Our lives and flourishing literally depend on the availability of reliable, affordable, and plentiful energy—most of which comes from fossil fuels: oil, natural gas, and coal. Most people in industrialized countries take the availability of such energy for granted: we turn on a switch, and the power is there, for heating, cooling, lighting, manufacturing, transportation, and for any other human purpose.
But reliable, affordable and plentiful energy does not just magically appear; it is only available thanks to the companies that produce and distribute it, such as those in the oil and natural gas industry. The producers of both sources of energy require significant capital and skill and take on considerable risks to locate hydrocarbons in the ground, drill and design successful wells to produce the oil or gas. Crude oil also requires refining, which some large producers do themselves; others depend on downstream operators. All producers depend on others—mainly railways and pipelines—to transport their product market. Pipelines, the safer and more cost-efficient alternative, also require significant risk taking and capital investment from their owners.
Given the tremendous value of reliable, affordable, and plentiful energy that oil and gas producers and pipelines provide, it would be logical to think that they should be allowed to operate, even in our mixed economy system, with a minimum of regulatory interference. But the opposite, of course, is true. The environmental regulations on both the producers and pipelines in North America are stringent, and getting government approval to build new pipelines seems nearly impossible. Witness TransCanada Corp.’s Keystone XL pipeline that was rejected by President Obama, after seven years of application, consultations, and hundreds of millions of dollars spent by the company.
The oil and gas producers and pipelines are targeted for government regulation because their alleged contribution to CO2 in the atmosphere and commitment at last year’s UN climate summit to cut down CO2 emissions, to ‘save’ the planet from alleged catastrophic global warming. (I say “alleged” because the impact of oil and gas industry on CO2 emissions is miniscule and because there is no scientific evidence of CO2 having a strong or harmful impact on global temperature. Besides, much higher than present level of CO2 (400 ppm) would be beneficial for plants and people).
In Canada, Natural Resources Minister Jim Carr and Environment and Climate Change Minister Catherine McKenna recently announced delays to decisions on Energy East (TransCanada Corp.) and Trans Mountain (Kinder Morgan Inc.) pipelines while the government studies their contributions to greenhouse gas emissions (presumably as enablers of more oil and gas production). These delays reflect the government’s review of its regulations of oil and gas projects and desire to add a climate assessment.
According to a news report, many oil industry participants are “quietly seething” over the government pipeline delays and expected new rules. Some are expressing concern about the negative consequences on the Canadian economy of the federal government’s increased regulation of the oil and gas industry, given very low oil and gas prices and the companies struggling.
Kudos to those who are speaking up. However, the pipeline companies (and the producers) need a stronger—moral—defense. Canada’s Liberal government sees itself as the regulator and coordinator of the economy that knows what is best for all players, entitling it to restrict their right to freely produce and trade. It is the moral right to produce and trade freely that the pipeline companies need to defend, and to do so effectively, they must take the moral high ground.
Taking the moral high ground means that the companies need to point out that the standard of value by which pipelines should be assessed is human life. The companies should show how they contribute to human survival and well-being, how their positive impacts outweigh the potential negative consequences (such as possible spills or accidents), how they develop and apply technology to prevent and minimize negative consequences, and how they respect the individual rights, including property rights, of others. If the pipeline companies are forced to spend their time and resources to meet regulatory requirements that are not based on human life as the standard of value, instead of focusing on delivering oil and gas efficiently and safely, our access to reliable, affordable, and plentiful energy is compromised.
By human life as the standard of value, the government’s role is not to regulate oil and gas pipelines, but to let the companies operate freely. That would lead to more human flourishing, with the government serving its proper role: holding companies accountable for respecting individual rights of others.