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Analysis Of Line 3 By Commerce Department Was Unbelievably Shortsighted

Earlier this year, the Minnesota Department of Commerce argued the new Line 3 oil pipeline does not need to be updated because the agency claimed Minnesota’s demand for gasoline and other refined petroleum products appears unlikely to increase over the long term.

This way of thinking is wrongheaded for two reasons: 1) Minnesotans and other residents in the Midwest will use oil for decades to come, and 2) oil is a global commodity and is easily diverted from one location to another. Because oil is easily diverted, it is important for the United States to enact policies that ensure it has a secure supply of affordable oil to meet future demand.

Americans will need oil for decades to come:

As I’ve written about before, electric car sales in Minnesota, and the rest of the country are small. In fact battery electric vehicles accounted for just  0.6% of vehicle sales in 2017.

Furthermore, Energy Information Administration data shows people who own electric cars generally own them in addition to their gas-powered cars. Therefore, electric cars aren’t a substitute for gas-powered cars, and even households that have electric cars will need the oil.

Oil is a global commodity:

Oil is easy to ship. It can be put on tanker ships, rail cars, or it can be shipped using pipelines. As oil demand continues to grow in developing countries, the current transportation patterns for oil are likely to change over time.

Oil production patterns will also likely shift in the coming decades as certain areas increase production by discovering and developing new deposits, and other areas see decreasing production due to the depletion of their oil reserves.

Approving Line 3 will allow the United States to hedge its bets against future disruptions in oil supply (from an oil embargo, for example), and it also means the price oil in the United States will remain lower in the event of a price spike.

Therefore, Minnesota Public Utilities Commission should approve the new Line 3 along Enbridge’s preferred route and ignore the shortsighted recommendations of the Minnesota Department of Commerce.

 

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