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Obama’s Keystone hurdle looks ‘insurmountable’

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VANCOUVER — U.S. President Barack Obama has once again rained on the Keystone XL parade, disparaging the pipeline on employment and environmental grounds.

Some key quotes by Obama from a recent New York Times interview:

• "Republicans have said that this would be a big jobs generator. There is no evidence that that’s true. And my hope would be that any reporter who is looking at the facts would take the time to confirm that the most realistic estimates are this might create maybe 2,000 jobs during the construction of the pipeline — which might take a year or two — and then after that we’re talking about somewhere between 50 and 100 jobs in a economy of 150 million working people."

• "So what we also know is, is that that oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States. In fact, it might actually cause some gas prices in the Midwest to go up where currently they can’t ship some of that oil to world markets."

• "Now, having said that, there is a potential benefit for us integrating further with a reliable ally to the north our energy supplies (sic.). But I meant what I said; I’m going to evaluate this based on whether or not this is going to significantly contribute to carbon in our atmosphere. And there is no doubt that Canada at the source in those tar sands could potentially be doing more to mitigate carbon release."

There’s some truth to Obama’s thoughts. Jobs for the Keystone XL pipeline will be "temporary" jobs, just as all infrastructure jobs are temporary. What’s surprising is that he would disparage such work when it’s being proposed by the private sector and when such "temporary" work programs have been featured in virtually every economic stimulus he’s proposed over the last five years. Put up wind turbines? Temporary work. Put up solar panels? Temporary work. Insulate homes? Re-pave highways? Install "smart" meters? All temporary work.

And it’s true, to the extent that there’s a glut of oil in the Midwest keeping gas prices low, that relieving the glut might lead to some higher prices. Of course, the economic reasoning isn’t exactly stellar here either: what the President is arguing is that it’s OK to keep gas prices artificially low in Oklahoma, while preventing people in the Gulf of Texas from receiving oil that would create jobs and profits in the Gulf. You’d think that if glut creation was his ideal way of keeping gas prices down, he wouldn’t have slowed oil production on Federally-controlled lands.

What’s most interesting about Obama’s recent comments, however, is his re-affirmation of what could be seen as an insurmountable hurdle to Keystone XL approval.

Back in June, the President gave a speech on climate change, in which he proposed this test for Keystone XL:

"Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward."

At the time some analysts thought the President’s statement left plenty of room for approval. Brad Plumer, at the Washington Post Wonkblog, felt that the President had left himself "wiggle room" to approve the pipeline. And over at the Financial Post, Claudia Cattaneo also went for the "wiggle room" theory.

I was more pessimistic, actually agreeing (somewhat) with Joe Romm’s interpretation at Climate Progress (an exceedingly rare event) that the President’s language suggested an insurmountable hurdle.

Even if Canada improved the efficiency of bitumen production so that its greenhouse gas intensity was identical to that of conventional oil, it is still the case that the simple act of developing the oil sands will add net carbon to the atmosphere: more carbon than Canada can capture in any offsetting way. To environmentalists like Romm, anything that helps get the bitumen out of the ground will flunk Obama’s litmus test. By repeating what now seems to be the official litmus test for Keystone XL approval, Obama has cast further doubt on its eventual approval.

 

Kenneth P. Green is senior director, natural resource studies at the Fraser Institute.

 

—troymedia.com

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