Farmers Forum staff
If Michigan Governor Gretchen Whitmer succeeds in closing down Enbridge Line 5, she will stick American families and businesses with billions of dollars in higher costs at the pump, says a new consumer group report that pegs the extra gasoline and diesel expense at $23.7 billion over five years across several states.
Line 5 transports 540,000 barrels per day of light crude and liquid natural gas out of western Canada oilfields. The line is an important source of energy on both sides of the Canada-U.S. border.
“Even using very conservative estimates, households, businesses, and governments will spend billions more for gasoline and diesel with the closure of Line 5,” according to the analysis prepared for the Consumer Energy Alliance (CEA), a U.S. non-profit consumer advocacy non-profit. “The economic pain of this welfare loss will be exacerbated by consumer prices currently rising at their fastest pace in more than 40 years,” the report says, “adding insult to economic injury” for those consumers.
Among those harmed would be residents of Whitmer’s own state who would pay more than $2.2 billion in additional fuel costs.
In light of the economic stakes, American voices in favour of the line have been speaking out. March editorials in The Wall Street Journal and Detroit Free Press castigated the Democratic Michigan governor for trying to worsen the current energy crisis. The governor and lieutenant governor of neighbouring Ohio issued a joint letter to the White House last fall urging President Biden to prevent a supply disruption on the line.
Ohio Manufacturers’ Association President Ryan Augsburger also highlighted the need to keep the line open. Its closure “would be an economic disaster for our region and the industries that depend on this vital resource,” Augsburger said in a recent statement. His association “strongly supports the uninterrupted operation of the pipeline, especially at a time when Ohio businesses and families continue to experience soaring energy inflation.”
For over a year, Whitmer has been trying to shut down the 68-year-old pipeline on the premise it poses an environmental risk on a 7 km section that crosses the Straits of Mackinac connecting Lake Michigan and Lake Huron. The Canadian-owned pipeline — comprising two parallel pipes on the lake bed — has never leaked, even after being struck by a ship’s anchor in 2018.
Calgary-based Enbridge applied to the state in April 2020 to replace the submerged section of line within an encased concrete tunnel the company intends to build beneath the Straits, a proposal that remains under review. Whitmer revoked the existing line’s 1953 easement in November 2020 and demanded the company cease the flow of products by May 2021. Enbridge did not comply and a legal battle is ongoing. The Canadian government has also intervened and invoked a 1977 treaty that prevents Canada and the U.S. from shutting off existing energy supplies to each other.
The energy alliance report asserts that the Midwestern fuel market wouldn’t adjust quickly if the line were shut down. “Alternatives, such as using rail or trucks to replace the lost production of transportation fuels for regional markets, ignore capacity constraints at other refineries, the scarcity of railroad rolling stock, and the severe national shortage of qualified truck drivers.” Several refineries would feel the effects, with two facilities in the Toledo, Ohio, area, “severely impacted.”
The report does not specifically address the additional costs borne in Canada if Whitmer succeeds. However, the authors do point out that at least six refineries in Ontario and Quebec would lose about 45% of their crude oil input. “It is not possible from publicly available data to ascertain how each refinery may respond, but the result will be higher prices for transportation fuels” in Canada.