I’ve not seen anything to indicate that they lose contracts with shippers. What they say they lose is something else. ETP has a contract in place to sell a portion of the pipeline to another pipeline company. That contract can be voided if they don’t get approval by 12/31. That’s probably what you’re referring to.
If this would have been treated apolitically, then it would never have been shut down to begin with. (All relevant claims have been raised in court and rejected by a judge.) All Trump would be doing would be to remove the political angle from it.
It’s considered a rate-regulated industry, some pipelines the FERC does in fact set rates in rate cases, market based rates and negotiated rates are more common, but FERC regulates even those to prevent monkeying around with the transportation system. There are various reasons for that, including the fact that for a long time (before recent large divestitures) a lot of times production and distribution companies might also own transmission companies, and could do things with pipeline pricing to harm competitors and help their sister businesses. Pipeline pricing is pretty heavily regulated and not the wild west.
Bottom line is that it’s not at all comparable to a utility where profits are almost guaranteed - there’s considerably more risk involved, and the returns need to be higher for this reason.
I couldn’t say–I’m repeating something I heard in specious anti-DAPL sources. I’m not really that familiar with ETP or the specifics of this pipeline. I had read several news articles about the implications of the shut down and several mentioned this deadline. A few sources have said that ETP’s projected customers have already signed deals to use the pipeline capacity (which I believe, generally a pipeline tries to sell as much capacity as possible before it even breaks ground), and if the pipeline isn’t finished by 1/1/2017 those contracts expire and have to be renegotiated. The argument the anti-DAPL sources have made is that due to the original contracts being written when oil prices were higher, the new contracts would be for much less money, which could make the pipeline non-viable. However that in and of itself makes no sense, pipeline transmission rates are usually not linked that strongly to the price of oil, they’re being paid to move it regardless of the price. Where the oil price could affect the pipeline’s profitability is if oil is too low in price there may not be sufficient demand to move oil to refineries and the pipeline could end up under capacity.
No, I actually agree. There’s actually two pipelines that cross the Missouri river not far north of where this one would. There’s no genuine environmental or water safety reason to oppose completing this pipeline, and while I’m sympathetic to the fact that the Sioux got fucked out of their land we’ve basically established for over 100 years the land in question is not theirs. Maybe it should be under a 19th century treaty, but we’ve basically as a country decided we aren’t going to relitigate treaties we’ve abandoned with Indian tribes in the past.
Some pipelines are riskier than others, lots of the pipeline infrastructure is related to many decades-old transmission routes that aren’t going away tomorrow or 10 years from now. For example a lot of natural gas distribution companies (your local gas utilities) are hooked into pipelines and they need a constant supply of gas, that is only minimally affected by commodity prices because most people can’t quickly swap out a furnace for a new price of fuel is the price of gas goes up or etc.
A huge portion of pipeline infrastructure is natural gas, and it functions almost exactly like a utility because it’s tied largely into the utility system. If a pipeline is moving oil to a refinery it’s a riskier project more exposed to market fluctuations. Pipelines serving chemical plants are usually not quite as commodity-price risky, but obviously global market conditions can result in chemical plants being shut down.
But at the end of the day I’ve provided evidence for my argument–the average pipeline company net margin is actually 6.1%, lower than ETPs, and net margins in that range are typical of utility-type plays and dissimilar to the margins typically seen from production companies.
There are some pipelines fees which are based on percentage of revenue or the like. In addition, the fact that many O&G producers have fallen on hard times due to the oil price rout has pushed down prices as well.
I can’t find a description of exactly what your link represents. But it’s clearly about current market conditions and not long term industry norms. If you look at the bottom of that list you’ll see all sorts of industries with negative margins.
As noted above, the pipeline industry has not been doing well in recent years, and this would be depressing their margins of late.