The Keystone XL pipeline aims to substantially ramp shipment of Canadian oil sands crude to hungry U.S. Gulf Coast refineries. Big Oil is lined up against an impressively organized green movement but expect oil companies to prevail as it is difficult to see how the White House will resist the oil lobby, especially after the latest State Department report, which gives the administration the cover it needs to approve.
Oil companies are deeply invested in Alberta’s oil sands and they need the pipeline to get more of the crude to market. It’s an important project for Canada and the province of Alberta, which continues to become ever more reliant on a petro-based economy. (Disclosure: I’m Canadian)
But for the average American consumer the $7 billion project has little to offer. There will be a few thousand construction jobs but there is not much to speak of after it is built.
For many U.S. Republicans, the pipeline also offers “energy security” and the promise of lower gasoline prices. Don’t hold your breath for lower prices. Republicans often chide the Obama Administration for not allowing more drilling, saying just the prospect of more activity would drive prices lower. But the United States, thanks to oil shale drilling, is awash in oil and gasoline prices are going nowhere but up.
Oil is traded, and manipulated, on a global scale. Traders and OPEC work very hard to keep prices high. The theory is once the pipeline is built, America gains something in energy security and the extra supply lowers prices. As is the case today, the industry will export the excess gasoline rather than keep it at home for the altruistic purpose of keeping prices lower for Americans. Oil companies don’t work that way.
The American consumer would be much better off if it could curtail demand and the Obama Administration has done good work on that front by sharply raising efficiency standards for automobiles.
Environmentalists are staging growing protests against the pipeline that only worsens the addiction to a fuel heavily responsible for a relentless rise in greenhouse gas emissions. But they are also taking it on the chin from some, especially from a certain columnist at the New York Times. The movement has created a side show, the critic argue. They should be taking more concrete action, such as pushing for a carbon tax.
But the green movement, rightly, says the pipeline is an important symbolic protest. David Roberts of Grist.org is writing some of the most impassioned, yet logical posts on why this fight matters and why it is important to draw a line in the sand here.
Or as Michael Grunwald wrote in Time: “The pipeline isn’t the worst threat to the climate, but it’s a threat. Keystone isn’t the best fight to have over fossil fuels, but it’s the fight we’re having. Now is the time to choose sides.
If you read the latest report from the U.S. State Department, it’s easy to be underwhelmed by the need of the pipeline:
The proposed Project seeks to capitalize on the demands of refiners for a stable supply of both heavy and light crude oil. Refineries in the Gulf Coast rely mostly on foreign imports, particularly from Venezuela and Mexico, as well as from other countries.
That’s it. It’s all about what the oil companies need. They need reliable supplies. But there is no sense how the pipeline will help the rest of the county; there is no promise of better times for consumers. It’s just a pipeline to help the oil industry supply a market, domestic and international, at world prices. They would like to keep that going, thank you very much, the planet be damned.