Symbols & fundamentals

May 28, 2012
Focus has returned to the Keystone XL pipeline, approval of which Republicans in the US House of Representatives hopelessly have made a condition of support for federal transportation spending.

Focus has returned to the Keystone XL pipeline, approval of which Republicans in the US House of Representatives hopelessly have made a condition of support for federal transportation spending. It's an important issue. The pipeline should be approved. But the issue is symbolic. In a crucial election year, the oil and gas industry should keep in sight a more fundamental debate that makes Keystone XL just one among many proxies.

The pipeline, which would extend transportation capacity for blended bitumen and synthetic crude oil from Alberta to the Texas Gulf Coast, is under an unnecessarily extended review. The administration of President Barack Obama doesn't want to approve the project because doing so would anger environmental groups. It claims, notwithstanding the results of 3 years of study already in hand, to want more information about possible environmental effects. That's a dodge. Environmental groups have made Keystone XL a priority issue, and the Obama team is loath to agitate them.

Political opportunity

For Republicans, the stall represents political opportunity. They say it shows Obama cares more about appeasing environmental extremists than about creating jobs, fostering energy security, and upholding relations with Canada. Most recently, the House passed a nonbinding resolution telling a conference committee working on transportation legislation to include authorization of TransCanada's Keystone XL proposal.

Prospects for the measure are abysmal. The Senate, controlled by Democrats, won't support it. Obama has promised to veto it. The number of House votes supporting the initiative wasn't high enough to override a veto. Some Republicans admit they want to keep the Keystone XL issue alive but not to stymie the transportation bill.

The symbol will fade. What happens then?

At that point, the argument should revert to fundamentals. Environmentalists oppose Keystone XL not mainly because the project represents a meaningful threat to ground sources of drinking water, although that's what they say; it doesn't. They oppose the pipeline because it would debottleneck a large and growing supply of oil they consistently misrepresent as especially polluting. They simply want to stop production of bitumen from the Canadian oil sands. Typical of their position is this comment environmental foundation director David Suzuki of Vancouver, BC, made recently in opposition to an Enbridge proposal to transport blended and upgraded bitumen from Alberta to Montreal: "We have always said that the tar sands oil should stay in the ground. Period."

That type of obstructionism instructs Obama on energy. It can't be ignored as the extremism that it certainly is. It drives policy.

From the same intellectual realms that insist humanity should not avail itself of a vast supply of convenient energy come calls to use costly renewable energy in place of, rather than in addition to, affordable hydrocarbons. This ambition is the foundation of Obama's energy policy. And it's no mere symbol. It's a consistent feature of the president's budget proposals.

Each proposal to end oil and gas tax preferences comes with an explanation about plans "to phase out subsidies for fossil fuels so that the United States can transition to a 21st-century energy economy." Each says preferences such as expensing of intangible drilling costs and accelerated writedowns of geological and geophysical outlays distort markets by encouraging investment in oil and gas. "This market distortion," the standard explanation says, "is detrimental to long-term energy security and is also inconsistent with the administration's policy of supporting a clean energy economy, reducing our reliance on oil, and cutting carbon pollution."

Explicit intent

This represents explicit intent to discourage production and use of hydrocarbon energy in favor of more-costly, less-abundant alternatives. It comports perfectly with the extreme and economically indefensible desire to leave bitumen in the ground. And it explains fully the administration's stonewalling of Keystone XL.

The fundamental debate is not about a pipeline. It's about the prominence of supply of affordability in energy policy. Obama makes his position clear with his plans for spending public money. He has other priorities.

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