12-3-15 – Obama’s Keystone Pipedream

by John J. Metzler

UNITED NATIONS—President Barack Obama has cancelled the Keystone XL, ending a seven year saga in which the pipeline from Alberta, Canada would have provided 800,000 barrels of oil to the USA on a daily basis. By scuttling the controversial deal which has been part of an         on again/off again political drama in both Washington and Ottawa, Obama cited environmental concerns and basically threw in the fact that America is awash with more affordable oil, so why do we need Keystone anyway?

In a Friday afternoon announcement, Obama naturally put the onus on the State Department whose environmental assessment now suggested rejecting the controversial conduit. In a sober and punctilious announcement, the President finally killed Keystone, and at the same time slapped Canada who has had so much invested in the infrastructural project. The timing was curious in itself as the cancellation came only two days into the tenure of Canada’s new left-leaning Trudeau government, who while publicly supporting Keystone, was quick to show his “disappointment” over the outcome and the ill-timed curve ball from Washington.

So lets’s look at the winners and losers in the Keystone drama.

Winners: The Environmental lobby (on both sides of the border) who always detested the pipeline which would send petroleum from Alberta province to the Midwest and south to the Gulf Coast for refining. The Eco/Lobby has been reenergized by this action. President Obama wanted to boost his environmental credentials just before the Paris UN Cop21 Climate Summit and show the USA leads the way on protecting the planet. I’m sure Beijing is very impressed. Lol. Speaking of China, don’t be surprised if Canada now looks to the People’s Republic as a consumer for the petroleum.

And let’s not forget that our “friends” in the Organization of Petroleum Exporting Countries (OPEC) will be more than happy to fill the void; Angola, Iran, Saudi Arabia and Venezuela to name a few.

Losers:   American workers. The Administration promotes building infrastructure; if a pipeline is not infrastructure, I don’t know what is.

Both Republicans and moderate Democrats agreed that constructing Keystone was good for American jobs, estimated at up to 42,000 construction and related jobs for a few years. Unions supported the project as did industry. That’s why a number of Democrat Senators from the Midwest also backed the project. Earlier in the year, in a U.S. Senate vote of 62-36, nine Democrats supported Keystone.

Shipping the oil by truck and rail, as we currently do, is far less environmentally friendly and efficient than a pipeline. Pollution from streams of tanker trucks, not to mention the danger of hauling oil on Midwest roads, is far less efficient and produces far more Greenhouse gasses than does an underground pipeline.

Given lower energy prices now, it’s a facile argument and puerile presumption to claim we don’t need more petroleum; maybe at $44 a barrel this is correct. That’s until the business cycle turns and the markets support higher fuel prices or until widening political instability in the Middle East cuts into our energy supplies. When the pendulum swings back, both politicians and consumers then return to “chicken little ” mode.

“The rejection reeks of hypocrisy. Obama is turning his back on Canada’s oil while making a deal with Iran” which shall enable the OPEC producer to sell its petroleum on the global market, wrote Claudia Cattaneo in Toronto’s respected Financial Post.

Russ Girling, chief executive of Trans Canada Corp., the firm supporting the project said, “Misplaced symbolism was chosen over merit and science. Rhetoric won out over reason.”

He added, “It is disappointing the administration appears to have said yes to more oil imports from Iran and Venezuela over oil from Canada, the United States’ strongest ally and trading partner.”

Midwest Senators hint at restarting Keystone in 2017 after a new Administration assumes office.   Possibly so.

In the meantime, Obama’s Keystone policy rejection looks more like the Keystone Cops than a reasoned and serious energy solution for the next decade.


John J. Metzler is a United Nations correspondent covering diplomatic and defense issues. He is the author of Divided Dynamism The Diplomacy of Separated Nations: Germany, Korea, China.


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