Supply and demand govern almost all of the prices that consumers face in the market. But there are factors behind the scenes that artificially alter elements of supply or demand, changing the ultimate price that we see. This may be regulatory hurdles and permits, foreign wars and supply chain pressures, or other factors. But one of the reasons for rising energy costs in particular is lawfare and organized opposition.
Lawfare is generally used to describe legal action to punish, penalize, or block some activity that is not necessarily unlawful. It is often used to describe the activity of activists with political or ideological opposition to a particular project, and achieved through lawsuits, complaints, or challenges to permits (even once they are approved). In the energy space, the most common type of lawfare is directed at pipelines.
Pipelines are a piece of transportation infrastructure. They are used to move a product. When the cost to transport a good is increased, some portion of the cost is passed along so that the good itself costs more. In this case, the good moving through pipelines is oil and gas, which adds upward pressure on energy costs down the line.
A current example of this is the Mountain Valley Pipeline (MVP), which has faced years of organized opposition in multiple states. While the merits of the project are not discussed here, the costs are an objective measure that is commonly reported. Individuals across the ideological spectrum can see this trend and should know its impact.
When the MVP was first proposed, it was projected to cost around $3 billion. This 303-mile pipeline makes headlines almost every week, very often for opposite sides of the same issue: permits challenged then permits upheld. Reported along with almost every one of these developments is the cost of the pipeline, a sort of journalist convention for large-scale projects. In the same way as headlines report on it as the “303-mile pipeline” they will often gain readers’ attention by identifying it as “the $3 billion pipeline,” for instance.
Eagle-eyed readers may notice that over time, the projected cost continues to rise, tracking perfectly with the onslaught of lawsuits, new studies ordered, permits rejected, new plans submitted, and more. In other words, while inflation and material costs likely have a very legitimate influence on the project rising in cost since its initial estimate over six years ago, one major reason for the rising cost of this particular pipeline is constant legal opposition.
May 2017 – reported as
$3.5 billion
Sept 2018 – reported as
$4.6 billion
Oct 2019 – reported as
$5.5 billion
Nov 2020 – reported as
$6 billion
April 2021 – reported as
$6.2 billion
May 2023 – reported as
$6.6 billion
While many reporters cite different exact costs across time, these reported estimates reflect the trend. As challenges continue, costs rise. Some of these increased costs may very well be the result of underestimating the original project cost or may even be the result of needed and beneficial improvements in equipment and materials used.
The fact that the cost is rising is not itself definitive evidence that legal action is harmful – again, some challenges may positively impact the communities or ensure the project adequately mitigates risks. However, the scale of costs and clear correlation between litigation and organized opposition and costs does require attention. This project may double in cost before it is completed, which will directly impact the energy costs faced by consumers.
For this and similar projects, policymakers should be keenly aware of the impact to consumers of allowing continual lawfare. Not every project should be approved, and oversight is important throughout a project, but there is a difference between improving a project and seeking to destroy it. Lawfare is used for the latter and the result is higher energy costs.
Written by Benjamin Dierker, Executive Director
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.