Keystone Conundrum

“As a serious strategy for dealing with climate, blocking Keystone is a waste of time. But as a strategy for arousing passion, it is dynamite.”  — David Victor, global warming policy expert at the University of California, San Diego.

Anti-Keystone protest outside White House

Anti-Keystone protest outside White House

Back in November, I suggested that the Lame Duck session of the 113th Congress could and should work with President Obama to approve the Keystone XL pipeline before the end of the year. Well,… it didn’t happen. (Surprised?) But, with the issue being debated again last week and this week for an upcoming bill, I wanted to look at it a little closer myself.

The proposed “XL” is not a totally new project but an extension of the already existing Keystone pipeline. It would consist of 1179 miles of new pipeline being constructed — 840 miles of it in the U.S. — and provide an alternate, shorter route between Hardisty, Alberta, and Steele City, Nebraska, than the one already in place. It would carry an estimated 800,000 barrels of crude oil per day, including from the Albertan tar sands and from the Bakken region of Montana and North Dakota. The existing pipeline extends in two directions from Steele City — east to Patoka, Illinois, and south to Cushing, Oklahoma. A second project — the Gulf Coast Pipeline Project, completed in Jan. 2014 — extended the pipeline another 485 miles from Cushing down to refineries in Nederland, Texas, for export from Port Arthur. The 48-mile Houston Lateral Pipeline Project, expected to be completed this year, will allow for oil near the end of the pipeline to be diverted to refineries in Houston.

Once upon a time, President Obama assured Canadian prime minister Stephen Harper that he was only delaying approval until the proper environmental studies could be done to assure the XL pipeline would not harm the environment. He said he would only deny approval for the project if it was shown to have negative ecological effect. In fact, multiple environmental studies have been done, each confirming that the pipeline poses minimal environmental risk to soil, water, wildlife, etc., and negligible climate impact. Yet, still the President put off his decision about issuing a Presidential Permit, while seemingly “evolving” towards a more negative position. This has greatly harmed America’s relationship with Canada, our “closest ally and biggest trading partner.”

The green lobby, of course, has continued to write about all sorts of imagined dangers and has put a huge amount of pressure on the administration to kill the project. As the Weekly Standard‘s Fred Barnes has noted,

“It’s a power play. If it works, the political clout of the movement will grow. And environmentalists are already a forceful special interest in Washington.”

Enviro-activists are using the recent rupture in the Poplar pipeline in Montana to paint all pipelines as bad, dangerous. Some Keystone protesters are staging “die-ins” and chaining themselves to the White House fence (see pic). The most alarmist claims by certain environmentalists, however, are being decried by some of their fellows.

“The extreme statements — that this is ‘game over’ for the planet — are clearly not intellectually true…”  — David Keith, Canadian climate scientist now at Harvard University

Some legislators on the left are trying to make it more difficult for the Keystone XL bill to be approved by tacking on amendments that require more regulations, restrictions, and other headaches. For example, Sen. Al Franken proposed a protectionist “buy American” provision, which may sound patriotic but is bad for many reasons.

Obama has stated mistakenly that the U.S. would not receive any oil or benefit from reduced gas prices from the Keystone XL expansion. But, a WSJ editorial pointed out that “Oil markets are global, and adding to the global supply might well reduce U.S. gas prices.” The president also doesn’t think many U.S. jobs would be created from the project. But, his own State Dept. projects 42,000 new jobs and a $3.5 billion boost to the economy. (I don’t know for sure, but this likely includes new and expanded businesses built up around the new pipeline workers and their families.)

According to an article last month by the Tribune News Service, some — including the Manhattan Institute, a free market-oriented think tank — are questioning if the Keystone XL is still financially feasible. According to Sandy Fielden, director of energy analytics at Texas-based RBN Energy, “The economics of this project are becoming increasingly borderline.” The issue is whether or not the additional effort and costs associated with extracting oil from tar sands are still justified by the market’s now-declining prices. (Some analysts are predicting further drops in the near future.) When asked about this, the pipeline’s owner, TransCanada Corp., pointed to their decades-long investment in the pipeline as evidence of their commitment.

“We sign binding, long-term commercial agreements with our customers so they can reserve space to deliver the crude oil they need to their customers. [Oil-shipping investors] have a good understanding of what the market needs over time. They do not make decisions based on short-term views or changes in commodity prices.”  — Mark Cooper, TransCanada spokesman

Pro-Keystone meeting

Pro-Keystone meeting

Their strategy is obviously much more long-term, their thinking is more big-picture. The Keystone pipeline and the resources that flow through it are very important to the Canadian economy. One way or another, that tar sand oil will find its way into the global market. If the XL proposal is not approved by the U.S., the crude will be shipped either to Canada’s west coast or to New Brunswick in the east, where it will be refined and exported. So, rejection by the U.S. won’t be helping to reduce any greenhouse emissions. (I can still admire the integrity of those who reject it on principle, despite pragmatic benefits, but I think those principles are misguided and/or misinformed.) As long as the companies investing in the pipeline continue to see long-term benefit in building & using it, it should be approved.

Of course, there are additional reasons, such as the broad support for the project. A December poll conducted by USA Today found 60% of Americans want it built, while only 25% are against it. Most Republicans and conservatives are for it. As for Democrats, most of the working class are for it, as are the unions (whom Obama says he is beholden to). Those against it are those who lean green, including the upper-class “elitists”. Fortunately, there are a few in Congress (mostly from states who would benefit from it) who are willing to vote in favor. The votes last November had only 15 Dem senators and 31 Dem representatives approving. Some of them are gone now, but there are also more on the right side of the aisle.

Oh, yes. There is also the benefit of reducing American dependence on oil from Venezuela and the Middle East by up to 40%.

The decision to approve the Keystone XL Pipeline Project is not really much of a “conundrum”, if ya ask me….

The new Congress is expected to pass and send Obama a bipartisan bill in favor of Keystone XL, and the President has indicated he will still veto it. The only possible reason I can see is that he puts his misguided, disproven, far-left ideological agenda over the welfare of the American people. Sadly, it wouldn’t be the first time, nor the last.

I guess the next question will be whether or not enough Democrats in Congress — yes, I’m pretty sure it comes down to the Dems — have the guts to vote in favor and ensure an override of the President’s veto.

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