Analysis: The Keystone XL Pipeline – Much More Upside than Down

(Newsroom America) – The Obama administration’s decision to put off construction of a 1,700-mile oil pipeline from Canada to Texas lays bare the president’s fundamental ideological opposition to continued reliance on fossil fuels and has been viewed as an election-year sop to the environmental lobby. But increasingly, it is also a decision that is being seen as wrongheaded for the nation, not just because it sustains heavy U.S. reliance on volatile foreign oil sources, but also because, domestically, the president has chosen activism over employment and economic growth at a time when Americans are desperately clamoring for both.

There has been a great deal said on both sides of the issue, but the fact is there is so much more upside to the Keystone XL Pipeline project than downside, when balancing all the legitimate competing interests – environmental, national security and economic growth.

Balancing Fact and Hype

Needs more environmental impact study? The administration claims the State Department needs more time to “study” the pipeline’s proposed route, because it would be built through environmentally “sensitive” areas. But TransCanada, the company wanting to build the pipeline, has already studied the proposed route in depth; in fact, it’s become one of the most studied pipeline routes in recent history.

“The U.S. State Department conducted a three-year environmental review and concluded that the pipeline poses few environmental risks,” said this Heritage Foundation analysis of the project. “The State Department, Nebraska officials, and TransCanada, the pipeline firm, even agreed to reroute the pipeline path in Nebraska to avoid a water aquifer.”

So at this point, delaying the project seems less about legitimate environmental concerns and more about scoring political points with an environmental voting bloc that, truth be told, isn’t going to vote against Obama anyway.

There is concern about the physical pipeline itself; is it safe? There were similar fears and concerns expressed when construction of the TransAlaska pipeline was proposed in the mid-1970s, but, as noted in a March 2011 USA Today editorial, those fears were unfounded then, just as they are now.

“Four decades after the Trans-Alaska debate, another large pipeline project is facing similar criticism and forecasts of catastrophe,” said the editorial, adding that “while there have been spills and accidents, predicted disasters never materialized.”

And there is this fact: TransCanada is a private corporation, not some government entity that can be bailed out with taxpayer money if, say, an environmental disaster occurred and TransCanada was bankrupted in the resulting lawsuit. To say the company has every economic interest in ensuring that its pipeline is safe and secure is an understatement.

Moreover, what is the alternative? From EnergyTomorrow.org, “Pipelines are the U.S. economy's lifeline. The Transportation Department's Pipeline and Hazardous Materials Safety Administration says that to move the volume of fuels our economy needs through even a moderately sized pipeline would require a string of tanker trucks, about 750 per day, loading up and moving out every two minutes, 24 hours a day, seven days a week.”

Would that endless convoy of trucks be better – or worse – for the environment?

Will the project really have a positive economic impact on the U.S. economy? According to the State Department’s EIS, the answer is undeniably yes. By the department’s own calculations, the pipeline could supply America initially with 700,000 barrels of oil per day, with the capability to expand capacity to 830,000 barrels of oil per day. The project’s cost – estimated at about $7 billion – is substantial enough, but just the workers themselves would serve as an economic boon in desperate times for towns, cities and states up and down the length of the pipeline.

Beyond that initial economic injection there is a long-term benefit. First, the project itself would create about 20,000 or so jobs, but Keystone says the project’s infrastructure will support “tens of thousands of construction and related jobs and billions of dollars in tax revenues,” the New York Times reported.

In all, the project is expected to generate private investment of about $20 billion into the U.S. economy; generate some $6.5 billion in wages for American workers; create an additional $535 million new taxes for the states and communities along the pipeline’s route; and pay more than $5.2 billion in property taxes over the life of the pipeline.

And by the way, when oil from the U.S. Gulf Coast was trading recently at about $102 per barrel, Western Canadian oil was in the neighborhood of $68 per barrel.

“If Keystone XL dies, Americans will still wake up the next morning and continue to import 10 million barrels of oil from repressive nations without the benefit of thousands of jobs and long-term energy security,” says Russell K. Girling, the company’s chief executive. Granted, he’s cheerleading for the company and the project – but seriously, who can logically, convincingly argue with that?

Which brings us to the next point – this project would enhance national security.

Securing a safer, less volatile supply is a good thing in today’s world. From USA Today: “The State Department — which has the lead because the proposed line would cross an international border —said this week that it would postpone its decision to allow further environmental review. Why? The Keystone expansion would provide an extra 500,000 barrels of oil a day from a secure ally and neighbor, enabling the U.S. to offset declining supplies from Mexico and Venezuela and avoid having to reach out to less-stable oil exporters (my emphasis). At a time of rising gasoline prices and turmoil in the Middle East, the U.S. is in no position to be finicky about its oil imports (again, my emphasis).”

The bottom line here is the nation’s bottom line. As oil and gasoline prices remain in flux, in large part due to political instability and uncertainty among a number of our suppliers; as unemployment remains stubbornly high and growth stubbornly low; and as Americans clamor for some sort of sign from Washington that our leaders and our president “get it” in terms of easing the economic pain and suffering that has been taking place since the collapse of 2007-2008, the Keystone XL Pipeline project has become a symbol of hope.

And isn’t that the moniker under which Obama built his campaign?

© 2011 Newsroom America.

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