Report: Line 5 Shutdown Will Lead to $5.8B More in Annual Fuel Costs

A new report from the Consumer Energy Alliance (CEA) in Lansing assembled by Weinstein, Clower, and Associates shows that shutting down the Line 5 pipeline could cost families, businesses, and industries in Michigan, Ohio, Indiana, and Pennsylvania more than $5.8 billion in additional transportation fuel every year.
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Shutting down Line 5 could cause midwest families, businesses, and manufacturers to have to pay $5.8 billion annually in fuel costs. // Stock Photo
Shutting down Line 5 could cause midwest families, businesses, and manufacturers to have to pay $5.8 billion annually in fuel costs. // Stock Photo

A new report from the Consumer Energy Alliance (CEA) in Lansing assembled by Weinstein, Clower, and Associates shows that shutting down the Line 5 pipeline could cost families, businesses, and industries in Michigan, Ohio, Indiana, and Pennsylvania more than $5.8 billion in additional transportation fuel every year.

In 2018, the state of Michigan and Enbridge Energy announced an agreement that the two sides said will lead to major safety enhancements along the entire length of the Line 5 petroleum pipeline crossing the state, permanently shut down the current segment that crosses the Straits of Mackinac, and construct a multi-use utility tunnel beneath the Straits.

Line 5 is a 69-year-old pipeline that carries oil and liquid natural gas from Superior, Wisc., to Sarnia, Ontario. The portion of pipeline that runs below the Straits is located two miles west of the Mackinac Bridge.

All costs for the new tunnel will be paid by Enbridge. Under the agreement, Enbridge would pay for all design, construction, operation, and maintenance of the tunnel for up to 99 years, subject to approvals by the Mackinac Bridge Authority.

Tunnel construction is estimated to cost between $350 million to $500 million over the seven- to 10-year duration of the project. This major infrastructure initiative for northern Michigan, which would be owned by the Mackinac Bridge Authority and in which Enbridge would lease space, also could house additional infrastructure, such as broadband and electrical lines.

But after Gov. Gretchen Whitmer took office in 2019, she, along with Michigan Attorney General Dana Nessel, have strongly advocated for shutting down Line 5 with no corresponding plan to replace access to needed fuel that powers thousands of homes and businesses.

In addition, if Whitmer and Nessel were successful in shutting the pipeline, the transportation of fuel by truck would lead to greater economic inefficiencies, put thousands more trucks on a poorly rated road network, and raise pollution levels.

After examination, Weinstein, Clower, and Associates found that shutting down this piece of infrastructure would have a devastating effect on the supply of transportation fuels and hurt petrochemical refiners that rely on the pipeline to deliver feedstock.

Such a supply shock would create significantly higher gasoline and diesel prices for Midwestern families and businesses, who will spend at least $5.8 billion more every year on transportation fuels, or $29.2 billion more over five years due to the resulting loss of production at area refineries.

“As small businesses work to overcome inflation and staffing challenges, the last thing they need is to be burdened with additional costs that a Line 5 shutdown would bring,” says Brian Calley, president and CEO of the Small Business Association of Michigan. “This report once again shows how reckless the politically motivated nonsense around shutting down Line 5 would be for our economy, our small businesses, and all of our residents.”

Remarking on the disruptions to Michigan’s fuel supply and its impact on residents, manufacturers, and businesses, Douglas Stockwell, business manager for Operating Engineers 324 says: “Carrying out the vital work of rebuilding Michigan’s infrastructure requires skilled labor, heavy equipment, and the materials and fuel to make them run. Line 5 is essential to that fuel supply. Any disruption to that supply or its costs will be felt by the residents and businesses that are relying on this work, and by the jobs it supports. Line 5 is necessary to rebuild Michigan, and to the skilled labor accomplishing it.”

The report states the fuel price increases will be most severe in Michigan and Ohio because of the relative reliance on refineries served by Line 5. The fuel price impacts in Indiana and Pennsylvania are adjusted to account for their gasoline and diesel markets being supported by other suppliers.

Refineries in Michigan, Ohio, Pennsylvania, Ontario, and Quebec would lose about 45 percent of their crude oil input in the event of a Line 5 closure, according to the report.

The closure of Line 5 will reduce the ability of area refineries to maintain current production levels or force them to secure alternative sources of feedstocks. It is not possible from publicly available data to ascertain how each refinery may respond, but, the report concludes, the result will be higher prices for transportation fuels.

“At a time when consumer prices are rising at their fastest pace in more than 40 years, and Americans are suffering from the highest gasoline prices in over seven years, choking the region’s fuel supply by closing Line 5 would be economically ruinous,” says Chris Ventura, director of CEA Midwest. “Midwestern families are already struggling to pay their bills, with many on fixed incomes or living below the poverty line having to choose between putting gas in their tank, buying groceries, or filling their prescriptions.”

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