What’s next for Keystone? Shenanigans and More Theater

It is shameful that the President engages in the theatrics of trying to create the impression that he can stop Keystone XL in its tracks. He can’t but he can add to its costs and further delay the economic benefits to the domestic economy.

The fact is that while the President postures about his veto pen, the pipeline is being built. Almost 800 miles of this 1179 mile project have been built and is operating. The President’s decision involves granting a permit to cross the border from Canada. That’s it! His shenanigans on this and most other fossil energy matters simply reflect an ideology of environmentalism.

His recent comments about Keystone should be an embarrassment because they bear so little relationship to the facts. He has said, “Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else. It doesn’t have an impact on US gas prices.” And, “It’s very good for Canadian oil companies, and it’s good for the Canadian oil industry but it’s not going to be a huge benefit to U.S. consumers, it’s not even going to be a nominal benefit to U.S. consumers.” Finally, “It could create a couple of thousand potential jobs in the initial construction of the pipeline, but we’ve got to measure that against whether or not it is going to contribute to an overall warming of the planet that could be disastrous,”

Each of these statements has a grain of truth but reaches totally unsupportable conclusions.

Yes, to get to Gulf Coast refineries, oil is pumped in Canada and shipped through our land. But, the statement that it will be sold everywhere else is nonsense. The heavy crude is well suited for the majority of our refineries. It will be turned in to gasoline and diesel and sold here and in the export market. That is happening today with domestic production.

Canada is our largest trading partner, so the sale of it crude, of course, benefits Canada but refiners wouldn’t buy it if it didn’t benefit their domestic consumers. The economic benefits have been widely studied. In summarizing those benefits, the Institute for 21st Century Energy concluded: “the Keystone XL pipeline project will: Create thousands of jobs Produce 20,000 well-paying jobs during manufacturing and construction; Increase personal income for all America workers by $6.5 billion during the lifetime of the project. Increase tax revenue for local governments Generate an estimated $138.4 million in annual property tax revenue for state governments and local entities where the pipeline is located; Create $585 million in new taxes for communities among the pipeline route; Create more than $5.2 billion in property taxes during the lifetime of the pipeline.t Generate additional private sector investment of around $20 billion on food, lodging, fuel, vehicles, equipment, construction supplies and services”.

Those who like the President dismiss these benefits bear a heavy burden of explaining how over $7 billion dollars could be invested in its construction without producing significant benefits.

The President resorts to the hobgoblin of climate change when his other arguments fall flat. His veto will have no—zero—affect on the production and use of Canadian oil sands. Indeed, the CO2 emissions will be less if the oil is used here than in China or some other emerging economy and he should know that. He also should take the time to ask why temperatures have not increased in 17 years even though CO2 emissions have continued to increase. Advocates have come up with dozens of explanations that fail to hold up when subjected to close scrutiny. There is a simple answer. The hypothesis is simply wrong.

Most citizens believe that our nation is one the wrong track and one reason is that politicians spend too much time with shenanigans and in creating images instead of dealing with the substance of the problems we face. Keystone is a good example of that.


This article appeared on the National Journal’s Energy Insiders weblog at http://www.nationaljournal.com/policy/insiders/energy/what-s-next-for-keystone-20150224

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