the drought varies. About 82 percent of the state is in an extreme drought, and 35 percent is experiencing an exceptional drought. That’s the worst of all the drought categories.”

    “Streams and lakes are drying up statewide, and wildfires have burned more than 11,000 acres in the last month.”

    More than 30 fires still burning in north Georgia

    “ABUN COUNTY, Ga – Fires that have consumed more than 48,000 acres of north Georgia forest land continue to burn, as forecasters predict the best chance of rain in weeks in the coming days.

    Fire officials say 33 large fires are currently burning in the Southeast. Wildfires have burned an estimated 48,670 acres in the Chattahoochee-Oconee National Forest over the last month.

    A total fire ban remains in place.

    More than 6,000 firefighters from Alaska to Maine have joined forces with local, state and federal agencies to battle the blazes burning across six southeastern states.”

    Apparently the “fire breaks” are not working down south.

    Coffeeguyzz, what do you have to say? It’s a hoax for 1) grant Money 2) something something Al Gore 3) something something enviro-mentals – libtards……………

    What a big fucking coincidence that all the things the science predicted would happen if the humans did not stop are happening and at a pace many times faster than expected.

    I think it’s a privilege to get to be here and witness the end. First the civilization, then the species.

  3. Harquebus on Sun, 27th Nov 2016 3:16 pm 

    “To destroy your home planet’s ecosystem for imaginary wealth is highly illogical.” — Mr. Spock.

  4. peakyeast on Sun, 27th Nov 2016 3:29 pm 

    Harq: Yeah one has to read David Icke to be able to make sense of the actions of our socalled leaders.

    Then it becames blatantly clear that we are infiltrated by reptilian aliens that are converting the planet to their preferred environment.

    😀 LOL

  5. Apneaman on Mon, 28th Nov 2016 10:07 am 

    West Antarctic ice shelf breaking up from the inside out

    “”It’s generally accepted that it’s no longer a question of whether the West Antarctic Ice Sheet will melt, it’s a question of when,” said study leader Ian Howat, associate professor of earth sciences at Ohio State. “This kind of rifting behavior provides another mechanism for rapid retreat of these glaciers, adding to the probability that we may see significant collapse of West Antarctica in our lifetimes.”

  6. Apneaman on Mon, 28th Nov 2016 10:14 am 

    The pipes no one wants to discuss.

    Drip Drop: America’s Crumbling Water Infrastructure

    “The results of this are catastrophic. For our country’s 1.5 million miles of water-related pipes—some of which were created more than 120 years ago—there are an estimated 240,000 water main breaks a year, which equals about 27 every hour. Approximately 2.1 trillion gallons of water a year are wasted due to old and leaky pipes, meters, and water mains, which accounts for about 14 to 18 percent of the water our nation treats. That amount of water would submerge the entire state of Rhode Island under six feet of water.”

    “The ignorance leading to this is two-fold: first, while many of the networks of pipes often date as far back as the 19th century, unless a water main breaks or something disastrous occurs, the public will never see it; and second, the government has downplayed many of the reported problems. Consequently, a significant number of our water systems are reaching, or have reached their operational lifespan. These disruptions aren’t just a hypothetical theory since they’ve already happened in practice. In Los Angeles last July, a water main estimated to be 93 years old broke open, flooding the campus of UCLA. In the Chicago area, it’s shown that 22 billion gallons of treated water per year escape through leaky pipes and mains, many of which are more than 100 years old.”

    “Our crumbling water infrastructure system also has a harmful impact on public health. In March, USA Today reported that more than 2,000 water systems in all 50 states have lead levels in excess of federal limits.”

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