Friday, March 07, 2014

Bad Infrastructure Grades Include Pipelines And Electricity Transmission Lines

It is very depressing to read the poor grades the ASCE gives to America's infrastructure.  The organization's Infrastructure Report Card for 2013 shows that most of this country's public facilities earn D's.  That is embarrassing.  It's also a serious disconnect from the World Bank's LPI, which rates America's transportation infrastructure as having the 9th best infrastructure worldwide in 2012.

The LPI ranking is a more comprehensive score that includes human competencies in processing and tracking movements.  The ASCE's report card addresses only the physical quality of infrastructure, but this does not explain its mismatch with the World Bank's data.  Adjusting the LPI rankings so that the "Infrastructure" column achieves primacy elevates the US to the fourth-highest overall score just for that category.  That is an even more severe divergence from the ASCE's opinions.  This disconnect's underlying cause becomes apparent once we delve into the World Bank's "Domestic LPI" data.  Clicking the "Infrastructure" link there shows that the LPI scores are based on self-reported assessments from respondents.  Compare this with the ASCE's more scientific assessment of physical deficiencies.  The ASCE's report card assesses investment need while the World Bank's surveys assess operating capacity.  The Alfidi Capital conclusion is that the US economy can continue to perform at the high proficiency that the LPI scores indicate, right up to the point everything falls apart if the US does not correct the glaring deficiencies the ASCE noted.

The ASCE report card thankfully addresses energy infrastructure.  Pipelines and electricity transmission lines are significant infrastructure categories, and many of these assets are privately owned.  USDOE's EIA tracks the natural gas pipeline grid but regulatory oversight for new investment is distributed among several federal agencies.  USDOT maintains the National Pipeline Mapping System for the most complete picture of the network's physical layout.  FERC has the most regulatory control over the pipeline operating companies when they address markets.  The AOPL's industry facts and policy issues do not address the overall physical condition of the nation's network.  Assessing the sectors' investment needs means examining the annual reports of the major pipeline operators.

FERC completed a comprehensive study of the electricity transmission grid in 2002.  The most important takeaway from any study of the nation's electric grid is that there is little connectivity between the east and west halves of the country.  The next most important takeaway is that there is little connectivity to the most promising undeveloped sites for wind farms in the north-central US.  The Edison Electric Institute tracks investments in the electric transmission grid.  The US Bureau of Land Management has a plan to accelerate permitting on land designated as corridors for transmission lines.  The need for additional investment is as obvious as the need for multi-jurisdictional regulatory coordination.

The US clearly needs to upgrade its physical infrastructure.  The ASCE's estimated bill for $3.6T could probably have been paid with the cost of our wars in Iraq and Afghanistan plus the Wall Street TARP bailout.  America instead chose to delay urgent investments in its public commons.  This huge bill for infrastructure must now compete with middle class entitlements that the Bowles-Simpson NCFRR report determined to be unsustainable.  America is in for a hard core wake-up.  The bill for infrastructure is due now.