The following summarises a Bloomberg Opinion column by Liam Denning, a former banker who edited the Wall Street Journal’s Heard on the Street and wrote the FT’s Lex column. It reflects the author’s personal views.
- Energy Secretary Chris Wright announced up to $42 million of Defense Production Act funding for permitting and pre-construction work on the 125-mile Constitution Pipeline, carrying natural gas from Pennsylvania to the northeast. On a project of that length the sum covers paperwork rather than construction.
- The commercial case is unproven. Denning notes the pipeline does not appear to have secured customer contracts, which raises questions over whether it is genuinely needed and is an important consideration for regulators. ClearView Energy Partners judges its benefits weighted toward diversifying supply rather than adding much incremental gas.
- The project has a long history of failure. First proposed more than a decade ago, it could not obtain New York permits over water quality concerns and was abandoned in 2020, before being revived last year with presidential support. It still awaits a FERC decision and probably a new state water permit or waiver.
- Denning’s central objection is about precedent rather than policy. Using a 1950 emergency statute to advance a contested pipeline establishes that a president may do so, and he argues Republicans cheering it now may feel differently when a future administration declares a climate emergency and applies the same authority to different ends.
What Happened?
Wright and Interior Secretary Doug Burgum framed the funding as advancing a critical project that reduces energy costs and enhances national security, correcting what they described as efforts by prior administrations and blue states to choke off US gas supplies. The announcement was made alongside Representative Mike Lawler, who faces a tossup race in New York’s 17th district. Denning observes that the same administration invoking emergency powers to push gas into New England has worked to block offshore wind projects that would reduce the need for it, and notes a bipartisan permitting reform bill may pass Congress, though not before the lame-duck session.
Why It Matters?
The absence of customer contracts is the practical problem and federal money does not solve it. Pipelines are built against long-term shipper commitments, and regulators assess need partly on whether anyone has agreed to pay for the capacity. A project that failed to secure permits for a decade, was abandoned, and still lacks contracts is not primarily constrained by permitting costs, which is what the $42 million addresses. Anyone treating this as a signal that northeast gas supply is about to expand should look for contracted volumes first. The precedent argument is the one that outlasts the election and it is not a partisan point. Emergency authorities exist for emergencies, and each use in contested circumstances lowers the threshold for the next. Denning’s framing is that whoever applauds the mechanism now is endorsing it for whatever purpose a successor chooses, which is the same logic that applies to selective bank levies, index providers forcing sovereign policy changes, and tariffs imposed under never-before-used statutes. The constitutional question is separate from whether more gas in New England would be useful. On that second question the honest answer is that it might be. New England burns carbon-intensive fuel oil for power during winter freezes, so displacing it has genuine value, and with heating costs expected to rise 21% this winter the regional constraint is real. Denning’s point is that the administration has simultaneously obstructed the offshore wind that would ease the same constraint, which makes the emergency partly self-created. Readers can weigh that.
What Next?
The FERC decision on reissuing permits is the gating item, and a New York water permit or waiver would likely follow. Watch whether any shipper contracts are announced, since that is what would make the project commercially real. The bipartisan permitting reform bill is the constructive route and could reach a vote in the lame-duck session. The November 3 midterms are the deadline this and five other federal fuel measures are working against.
Affected Tickers and Coins: NG, HO
Source: Bloomberg Opinion
