Killing Constitution: Pipeline Politics Upstream of Inflation

The Federal Energy Regulatory Commission (FERC) building in Washington, D.C., on Feb. 16, 2023. Eric Kayne/AP Images for Movement Catalyst

Commentary

President Donald Trump’s recent meeting with New York Governor Kathy Hochul has reignited discussion about the Constitution Pipeline. A longtime proponent of the project, Trump sees it as part of his broader push for American “Energy Dominance.” However, the meeting did not yield an agreement to revive the project.

Beyond the politics and speculation about what may have been discussed behind closed doors, the pipeline’s cancellation and the region’s persistent energy challenges highlight a broader economic reality: energy policies that constrain supply drive up costs—not just for energy itself, but across the entire economy—contributing to inflation.

The Context

The Constitution Pipeline was a proposed 124-mile natural gas pipeline designed to transport up to 650 million cubic feet per day from the Marcellus Shale in Pennsylvania to upstate New York, connecting to infrastructure that supplies New England. Initially approved by the Federal Energy Regulatory Commission (FERC) in 2014, the project faced a major setback in 2016 when New York denied a crucial water quality certification under Section 401 of the Clean Water Act (CWA)—a provision that allows states to block federally approved projects if they do not meet local environmental standards.

The companies behind the pipeline—led by Williams Companies—challenged New York’s permit denial in court, arguing that the state had exceeded its authority and was using environmental regulations as a pretext for an outright ban on fossil fuel infrastructure. The case led to a protracted legal battle, ultimately reaching the U.S. Court of Appeals for the Second Circuit, which upheld New York’s decision. The pipeline developers petitioned the U.S. Supreme Court for review, but in April 2018, the Court declined to hear the case, leaving the state’s permit denial in place.

With no legal path forward, Williams officially canceled the Constitution Pipeline project in early 2020, citing regulatory obstacles and the prolonged legal uncertainty. The cancellation underscored the growing challenge of building energy infrastructure in states with aggressive anti-fossil fuel policies.

The Effects

Energy prices are up across the board for all the would-be beneficiaries of the cancelled project, the residents and businesses of New York and New England who rely on natural gas for heating, electricity, and industrial activity.

Since the Section 401 CWA denial in 2016, the average cost of natural gas for New York commercial users has increased by 70 percent. Over the same period, residential rates have risen 49 percent. Nearly 60 percent of New Yorkers use natural gas for home heating, making these price hikes a direct hit to household budgets.

Blocking the flow of gas results in higher electricity prices too. According to the EIA, 46 percent of the state’s electricity comes from natural gas, generating twice as much electricity as any other fuel source. Natural gas power plants account for approximately three-fifths of the state’s generating capacity. As such, average New York residential, commercial, and industrial electricity prices are up 38 percent, 30 percent, 45 percent, respectively, since 2016.

The data tell a similar story in New England, where high demand coupled with natural gas supply constraints sent city gate and electricity prices soaring.

Restricting Energy Is Inflationary

There are a few characteristics inherent to energy products which elevate their influence on broader macroeconomic issues, such as inflation.

1. Energy is the fundamental economic input. Every household, business, school, and institution relies on energy. Our world is so thoroughly structured around access to power, fuel heating, and petro transportation, it’s hard to take stock of the full scope of our dependence on it. It is required at every stage of production for all products—from raw material sourcing to manufacturing, distribution, and final delivery. When energy costs rise, so do the prices of all goods and services. Even relatively small increases in energy prices can have an outsized impact on overall inflation.
2. Energy demand is price-inelastic. Households and businesses must continue buying energy, even at higher prices. Unlike discretionary goods, there is no substitute to heating homes, fueling trucks, or keeping the lights on. Unlike other products, you cannot “switch brands” when energy prices spike—you simply pay more.
3. High energy prices reduce purchasing power. Because energy utilities are indispensable and energy is an input to all products, price hikes leave consumers with less money for other goods and services. This effect is especially severe for low-income and middle-class families, who spend a higher percentage of their income on utilities and transportation.

While inflation is a multi-factor issue, the role of energy shortages and misguided energy policies cannot be denied and should not be ignored.

Rising Energy Costs Are an Energy Emergency

Trump’s “Energy Emergency” framework correctly identifies high energy costs as both an inflationary pressure and a direct burden on working Americans.

The Constitution Pipeline could have alleviated some of these pressures—but its cancellation serves as a cautionary tale. Now, with Trump’s tariffs on foreign energy imports—including a 10 percent tariff on Canadian natural gas, which New England relies on—there is even greater urgency to expand domestic infrastructure.

At the same time, political pressure is growing on Democratic leaders in the Northeast. As reported by The Washington Post, many low-income, predominantly black communities in Boston—traditionally Democratic strongholds—are feeling the squeeze of high energy prices and losing faith in their party’s energy policies. A February report by the Progressive Policy Institute warned that high utility costs were a major factor in shifting voter support toward Trump. The report’s author explained that the working class in the Northeast, who are struggling to pay their heating bills, are not moved by the typical Democrat talking points on climate policy or tax credit initiatives to support expensive electrification overhauls.

As for the future of the Constitution Pipeline, the CEO of Williams Transco, Alan Armstrong, stated on March 12 that he is “absolutely in support of building” the pipeline, contingent on “strong support” from regional governors. With a major industry player signaling readiness, the shifting political and economic landscape—including rising energy costs, new import tariffs, and direct backing from the Trump administration—could provide the necessary momentum to revive the project. If regional leaders respond to growing voter frustration and industry support, they may finally be motivated to approve the effort.

Ironically, a current Trump ally—HHS Secretary Robert F. Kennedy Jr.—was once a vocal opponent of the Constitution Pipeline. In 2016, Kennedy denounced the project at a protest at the New York State Capitol, calling it an “abomination” and declaring, “we don’t want it, we don’t need it.” But the numbers tell a different story.

The politics may be complicated, but the economics are straightforward: build pipelines, lower costs, and restore economic stability—or continue down the path of self-imposed energy scarcity.

From RealClearWire

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.