Keystone: A case of cognitive dissonance

President Obama likes to take credit for the increase in domestic oil production and its contribution to economic growth and job creation. But when it comes to doing something positive about oil, his true biases come to the surface. The President’s tendency is to pander to his environmental constituency. He typically reflects his hostility to fossil energy by refusing to act.

His Administration has been studying the Keystone project for six years. Don’t forget, the United States won World War II in just five years. Each time the State Department issues a positive review for the Keystone XL project, the President sends the State Department people back to do it again until they get it “right.” “Right,” meaning that granting a permit to cross the boundary between Canada and the US would not be in the national interest.

On this subject, like others, the President has no credibility because his excuses are weak and lack any factual foundation. The President talks as if the decision is to build or not build the pipeline. Wrong. The decision is about building one leg of the Keystone pipeline system that is about 800 miles in length. Over 1300 miles of the pipeline has already been built and is carrying oil shipped from Canada by rail and domestic oil produced in the states that the pipeline traverses.

The President also says that the project will not create many jobs and that the oil transported is simply for export. These are assertions that are simply eco-rhetoric. Over $3 billion will be invested in construction and that amount produces both direct job benefits and indirect ones. Direct benefits are the employment related to production and installation of pipe and the engineering related to that installation. Indirect benefits are those that provide services to workers who are spending their salaries while the last phase of the pipeline is being completed. Oil is a global commodity, so it matters little where it goes as long as it gets into the market cost-effectively. Much Canadian oil is so-called heavy oil—high sulfur content-which is what many Gulf Coast refineries have been built to process. This means that the Canadian oil will replace oil from Venezuela, Saudi Arabia, or any other OPEC nation that produces heavy oil.

There is no doubt that Keystone legislation will be passed by the Senate and probably no doubt that the President will follow through on his veto threat. That means that there are two outstanding questions. First, can the Senate muster 67 votes to override, assuming that the House can, and second is there a deal to be made between the President and the new Senate Majority Leader?

The Republicans need to get 13 Democrats to vote to override. Sen. Harry Reid can probably prevent that. That leaves the deal option. In six years, the President has not demonstrated great negotiating skills, so it is at least 50-50 that he would snatch defeat from the jaws of victory. That leaves the option of making Keystone part of “must pass” legislation.

Perhaps the greatest tragedy in the President’s obstructionism is that he is showing great disrespect to Canada, our leading trading partner and one of our staunchest allies. Where’s the shame?

 

This article appeared on the National Journal’s Energy Insiders weblog at http://www.nationaljournal.com/policy/insiders/energy/will-obama-negotiate-on-keystone-20150112

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