KXL is Sensible Energy Policy

The Keystone XL pipeline has unfortunately become the centerpiece of our nation’s overall conversation about the energy and environment nexus. Rather than a simple decision about a pipeline approval and the jobs and economic opportunity it brings, the final decision regarding Keystone XL will be one of the first big tests of the President’s second term. And the question still remains. Will the President side withlabor organizations, the U.S. Chamber of Commerce, the journal Nature and nearly 70% of U.S. residents that support the Keystone XL pipeline? Or, will he side with ideologically driven organizations who are working to derail the pipeline in an effort keep fuel prices high, and “that carbon in the ground.”

With gas prices rising more than 50 cents in the past nine weeks, well ahead of the summer driving season, Americans and the President should seriously consider a project that will bring a reliable source of crude oil to U.S. markets. When crude oil makes up 80% of the price of a gallon of gas, a pipeline that delivers 700,000 barrels of oil a day can have a big impact – particularly when that oil is priced at a very significant discount the overseas oil that we are bringing in from the Middle East. In addition to running up to $50 per barrel cheaper than Middle Eastern crude, it is not subject to regional instability and comes from a friend and ally which shares our world view.

Activists claim that stopping the pipeline will keep Canada’s oil sands in the ground thereby decreasing additional carbon emissions. Here again the facts tell a different story. Take for example the following, the energy sector accounts for 6.8 percent of Canada’s GDP. Over the past three years Asian investments in the oil sands have exceeded $15 billion, a staggering sum. This prompted Canadian Prime Minister Stephen Harper to visit China last year where he discussed ways to expand trade with the Chinese for sources of Canadian energy. This makes sense, with billions invested the Chinese are just as eager to develop the oil sands as the Canadians. In fact, given all of this it becomes hard to envision how these two powerful nations would simply walk away from a project that is so clearly in their joint interest.

If these nations don’t walk away from the oil sands, which they likely won’t, a study conducted by Barr Engineering notes that shipping more Canadian oil to Asia, and shipping more oil from the Middle East to the United States, would increase greenhouse gas emissions because of the long sea voyages that would be required. This phenomenon would result in GHG emissions that are approximately twice as high as would be the case otherwise for crude transport. While the study was designed to quantify the impacts of a federal Low Carbon Fuel Standard, the phenomenon would apply to blocking the Keystone XL project as it would induce the same crude shuffling.. A restricted market that arbitrarily diverts Canadian crude to the Pacific rim and replaces it in the U.S. with oil from the Middle East.

Further, Canada contributes just 2 percent of the world’s greenhouse gases, and the oil sands account for a bit more than 5 percent of this amount. Comparing this to China, a nation that emits 25% of all carbon spewed into the air across the globe, makes it clear why activists efforts will do little to change the global mix of carbon emissions. This one simple fact provides a lot of credence to a recent Washington Post editorial which declared: “Mr. Obama should ignore the activists who have bizarrely chosen to make Keystone XL a line-in-the-sand issue, when there are dozens more of far greater environmental import.”

The State Department is currently conducting its review of TransCanada’s application for a permit to build Keystone XL. We hope that they will do so expeditiously and that President Obama will give the project a green light. In addition to being the safest pipeline project ever proposed, it will create high-paying American jobs, provide a significant boost to our wobbly economy and help reduce prices at the pump.