Editorial comment
Thure Cannon, President, Texas Pipeline Association
Natural gas – transported safely and efficiently by pipelines – delivers the products we need and use every single day. Recent political developments in the US, however, may threaten the country’s – and our allies’ – energy security, as well as the development of the cleanest and most reliable natural gas industry in the world.
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The Texas Pipeline Association (TPA) is the largest state trade association in the US representing solely the interests of the intrastate pipeline network. Its midstream member companies deliver the large quantities of natural gas, crude and the refined petroleum products that are in just about every item on the market today, including plastics, medicines and clothing. These are products the state, the nation and the world cannot do without.
In addition, the Texas oil and natural gas industry is an economic powerhouse. In 2023, it paid state and local taxes and state royalties totalling US$26.3 billion, equating to more than US$72 million each day.1 And in FY 2023, the industry employed 480 176 Texans. Since 2007, the Texas oil and natural gas industry has paid more than US$230.3 billion in state and local taxes and state royalties. No other single industry in Texas can claim anything close to such impressive statistics.
However, the Biden Administration recently froze LNG export permitting to non-free trade agreement countries, threatening our energy, economic and national security, while providing no major environmental benefits. Along with 31 other state and national oil and natural gas and business organisations, TPA wrote to Biden’s Department of Energy Secretary Jennifer Granholm this past January to argue that restricting LNG exports “puts American jobs and allies at risk, while undermining global climate controls.”
The letter warned that the pause would undercut Biden’s own commitment to supplying American allies with reliable energy. “While our European allies have made significant strides in reducing their reliance on Russian natural gas thanks to American energy producers, Europe faces a considerable supply gap over the long-term that should be met by American energy, not hostile nations,” the letter said. In late March, 16 states, including Texas, sued the federal government over its ban on LNG permits.
The LNG pause is just one more example of the current federal interference that threatens Texas’s vaunted innovation, development and growth of a natural gas and infrastructure system that is the envy of the world. To understand why the state’s market-driven approach is so successful, it is vital to understand the difference between interstate and intrastate pipelines.
There are approximately 489 657 pipeline miles in the state, of which 439 922 are intrastate.2
The intrastate industry is regulated primarily by the Railroad Commission of Texas (RRC) and is based on a free-market system that is designed to ensure a safe, affordable and abundant supply of energy. Prices are set by market forces. Neither the RRC, the state of Texas nor any state or federal agency has the power to set the price of natural gas.
The Texas intrastate market is an independent competitive market that allows pipelines to be built when there is sufficient market demand. Pipelines can begin construction once the permit is approved (often in less than a year) and ultimately are built in a timely manner to meet ever-increasing demand. Transportation rates are negotiated between shippers and pipeline companies.
Conversely, at the federal level, the Federal Energy Regulatory Commission (FERC) regulates interstate pipes and determines if new interstate pipelines are necessary, whether they can be constructed, their location and the maximum rate of transportation based on cost-of-service. New pipelines can only be built after these determinations have been made, often taking years and thus restricting access to abundant natural gas.
This excessive federal involvement causes major slowdowns during the building of new infrastructure at a time when demand for power in the US is at its highest and continues to grow. Instead, our market-based system has delivered tremendous success in a state where Texas legislators have worked diligently to keep energy prices low and supplies abundant – just one of the reasons why the population and economy is booming.3 The state is now the nation’s second most populous – and the number of energy-hungry businesses that have moved to the state continues to grow. Consumers win as well, with the state boasting some of the lowest energy costs in the nation.
Left unfettered by unnecessary regulation, Texas wins, along with our European allies and global emission goals, as we continue to produce and deliver some of the safest, most reliable and efficient natural gas and hydrocarbons in the world.
- 2023 Annual Energy & Economic Impact Report, TXOGA, January 30, 2023.
- Texas Pipeline System Mileage, Railroad Commission of Texas; 2024.
- US Census Bureau, Texas population.
