Keystone XL Pipeline Debate Outgrowing The Issue At Hand

The recent battle between Congress and the Obama Administration over the proposed Keystone XL pipeline expansion came to a head of sorts when the State Department rejected the TransCanada route proposal last week. The rhetoric has been amplified by environmental and energy pundits on both sides. An editorial in The Independent [1] has called the decision “…one of the bleakest chapters in our nation’s history” and stated that Canadian Prime Minister Stephen Harper “spoke directly with President Obama to express his ‘Profound Disappointment.’” The article continues to say:

“Jobs creation, our nation’s energy future, and the reputation of the United States as a safe place to invest capital will command attention in the coming presidential debates. President Obama has made a precarious choice.”

On the other side, environmental advocacy groups such as the National Wildlife Foundation have argued that the pipeline will be of no benefit to Americans anyway- the pipeline terminates at the Gulf of Mexico, and Big Oil is simply planning to sell the oil to other markets and reap substantial profits. Additionally, they state that there will likely be far fewer jobs created than estimated by TransCanada, so it’s not worth risking the environmental degradation that could result from a spill.

In reality, both sides are probably taking an extreme view of the matter, as a quick look at the facts seems to confirm. The proposed Keystone XL pipeline is an extension of an existing pipeline, and extends from Cushing, OK to the Texas Gulf Coast city of Nederland. Additionally, a new line will originate in Alberta and terminate in Cushing, OK (the current operational Keystone Pipeline, completed in 2011, travels from Alberta to Steele City, NE and then to Cushing). The link from Cushing to the coast is intended to transport crude for eventual export, although it is conceivable that oil could flow in reverse, from the gulf to Cushing, for redistribution to refineries if needed. The Keystone XL would roughly double the present amount of oil being exported through the Keystone Pipeline, from ~590,000 bbl/day to 1.1 million bbl/day [4].

The anti-Keystone XL argument that the pipeline won’t create very many jobs has some merit, although actual jobs numbers are likely between the 4000 and 200,000 figures cited in the media [3],[4] – the original Keystone project employed around 9000 people for 36 months, and TransCanada estimates that the Keystone XL project will employ around 20,000 total workers, when including the manufacturing of parts in other areas [5]. Nonetheless, pro-pipeline supporters note that these are jobs which can be filled relatively quickly and will at least provide some employment- a good thing in the current economy.

The Athabasca Tar Sands (the source of oil which the pipelines will transport) are being developed by a number of different interests, including companies from Canada, the US, China, France, Norway, Japan, and others [6]. These companies undoubtedly have significant say in where and to whom they sell their oil, and having additional transportation infrastructure will benefit all parties involved. In other words, some of the oil is going to be exported, and some will be burned here in the US. However, concerns that all of it is going to be sold overseas are likely unfounded.

In conclusion, the Keystone XL pipeline can probably be best thought of as a highway, which is going to benefit many different corporations and entities. It will not solve US energy security issues, as its capacity is quite small compared to the amounts of oil imported by the US- in other words, there are also a lot of other highways. Additionally, it is no magic bullet for the unemployment problem. We would do well to reach a decision quickly about the pipeline and move on. If it does not get constructed, the oil in the tar sands will still go to those who have the rights to it- one way or another.

 

 [1] http://www.texasinsider.org/?p=57730

[2] http://www.downstreamtoday.com/news/article.aspx?a_id=11890&AspxAutoDetectCookieSupport=1

[3]: http://business.financialpost.com/2012/01/24/bad-statistics-on-the-clean-economy/?__lsa=346784ec

[4] http://www.tarsandsaction.org/spread-the-word/key-facts-keystone-xl/

[5] http://beta.fool.com/bobbiejohnson/2012/01/21/part-three-understanding-transcanada-and-keystone-/1082/

[6]http://web.archive.org/web/20080409105246/http://www.alberta-canada.com/energyCommodities/files/pdf/oilSandsUpdate_December_2007.pdf

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