The Cost of President Obama's Keystone XL Dithering
Politics gets in the way of the TransCanada project that would have brought jobs and energy
February 17, 2012It's not right to compare the Obama administration's performance in the matter of the Keystone XL pipeline to the Keystone Kops. Yes, the bunglers of the Charlie Chaplin silent movies are so busy blowing whistles that they arrest the victim while the bad guy makes off with the swag. But that was very funny, and the confused cops didn't know what they were doing. The administration knows full well what it is doing.
It has not gone so far as to kill the proposed 1,700-mile underground pipeline to carry crude oil from Canada to American refineries on the Gulf of Mexico. That might play badly against the president's vision in his State of the Union address of "a future where we're in control of our own energy, and our security and prosperity aren't so tied to unstable parts of the world" (which stand to get a lot less stable, the way things are going). Instead, in Machiavelli's dictum, the president has been willing to wound but afraid to strike. He has contrived an excuse to delay a decision yet again. An environmental impact statement was issued by the State Department on Aug. 26, 2011, the conclusion of three years of reviews and negotiation. The approval process typically takes from 18 months to two years. That's understandable given the variety of concerns and interests a massive project entails about safeguarding water supplies, disturbing local landowners and communities, and restoring the landscape.
[Read Mort Zuckerman and other columnists in U.S. News Weekly, now available on iPad.]
The original Keystone pipeline won approval after two years and is operational. But in 2013, the Keystone XL (extension) will be in its fourth year of review, a Great Dither not justified when the State Department conducted three consecutive environmental reviews to reach its conclusion of minimal environmental impact. In that time, there have been many public hearings to satisfy local communities and private property owners. More than a dozen alternative routes have been surveyed, and TransCanada Corp., the builder, agreed to 57 special conditions beyond current federal pipeline regulations.
The president wants a relatively short section of the route from Alberta through Nebraska reconsidered. It means the State Department will have to agree to a new understanding with Nebraska and secure the governor's approval. Given the long history of Keystone XL, that is not a big deal. By all accounts, it could be done within a couple of months. Yet after three years of satisfying intense reviews, the president says that decision will not come until 2013. Hello? That wouldn't have anything to do, would it, with appeasing a particular left-wing environmental lobby until after the general election?
[Check out the U.S. News On Energy blog.]
It's a calculation which assumes that the voters concerned about the energy future that Obama paraded will be less active than the more extreme environmental lobbyists—who, in fact, will never be satisfied with anything to do with villainous Big Oil. Throwing a sop to the leftist anti-oil campaigners and "four more years" are apparently more important to the president and his campaign advisers than reducing our dependence on those unstable regions he mentioned and maintaining the momentum of the small improvement in the lamentable unemployment totals.
Notably, the Great Keystone Dither does not appeal to labor or indeed to all Democrats. Democratic Sen. Joe Manchin of West Virginia put it well: "I'd rather buy from our closest ally and create jobs in America than push Canada to build a pipeline out to the West Coast of North America so that it ends up going to China. There is no question, this pipeline is a job creator with support of both labor and business. It needs to be built not for the benefit of one political party or one state, but for the benefit of America."
A final go-ahead for the $7 billion shovel-ready project would have supported tens of thousands of jobs now: 20,000 in new, direct well-paid construction and manufacturing jobs, and roughly 100,000 in indirect jobs along the pipeline, according to the developer, TransCanada. But the president's political concerns seem more important than enraging the Canadians, than giving China more edge in economic competition, than the defense and national security interests of truly independent energy.
[See a collection of political cartoons on energy policy.]
Keystone XL became a political issue only after the environmental lobby focused on a modest adjustment to the route involving about 100 miles of the pipeline, which would carry some 800,000 barrels of oil south each day. The state of Nebraska was unhappy about even this modest adjustment, given that its own exhaustive studies in three environmental impact statements over three years concluded that there would be "no significant impact" from the pipeline. The environmentalists argued that the state's ecologically sensitive Sand Hills region might be threatened by this minor change, but TransCanada had already said it would be willing to adjust the route in consultation with Nebraska officials. This did not suffice, because the more leftist environmentalists are just dead set against the development of Canada's oil-rich tar sands, which they wish to stifle by cutting off the export route to get the oil to market.
This is not quite 1812 again, with big bully USA intimidating the Canadians, but the fury of the Canadians is justified. Their minister of natural resources said the green movement's "goal is to stop any major project no matter what the cost to Canadian families in lost jobs and economic growth," and that these groups are willing to "sue everyone and anyone to delay the project even further."
The Canadian prime minister, with the full support of his cabinet, may seek to redirect this oil to export markets in Asia, "based on what's happened with Keystone XL." He said recently, "This does underscore the necessity of Canada making sure that we're able to access Asian markets for our energy products." This is diplomatic language for making it clear that, without progress on Keystone XL, Canada would build a pipeline across Canada to the Pacific and ship the energy to Asia. The Canadians see the U.S. inaction as a direct rebuff, taken despite the fact that Canada is the largest U.S. oil supplier at about 2.67 million barrels a day, compared with 970 thousand barrels a day from Venezuela, and that this is the biggest infrastructure project on the continent and would enhance America's oil independence.
[Washington Whispers: Most Want Keystone Pipeline Built]
Congressional Republicans are also furious, and in this instance they, too, are right in their rebuttals of the administration's half-baked case for still more dither, sacrificing thousands of American jobs and energy security to the Chinese. The business community is also up in arms. As the U.S. Chamber of Commerce put it, "The president's decision sends a strong message to the business community and to investors: Keep your money on the sidelines, America is not open for business." The president's Council on Jobs and Competitiveness restated the concern that if the United States is going to have inexpensive and reliable energy, it needs "to optimize all of its natural resources and construct pathways (pipelines, transmission and distribution) to deliver electricity and fuel."
Furthermore, legislation passed by Congress late last year, setting a 60-day deadline for granting the Keystone XL permit absent a determination by the president that the pipeline was not in the "national interest," stated clearly that Obama could not consider any new environmental impact study. "The final environmental impact statement issued by the Secretary of State on August 26, 2011, satisfies all requirements of the National Environmental Policy Act of 1969 ... and section 106 of the National Historic Preservation Act," it said. And to make it crystal clear: "No further Federal environmental review shall be required."
[Read Michael Lynch: Keystone XL's Rewards Outweigh Its Potential Risks]
The fight is not over. The outspoken Sen. Manchin has allies in the Democratic Party. They should coordinate their approach with the Nebraskans. The only question is how the battle will be waged. Clearly there is a national interest in securing an energy supply independent of the Middle East. No project of this scale avoids marginal costs, but the incremental benefits are such as to undermine the confidence that this administration has acted appropriately to balance the national interest with what it considers its own political interest. As Will Rogers said, "Be thankful we're not getting all the government we're paying for."
- Read Mort Zuckerman on America's energy future.
- Read the U.S. News debate: Is It Time to Drill in the Arctic Refuge?
- See a collection of political cartoons on gas prices.
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