The environmentalist campaign to block the Keystone XL pipeline has run out of gas.
Canada's largest energy firm, TransCanada, has announced plans to create an alternative to KXL that lies entirely within Canada’s borders – a pipeline that would transport crude from Alberta's oil sands to our northern neighbor's east coast.
Known as Energy East, the new project presents clear proof that, even without a U.S. pipeline, the Canadian oil sands will continue to be developed. By blocking KXL, the fourth and final leg of a 2,151-mile transnational project, green activists are simply denying Americans the project's wide-ranging benefits. The U.S. State Department counts 42,000 new jobs, plus the opening of a new way to get oil from Montana and North Dakota to Gulf Coast refineries.
If the Obama Administration doesn't approve the 800,000 barrels/day, Alberta–U.S. Gulf Coast pipeline soon, an historic opportunity to improve the American economy and strengthen our country's energy infrastructure will be squandered.
Discolored Green
Many green activists have clung to Keystone XL as their signature issue in order to demote fossil fuels in North America. Now, with the Energy East proposed, their talk is about a symbolic victory.
But the environmental arguments against KXL have always been misguided. In particular, green activists assert that the pipeline will increase global carbon emissions by encouraging the production of crude from Alberta's oil sands. The National Resources Defense Council, for example, claims that oil sands are "dirtier and more corrosive than conventional oil."
Enter reality. An analysis by the State Department concluded that Canadian oil sands will be developed whether Keystone is completed or not. The study found that it was unlikely that construction of KXL would have any impact on greenhouse gas emissions.
Political Miscalculation
Yet the president continues to hold up the project. The Obama Administration recently pushed its final decision until after the upcoming midterm elections. This punt is the latest in what is now a six-year delay.
So much for being a good neighbor, which the Canada-United States Free Trade Agreement of 1987 and the North American Free Trade Agreement of 1994 were supposed to institutionalize.
Two-way trade between the U.S. and Canada exceeds one trillion dollars per year. Last year, the U.S. exported $48 billion in oil and other mineral fuels to Canada and imported $144 billion of the same. The politicization of KXL in this context is bizarre.
Regulatory obstructionism is the worst kind of partisan politics. Sixty-five percent of Americans support the construction of Keystone XL. By failing to approve the project, the president and his compliant Democrats have put the interest of 150 or so megadonors above the national interest.
Ironically, but tellingly, some environmentalist groups now back candidates who favor KXL's completion. The League of Conservation Voters has earmarked $25 million for six candidates who otherwise are deemed sufficiently committed to lower greenhouse gas emissions, including Senator Susan Collins (R-Maine) and Senator Kay Hagan (D-N.C.), as well as Rep. Frank LoBiondo (R-N.J.). Apparently, the two goals do not clash as much as green activists once thought.
Substitution Effect
Energy East is a direct response to market pressure. The 2,858-mile pipeline would carry more than a million barrels a day of Alberta oils-sands crude to Saint John, New Brunswick. From there, the oil could be shipped across the Atlantic. The pipeline, which could be completed as soon as 2018, would make KXL unnecessary.
In the meantime, rail cars and other transportation are continuing to pick up the slack. According to the Canadian Association of Petroleum Producers, by next year, rail transport systems will be able to carry more than a million barrels of crude per day from Western Canada.
The prolific oil sands of North America are here to stay, symbolism aside. The economic law, supply creates its own demand, is in operation with the substitution effect.
And Keystone XL? According to TransCanada spokesman Shawn Howard, the pipeline remains critical for shippers who "have still not walked away" from the opportunity to transport oil via Keystone.
That leaves the Obama Administration with the question: Will Americans benefit from Alberta's oil resources, or not? It is time to get past symbolism to real benefits that are far in excess of costs. While we still can.
Robert L. Bradley, Jr., is CEO and founder of the Institute for Energy Research and the author of seven books on energy history and public policy
