The year 2013 opens with the US economy still sputtering, unemployment still too high, the federal government still struggling with fiscal hazard, and President Barack Obama triumphant in his bid for a second term in office. The time is perfect for executive approval of the Keystone XL pipeline.
The president no longer needs environmentalist political support in his reelection bid. The nation now needs him to do what's reasonable and necessary: to acknowledge that studies show risks associated with Keystone XL construction and operation to be acceptable, especially in relation to the enormous economic benefit, and to approve transit of the border with Canada.
The rewards
Construction of the pipeline will create jobs. Operation of the pipeline will increase movement of heavy feedstock to high-conversion refineries on the Gulf Coast and remove a bottleneck to production of bitumen in the oil sands region of Alberta. The increased trade will enhance the security of oil supply to the US and strengthen the US and Canadian economies. Profits enhanced by the project will support job growth beyond the construction period in both countries. The rewards overwhelm arguments against the project.
Those arguments are especially weak. According to one of them, the pipeline threatens ground sources of drinking water in the US Midwest. Yet pipelines already in place across the supposedly threatened aquifer haven't fouled water supplies. Pipeline accidents are rare and manageable. And TransCanada Corp., which operates the existing Keystone system and wants to build the controversial extension, has rerouted the proposal to address the concern.
Another argument against the project asserts that some of the blended bitumen and synthetic crude oil arriving on the Gulf Coast might be loaded aboard tankers and exported rather than processed in US refineries. Yes, that might happen. Especially with production of light crude increasing in the US interior, coastal refineries might, in fact, not need all the heavy material available from Canada. Some might go into waterborne trade. What's objectionable about that? Benefits to the US would still be great. They'd include income from pipeline operations, job creation, and the enhanced ability of high-conversion refineries to optimize feedstock slates. That last benefit would help damp US prices of gasoline and diesel. And approval of a transport outlet important to Albertan producers would assure Canada it still has a friend to the south.
Most importantly, however, approval of the pipeline would rebuke the main and most extreme reason environmentalists want Keystone XL never to be built. Environmentalists recognize the need for new connections between the oil sands and markets for what they sneeringly and misleadingly call "dirty oil." In a few years, the absence of a pipeline connection to seaborne trade would constrain development of an important new source of oil. That new supply would strengthen industrial economies but conflict with the environmentalist vision of growth limited to activities approved by governments and fueled by energy not derived from hydrocarbons.
Leading inevitably to too much cost for too little energy—and therefore limited economic growth—the environmentalist political agenda resorts to fear-mongering over hydrocarbon energy and unrealistic claims about the potential of alternative energy forms. Approval of the Keystone XL pipeline, opposition to which the environmentalist agenda has made an iconic issue, would give US energy politics a healthy injection of realism.
No compromise
Controversy over the Keystone XL project leaves no room for compromise. Fundamental views about the future of energy are in conflict. Approval of the project would acknowledge the rich potential of the next generation of fossil energy and encourage its development. Rejection would foreclose much of that potential in deference to an energy utopia few Americans support when they learn how much it costs.
Keystone XL is, indeed, an iconic issue. The decision about it will say much about the energy strategy for the next 4 years of a president newly relieved of worry about reelection—but not about health of the US economy.