Donald Trump pitched the idea of a massive rebuild of the nation’s aging infrastructure during his campaign. Now Democrats have voiced support for a very similar—me too!—$1 trillion infrastructure investment plan.
It’s proof of the old adage that all good ideas get copied. The goal is the same but the methods to pay for the work differ. Challenged to explain how the federal government, as always deeply in debt, would pay for the plan, the Trump administration has proposed a program that would dangle $137 billion in tax credits to private enterprise to encourage the private sector to do most of the rebuild. The Democrats’ plan appears to rely mostly on a conventional increase in federal spending.
The Trump approach remains short on details but the idea has merit. After all, a large share of basic infrastructure that keeps the nation functioning is privately owned—think in particular of pipelines, railroads and some airports. Also, privately owned toll roads have become increasingly popular in recent years, as alternatives to strapped state highway department budgets that cover scooping asphalt into pot holes but not much else.
What to do about infrastructure presents the U.S. with a real problem, according to a recent Zacks Investment Research report. “The average age of all fixed assets in the U.S. was at a record high of 22.8 years in 2015, with that of government-owned (average of federal, state and local) touching 24 years—the highest among them dating back to 1925,” Zacks found. “As roads, bridges and pipelines get rustier—potentially adding to future repairing costs—project proposals for replacements/repairs for reviving the American infrastructure has become a timely issue.”
The contrast between infrastructure in the U.S. vs. much of western Europe, for example, can be stark. Granted, much of Europe’s infrastructure got bombed away in World War II and replaced in the 1950s and 1960s. But there may have been more emphasis over there on maintenance.
Even this nation’s once-outstanding network of interstate has begun to age—and not always gracefully. For example, the federal and state governments had to rebuild several miles of elevated Interstate 40 through downtown Oklahoma City in recent years after chunks of decking began to fall to the ground below.
The pipeline grid faces the same dilemma. I recall an anecdote the executive of a major natural gas transmission firm shared with me about a confrontation he had with Keystone XL protestors when that issue was still on. “I’m glad to see you’re so interested in the quality of pipelines crossing the Midwest. Surely you’re just as interested in replacing some of the old pipelines that have been in place since the 1920s,” he told the demonstrators.
Crickets.
Pipelines? What old pipelines? They didn’t know there were any other pipelines in the region.
But let the gasoline pumps go dry, or the furnaces fail to light, and suddenly they would know—much less if there’s an emergency incident of some kind. It’s an issue the midstream needs to keep in mind, even as it continues the shale play buildout. And maybe, just maybe, there may be some assistance coming.
“At this point, we don’t know which one will get the lead, (or, if there’s any chance of collaboration between the two proposals), but one thing’s for sure: America’s infrastructure needs some serious attention, and it needs it fast!” Zacks concluded.
Meanwhile, here’s quick a reminder that our 2nd annual Midstream Business Excellence Awards competition is underway. We welcome your nominations for 2016’s Executive of the Year, Deal of the Year and Project of the Year at midstreambusiness.com/ excellence-awards.
Paul Hart can be reached at pdhart@hartenergy.com or 713-260-6427.
Recommended Reading
Stocks Slump, Dollar Soars as Trump Tariffs Trigger Trade War
2025-02-03 - Oil prices rose, with WTI up 2.4% at $74.27 a barrel and Brent crude futures adding 1% to $76.40 a barrel.
What's Affecting Oil Prices This Week? (Feb. 18, 2025)
2025-02-18 - The price of Brent crude oil did reach $77 on Feb. 18 before falling back with news that members of the Trump Administration were holding talks with their Russian counterparts.
Analysts: How Trump's Tariffs Might Affect Commodity, Energy Sectors
2025-02-03 - Trump's move has sparked volatility in the commodities market. Oil prices rose, with WTI up 2.4% at $74.27 a barrel and Brent crude futures adding 1% to $76.40 a barrel.
Cushing Crude Storage Levels Near All-Time Lows
2025-01-16 - Near-empty tanks can cause technical and price problems with oil, an East Daley Analytics analyst says.
What's Affecting Oil Prices This Week? (March 3, 2025)
2025-03-03 - For the upcoming week, Stratas Advisors expects oil prices to continue bouncing around but overall trend upward.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.