It looks like a major overhaul of U.S. pipeline infrastructure is coming.
This week, both Minnesota’s CenterPoint Energy and Baltimore Gas and Electric said they would raise rates for natural gas customers. The extra cash being used for upgrading and modernizing gas distribution pipelines.
The moves reportedly comes as a result of legislation introduced last year. The new rules require aging pipelines to be brought up to standard–many having to be completely replaced.
In the wake of the financial crisis of 2008, many analysts believed government stimulus money would lead to a massive re-vamping of American infrastructure. But this “infrastructure revolution” largely failed to materialize.
It’s interesting then that the revolution finally seems to be coming for American pipelines. And rather than a government-backed phenomenon, the boom is being driven by private enterprise.
That’s because cheap natural gas is largely what’s enabling companies like CenterPoint and Baltimore Gas to re-build.
The firms are passing on infrastructure surcharges to their customers, making gas more expensive. Five years ago, the higher costs might have brought cries of outrage. But with natural gas prices having tumbled on the back of shale gas development, so too have billing rates. Giving utilities room to ratchet things up a little without causing widespread resistance.
It’s thus a good time to re-do the country’s pipeline network. Which in turn strengthens the market for new natgas supplies coming online from shale.
Seems like “the invisible hand” really does work.
Here’s to doing it when the time’s right,
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