Our nation enters the New Year with extraordinary promise in terms of its domestic energy industry. The United States is now the world’s number one producer of natural gas and will soon become the global leader in oil production as well. Although there may be some distance yet to cover, with the right policies in place, America can finally achieve energy independence and position itself as a leading supplier of energy to the world.
However, if the United States is to fully embrace the energy renaissance that is taking shape, and the quality jobs and economic growth that can come with it, we must first ensure that as a nation we are investing in the infrastructure needed to safely and efficiently move a wide variety of energy resources. This means augmenting and properly maintaining our network of oil and natural gas pipelines, which is already the largest of any country in the world. And of course, our new found oil and natural gas supplies and growing demand require incremental investment and construction now and in the future.
Fortunately, the United States has an effective policy in place that allows the private sector to take a leading role in the financing and construction of our national energy infrastructure network. That catalyst is the master limited partnership (MLP) tax structure – and, right now, private investment is driving a much needed surge in energy infrastructure.
Midstream energy companies organized as MLPs currently own and operate approximately 310,000 miles of natural gas, natural gas liquids (NGLs), refined product, and crude oil pipelines. This represents the backbone of our domestic energy system and consists of a vast network ranging from local gathering lines to major interstate pipelines traversing thousands of miles.
In a truly win-win scenario, MLPs respond and grow according to market demands. From 2007-2012, the largest MLP companies invested approximately $88 billion in new infrastructure construction. In 2013 alone, MLP businesses are expected to have invested more than $29 billion, bringing total recent investment to approximately $117 billion. Many of these investments went to support the energy-rich shale gas plays that are now being developed across the United States.
Private sector investment allows MLPs to flourish. And Americans – who are beginning to realize that when our energy economy thrives, the country as a whole thrives – are supportive of measures that encourage even more infrastructure investment.
According to a recent poll conducted for the American Petroleum Institute (API) by Harris Interactive, 83 percent of American voters support increased development of infrastructure to transport energy around the country, including 59 percent who express strong support.
It is clear the American people would like to see action on this front – and for good reason.
That same API poll also shows that 93 percent of respondents agree that increased development of energy infrastructure would help create jobs, while 89 percent agree that infrastructure investment would strengthen America’s energy security.
From a policy sense, but more importantly from a practical sense, if the U.S. is to enter this new era of energy independence, robust infrastructure investment is absolutely critical. The MLP tax structure is the ideal vehicle to help the nation cross that important threshold.
The degree in which MLPs have rapidly responded to current financing demands, foretells a tremendously bright future for our domestic infrastructure sector and for all Americans who depend on reliable and affordable energy to power their homes, businesses, and communities.
Lyman is executive director of the National Association of Publicly Traded Partnerships (NAPTP). NAPTP is the nation’s only trade association representing the businesses largely responsible for financing the construction of America’s vast energy infrastructure.