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With The Keystone Delay, U.S. Is The Only Loser

April 29, 2014

By Diana Furchtgott-Roth

President Obama chose Good Friday to announce another delay in the Keystone XL pipeline, which would bring crude oil from Canada to our refineries near the Gulf. If the pipeline is not approved, Alberta's oil will go to Asia-and the United States will be the big loser.

According to Terry O'Sullivan, general president of the Laborers International Union of North America, writing in the Washington Post on April 25, "Despite efforts by an environmental fringe to hijack the mantle of progressivism or attempts by the far right to make Keystone a wedge issue, energy development is not a right-wing or a left-wing issue. It is critical to our country and to all of us."

With the latest delay, President Obama is widening the split in his fragile Blue-Green coalition. The blue collar workers want the pipeline; the greens want the oil to stay where it is, in the ground.

Pipelines are ideal for transporting liquids. The shipping container, the pipe, is static while the oil moves. The container is buried under several feet of earth. With road, rail, and barge, both the container and the commodity are moving over the surface, sometimes in close proximity to people and other traffic, as well as to other large containers moving in different directions.

Some environmentalists think that they are doing the world's climate a favor by forcing Obama to block Keystone's approval. They think that if the oil does not come to America through a pipeline, it will stay in the ground. But Canada will not leave a valuable resource untouched just because America does not want to approve the pipeline. The oil will be consumed pipeline or not, as it should be.

It turns out that the Keystone pipeline is likely the most environmentally friendly alternative. The Canadian oil can travel by rail to United States, or by pipeline or rail to Canada's east or west ports, to be refined and exported. Oil can even be shipped north through the Yukon to Alaska, and sent by tanker or the Alaska pipeline to get it back to the United States. These alternatives are more costly, and less environmentally friendly than the Keystone pipeline.

With competitive world energy markets, and the Chinese thirst for oil, Canada will not leave its oil in the ground. Canada and the rest of the world will move their economies forward, although with greater environmental risk than the Keystone pipeline; by delaying the Keystone pipeline project, the United States will be the only loser.

Environmentalists, whose dollars are funding Democratic mid-term campaigns, assert that pipelines are unsafe. True, all activity carries an element of risk. But the State Department's latest report on Keystone, issued in January, concludes that shipping an additional 830,000 barrels of oil per day by rail instead of by pipeline would cause an additional 48 injuries and six fatalities per year.

Keystone XL would generate additional tax revenue, economic activity, and jobs for the United States, not just for the pipeline itself but for the broader energy sector.

For example, oil projects and supply chains in North America are linked, and every dollar in Canadian investment results in substantial spending in the United States as well. Caterpillar supplies oil sands mining trucks to Canada. Pennsylvania's Aquatech International Corporation provides technology to recycle water from oil sands. For every two jobs created in Canada, two are created in the United States.

Canada's heavy crude can be blended with the light crude that comes from North Dakota's Bakken region to make a variety of oil products. Our refineries in the Texas and Louisiana need that work, because supplies of Venezuelan crude are diminishing.

Canada is building a new refinery in Alberta, the North West Redwater Partnership, to process Alberta crude. Due to be completed in 2017, it will be the first new refinery in North America in over 30 years. Refining Canadian crude could have been done in the United States in our refineries. Instead, we import oil to refine from Venezuela and the Middle East.

Without the approval of Keystone XL, Canada may well be sending oil in tankers across the Pacific to Asia, at the same time that the United States is getting oil in tankers from the Middle East. The tankers would practically cross in the ocean and come back empty, a costly waste of fuel and resources.

As Canada pursues its plans to move Alberta's oil to market without Keystone, the absurdities of these transportation arrangements-for both Canada and the United States-make little sense.

Nor is there a credible national security or foreign policy reason to object to Keystone. Canada is our closest ally and most important economic partner. We have needlessly offended not only the Canadian government but millions of ordinary Canadians who cannot fathom the rejection of the Keystone pipeline. Instead, we refine petroleum from countries around the world whose government and citizens were neither our friends in the past nor will be our friends in the future.

No one knows when President Obama will make his decision about Keystone XL. Perhaps not until after the November elections. But it is not just Mr. O'Sullivan and the Laborers' Union who are getting impatient. The AFL-CIO is also in favor of the pipeline, since their members would gain from its construction.

Earlier this year AFL-CIO president Richard Trumka was quoted in the National Journal as saying, "Anything that makes sense and creates jobs and is sound environmental policy as well, we will be doing it. [With respect to] the XL pipeline, there's no environmental reason that it can't be done safely while at the same time creating jobs."

Mr. Trumka is correct. There is no environmental reason against Keystone. There is no safety reason against Keystone. There is no economic reason against Keystone. There is no national security reason against Keystone. So why has the Administration not approved Keystone?

Original Source: http://www.realclearmarkets.com/articles/2014/04/29/with_the_keystone_delay_us_is_the_only_loser_101027.html

 

 
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