We constantly hear that the rich are getting richer and the poor are getting poorer. So how does wealth inequality make you feel?

For one thing, prices for basic items can make a big difference for those on the economic ladder’s lower rungs. For many things that we use daily, we call this a regressive tax. A regressive tax is a tax burden that affects people in lower-income brackets by taking a higher proportion of their income versus someone who makes more or is in a higher income bracket. Quickonomics describes this below.

A regressive tax is most apparent in consumer goods – like food and gasoline.

Take, for example – milk. Milk is one of the best natural sources of nutrients. The average cost for a gallon of 2% milk is about $3.60. The USDA says the average person drinks 18 gallons a year. For a family of four average milk drinkers, that is 72 gallons and about $260 every year.

One year the price of milk doubled. That may seem like a small expense, but the family scraping by with less money will feel the cost of milk at $520 annually, much more than someone wealthier. If you’re making $45,000 a year, that’s more than !% of your income on milk alone. Other food prices probably rose, too. That adds up quickly.

Wealth includes many values beyond income, including land ownership, homes, vehicles, and savings in different forms. Wealth allows people to make other decisions, like what stocks to buy, who to hire for their business, what kind of vacation to take, and what their retirement looks like. Income contributes to wealth and wealth creation.

For people who don’t have accumulated wealth, having access to opportunities is a way to not slide too far down the income scale. Currently, there is a solution for parts of rural Minnesota by building the Line 3 pipeline. The proposed upgraded Line 3 will be built across some of Minnesota’s poorest counties, where the $30-35 million in property taxes generated annually by the pipeline will make a huge difference.

The Line 3 upgrade will provide construction jobs in northern Minnesota for locals and Indigenous tribal members and be an overall economic boom to the northern part of the state that has been hit hard by COVID-19 restrictions. The project will generate 2,100 local construction jobs, 1,600 jobs in local supply and manufacturing, and 2,800 jobs in hospitality, another sector that has suffered tremendously during the pandemic.

Going back to wealth: There will be $167 million in payroll to local workers. Imagine what that means to those with low incomes and the limited number of job opportunities associated with lower-income areas of the state. Every time an anti-energy group (often from out-of-state) works to stop the pipeline in court, it prevents these opportunities across rural Minnesota.

The costs of gasoline, electricity, and propane are much more serious concerns in the pipeline counties than in the suburban areas surrounding the Twin Cities where the wealthiest Minnesotans live. When you have wealth, it is easier to pay more for progressive plans. When you don’t, it just feels like the walls are closing in. Therein lies the problem of income inequality.

For instance, residents of Scott County, just southwest of the Twin Cities, have a reported median income of more than $110,000, representative of other surrounding counties. Median income means half the people make more than $110,000, while the other half makes less. With a median income of that level, these suburban residents do not feel price increases as acutely as other people do. This is true for putting gas in the car, running household appliances with electricity, or energy home heating during the long, dark, cold Minnesota winter.

Wadena County is on the proposed route for the new Enbridge Line 3 upgrade. It has a median income of only $46,605, similar to other counties along the proposed route.

To put this in perspective, the national median income is $68,703. Half the wage earners in counties along the proposed route for the new Enbridge 3 pipeline make less than $46,000-$50,000. You can see why the pipeline matters, even for providing your family with subsistence goods like milk.

Don’t get us wrong. Wealth is a good thing. We wish more people had it. Those with wealth can choose to afford a more expensive lifestyle. Those with less income and less wealth have fewer choices. Residents of Wadena County are much less likely to be able to pay for home-installed solar panels costing $15,000-$20,000 or electric vehicles ranging from $50,000 to $225,000. Both products are more popular – and prevalent – among wealthier individuals in our communities. That doesn’t mean others don’t want them.

When the base cost of everything from milk and gasoline to electricity and propane rise, people making $46,000 a year carry a much heavier burden than those who can afford solar panels and EVs. More wealth allows people to make choices about discretionary items they can spend their money on without feeling pinched.

Who needs the supporting property taxes more, the wealthier school districts around the Twin Cities, or the residents of the pipeline counties?

The counties around the Twin Cities can afford good services. The counties along the proposed pipeline route just want to afford to fund enough police, fire protection and school systems. The $30-$35 million in property taxes paid to these areas by Enbridge will undoubtedly make a huge difference.

Let’s say you own your own clothes washer and dryer, while those with fewer resources have to go to the laundromat. The median cost of running a clothes dryer for an hour is about 50 cents. Suppose the average family does eight to 10 loads of laundry in a week, and it takes an hour to dry the clothes, at 50 cents each. In that case, the average family pays about $260 a year to dry their clothes.

Now let’s say the cost of electricity rises dramatically – as it will our energy sources evolve – let’s say it doubles. That makes the yearly cost of running the drier $520. If that sounds manageable to you, maybe you’re not getting the point. Those with low incomes, like $45,000-$50,000, or less, definitely feel that pinch.

The price hikes make for a more difficult life. And that’s just the cost of electricity for drying the laundry. When you add in the cost for total residential electricity use, you can see why it’s vital to have pipeline construction jobs and property taxes.

You just don’t feel all the expenses the same way once your wealth reaches a certain level. If you’re one of those people, be thankful, but also remember, some people feel the pain when they can’t afford to make the lifestyle changes you can.

If you have an income of $100,000, you can afford more home improvements to meet mandates and keep heating and cooling costs down. If you’re struggling economically, you can afford much less and will pay more for home heating energy.

Is your home drafty? Too hot or too cold? Maybe a new mandate will require you to maintain a steady temperature in your home. You’ll need insulation. And you guessed it, the cost of a roll of insulation is the same, whether your total household income is more than $100,000 or less than $46,000.

Now that the pipeline upgrade has final approval, legal objections are being used to stall construction. The new president has told us energy prices are going up in coming years, perhaps severely. Those with less wealth will get hurt the most. This is why opportunities like building the Line 3 replacement project are crucial to help counties along the line, like Wadena.

And it can certainly make a positive difference for those who feel the direct effects of wealth inequality.

Supply chains have always been vital, fragile things. In 2020, Americans learned firsthand during the pandemic how complications and stresses on international supply chains hit home when supplies of toilet paper, meat, and even lumber came to a screeching halt during the COVID-19 pandemic. We all watched as the series of steps necessary to go from raw materials to manufacturing and to delivered products to consumers broke down worldwide.

As an example, medicinal compounds are high value. A pharmaceutical supply chain could start in a farmer’s field in Asia, where particular plants naturally produce the needed compounds, which are taken from the plant and turned into a product.

That product is then put on a container ship headed for docks at Long Beach, California. It will be loaded on trucks or trains, moved to a distribution center, then transported to a pharmacy, and finally purchased by a customer. The supply chain for that medicine can be traced from harvesting the seeds used to plant the next crop to the ultimate end user.

Now imagine this supply chain is disrupted.

Perhaps the seeds for the next crop go bad, or the crop gets flooded. Maybe the power goes out in a foreign factory that processes the plants into life-supporting products. Or workers at the Long Beach port go on strike, and the product never gets off the dock.

You get the idea. Supply chains are fragile. Especially during a pandemic when mysterious health problems can shut down large segments of them. Equally delicate are our energy supply chains.

Energy Supply Chains

Like the medicinal example above, consider all the steps necessary to develop oil from raw material all the way to the point when you buy it from a gas station. First, you have to find it. No one posts real estate signs saying, “Drill here.” If the oil deposits are confirmed, equipment is coordinated, rigs are built, and work begins to extract the energy. Once out of the ground, the crude oil is stored en route to a refinery that makes it into gasoline, diesel, jet fuel and other products. When it’s ready, those supplies are then transported onward to commercial, industrial and consumer buyers.

There is an incredible number of steps required to prepare oil for personal automobiles or jet fuel. Each one of those steps – identify, explore, build, produce – have their own lengthy and detailed process.

The question is, what’s the best way to move oil to the correct refinery? Refineries are sited and built to process specific kinds of oil. Refineries made to process heavy crude like the kind you get from the Canadian oil sands would require extensive and expensive retrofitting to be able to refine different types of oil.

Now ask yourself, would you rather have an energy supply chain that is safe, secure, and in the same hemisphere; or one that takes time to receive and has a greater risk of causing environmental contamination? Oil transported by tankers from overseas could face similar disruptions to those listed in our theoretical supply chain for medicine originating in Asia.

In Minnesota, Enbridge Line 3 is the cheapest, safest, and environmentally friendly way to deliver oil to refineries. The pipeline is an essential part of that supply chain. Trucks, trains, and ships are not as environmentally friendly as a pipeline, especially as the compressor stations that push products through the pipeline, are starting to use solar energy. And alternative forms of transportation require fuel and are more expensive to use. Do you know who pays for price increases that arise from disrupted supply chains? You do.

Affordability is critical because energy costs hurt those on the lower economic rungs the most. Energy costs are regressive, meaning the less you make, the higher the percentage of what you earn pays for home heating, cooking, and other energy needs. A family surviving on $45,000 annually might devote 10-20% of earnings to energy. A family making $110,000 pays the same amount as the other family. Still, that amount is much less of a percentage of their earnings. Why are we making things even tougher on low-income families during a pandemic?

The need for oil does not go away when pipelines close, and closing pipelines make energy cost more because alternative delivery methods are more expensive. If Line 3 is closed, the demand for oil could require more than 750 tanker trucks a day to compensate for losing the pipeline. That’s at least 30 truckloads an hour on Minnesota roads for 24 hours a day. Does anyone want that traffic on their roads?

The current energy supply chain is simple; it goes from the Canadian Oil Sands through a pipeline to U.S. refineries. By intentionally shutting down Line 3, the process gets infinitely more complex. It could add in new countries if we are forced to rely on foreign exports, with new modes of transportation – including oil tankers, trucks, and rail – and infinitely increases the price and the amount of risk to the environment and the supply chain.

Venezuela, Nigeria, or Canada?

Shutting down Enbridge 3 in the courts might require Minnesota to seek oil from other sources that provide the right kind of oil for Minnesota’s heavy crude refineries. While Canada leads the pack in terms of the amount of oil they can produce, other countries include Venezuela, Nigeria, Russia, China, Iraq, Saudi Arabia, and Angola. All of these sources require ocean-going shipping, but there are other challenges to consider.

Venezuelans can tell you about supply chains because their basic, subsistence food supply chains are broken. Reports have said that tens of thousands of Venezuelans seek food at the Columbian border. Buying crude from Venezuela means propping up a dictator who abuses the people and doesn’t know how to keep the economy going or allow the market to keep food on the grocery shelves.

Nigeria is rich in natural resources. It has natural gas, tin, iron ore, coal, limestone, lead, zinc, and good farmland in addition to oil. Revenue from petroleum exports might be as high as 86% of total export revenue. You’d think such a country would be a good trading partner. Still, Nigeria has other unresolved issues from political corruption and environmental degradation to human trafficking and piracy (like on boats), making it an unsavory place to do business.

The others have their issues, too, the primary one being that we could be forced to rely on nations that don’t always share our values and commitment to environmentally sound energy production, like Canada.

Instability in places like Venezuela and Nigeria makes them less attractive trading partners. For the U.S., Canada is the more important and dependable trading partner. Why are we intentionally damaging our energy supply chains by shutting pipelines from Canada, like Minnesota’s Line 3?

Advantage: Canada

Canada is America’s biggest trading partner. However, this relationship is critically dependent on supply chains and energy infrastructure.

Canada’s energy resources are massive, making it the fourth-largest producer of heavy oil in the world. Of the globe’s oil reserves, nearly 1 out of every 10 barrels are located in Canada. The vast majority of that oil is located in the Oil Sands region, and 98% is exported to the U.S. This helps maintain energy security ties for North America.

Additionally, there are fewer GHG emissions from a barrel of oil derived from the oil sands with each passing year. Since 2000, such emissions have fallen 36% because of cleaner-burning engines. After all, the primary source of GHG is transportation. Pipelines are not only safer; they produce much less GHG than if trucks, trains, or ships transported this oil to the refinery.

Plus, does anyone really think Venezuela, Nigeria, or Russia have the same environmental regulations as the U.S. or Canada? It’s important to know that the most advanced technology and environmental policies have been put in place specifically around extracting and transporting oil. When it comes to our international supply chains’ welfare and safety, the environment, and keeping energy prices low during a pandemic, Minnesotans win with Canadian pipelines safely delivering oil to their refineries.

You’ve seen it written in headlines and out of the mouths of anti-energy activists. Stop Line 3 – without any sense or understanding of how our energy mix can, or should, evolve to ensure reliability and access for communities.

It’s an easy proclamation. Just open your mouth and say it; it’s lip service. In reality, it is much harder and more complicated to consider all of the cyclical effects associated with just stopping a pipeline.

Environmentalist Roger Scruton aptly stated: “But there is a lesson in this for the environmentalists. No large-scale project will succeed if it is not rooted in our small-scale practical reasoning. For it is we in the end who have to act…and (we) who have to make whatever sacrifices will be required for the sake of future generations.” He goes on to say: “Their schemes, like their cries of alarm, frighten the ordinary citizen without recruiting him, and he stands in the midst of a thousand warnings hoping to get through to the end of his life without going insane from the noise.”

There is something to this, especially through the lens of personal responsibility and understanding our role as concerned citizens. Whether it is what products we use, how much electricity or water we use, or what we drive, we ultimately make those decisions.

When it comes to driving, that we do – in 276 million registered vehicles in the United States alone. Halting Line 3 won’t stop the supply or the demand. It just changes how the products are delivered to their destination. Despite the many different Transportation Climate Initiatives that have sprung up across the country, mostly in the form of additional taxes, not one specifically focuses on a plan to evolve the transportation sector.

Plus, oil is not just about cars. Will all of the boat motors on all the lakes across Minnesota suddenly stop running? How about ATVs or snowmobiles? The fuel to run those engines will cost more without Line 3 because gasoline will still be delivered to Minnesota distribution points to meet demand, albeit through less environmentally safe channels.

According to the National Marine Manufacturers Association, there are more than 750,000 recreational boats in Minnesota, more than 670 associated businesses, more than 42,000 jobs connected with boating, and $2.3 billion is spent on boating, including fuel.

Add in the Minnesota Snowmobile Association, which says there are at least 220,000 snowmobiles in Minnesota, which all take fuel. There are more than 7,000 snowmobile-related jobs, contributing more than $500 million to the gross state product.

And the ATVs industry employs more than 4,000 people, pays $165 million in salaries, and delves out $30.4 million in tax revenues. That is just in Minnesota.

That’s a lot of outdoor recreation using conventional fuel. Are 5.7 million Minnesotans going to suddenly stop using boats, snowmobiles, and ATVs? No. The sudden ending of all this economic activity would hit Minnesota’s quality of life the way the 2020 pandemic did. Without a serious plan to transition from the necessary existing pipeline to renewable sources alone without a plan is no plan at all, but it will cost real people.

ECONOMIC AND TRANSPORTATION CHALLENGES TO CONSIDER

How will gasoline, diesel, and jet fuel get to Minnesota and the surrounding area if the pipeline closes? Ships? Trains? Trucks? How about barges? And how is that different from the argument about pipelines crossing water, because that is one of the ways it could move.

As we work toward a lower-carbon future, pipelines are a fantastic way to capitalize on sustaining our existing economic output while also transforming how we receive our energy. We can do this by using solar energy to power the compressors that push products through the pipeline. Ships, barges, trucks, and trains are certainly not zero-emission means of delivery. They all have a higher carbon footprint and lower safety records than pipelines. How much more carbon will Minnesotans be responsible for using these other methods of delivery?

Perhaps we should ask how many more thousands of trucks will start to inhabit the roads in Minnesota. The heightened risks of accidents are something to consider when suing to shut down the pipeline.

Then there are trains. Minnesota farmers depend on trains to get their commodities to reach either St. Paul, where the goods travel down the Mississippi to the Port of New Orleans for overseas shipping, or to send them across the country to the Port of Seattle to shipping to Asia.

Farming is a big deal in Minnesota, and canceling the pipeline creates more trouble for farmers. Top Minnesota crops produce billions: $4.6 billion in corn (cornmeal, corn oil, cornflour, corn syrup), $2.6 billion in soybeans, $50 million in sweet corn, $20 million in sunflower seeds, and $20 million in peas, to name but a few. All of these valuable products need to travel from farm to table. That journey starts early on with transportation via truck or rail.

What most people don’t consider is that rail freight brokers will get a higher price for transporting energy products than farm products. When rail companies have to make a choice, they will often make the most profitable financial decision. Do you think activists considered that when they called for the end of Line 3?

TRANSITIONING TO RENEWABLES

Technological advances, like truly making renewables our sole source of energy, takes time and planning. When cell phones were in their infancy in the 1980s, no one ripped their phone out of the wall at home and said, “there, I don’t need that. I’m going to wait for an Android or an iPhone.” Even in 2007, when we got the first iPhones, people were never forced to stop using their older phones in the meantime. And they didn’t. Not until they were assured of reliability.

It would be good to think about whether Minnesota has the grid infrastructure capable of handling the transition from non-renewables to renewables. With hydropower, there is steady electricity production. The intermittent generation of wind and solar makes energy storage imperative.

The problem with trying to overcorrect for climate change too soon by relying solely on renewables is that the numbers just don’t add up. The U.S. is severely short of storage capacity. In 2018, the U.S. Energy Information Administration data showed the U.S. had 1,236 MW of battery storage. To break it down, a megawatt-hour (Mwh) is equal to 1,000 Kilowatt-hours (Kwh), which is equivalent to 1,000 kilowatts of electricity used continuously for one hour. That means that these battery storage facilities are providing roughly 4-7 hours of power. So even assuming they could go 24/7, which they can’t, 1 MW can power roughly 300 homes depending on the house’s size and how much energy the owner uses. So, at the present moment, the entirety of the U.S. battery storage universe could power roughly 370,000 of the 139 million homes in the U.S. for about 4-7 hours.

To top that off, electricity consumption in the United States was about 3.9 trillion kilowatt-hours (kWh) in 2019. That’s a lot of energy to replace.

To think of the immensity of the entire U.S. grid, consider a household appliance. All household appliances have life spans, and when they run their course, they must be replaced. The massive U.S. electricity grid has far exceeded its life expectations. As it is, the grid cannot do much to support transitioning from non-renewables to renewables. Our current grid is like an old box T.V. from the ’80s that we’re expecting to play football and movies in 4K UHD with superior sound quality. It just doesn’t happen. You have to go out and invest in a new T.V. Same with the grid, which is why people across the country are starting to see rate cases. It may not be ideal, but it’s necessary to get where states are mandating.

Let’s say Congress and the president agree on an infrastructure bill, and there’s money to recreate the electrical grid. What happens next? There are still regulatory requirements for all such projects, with extensive, time-consuming permitting and Environmental Impact Statements. These permits include, but are not limited to, permits for wetlands, stormwater, air, cultural and historic preservation, and Tribal consultations. This can take years; some have taken decades.

Once the grid is modernized, the same permitting processes will be required to construct renewable energy generation sites that will supply the grid. Construction also takes time if all goes smoothly. Then there will be protesters. No energy source is immune from the haters, as solar and wind are learning. The fact they have attracted protesters is a sign their business has matured enough to fall prey to the “Not in my Backyard” curse, aka NIMBY.

Besides taking years to build enough turbines to overtake other energy sources, wind makes electricity. Wind, however, can’t replace a molecule; nothing can. And there is still demand for jet fuel and gasoline for cars, boats, snowmobiles, and ATVs that wind power just can’t supply.

So let’s think about this. What would happen if we just stopped all use of non-renewables right now? We have to think about now, too, not only 2030, 2040, or 2050.

As we evolve, we still need to ask the vital question, “What supplies our energy mix today, and what should it look like tomorrow?” We have to get a consensus on creating a plan to execute the transition to renewables. While we do that as fast as possible, let’s use the safest, most carbon-neutral energy delivery source we have in Minnesota. That’s Line 3.