Keystone XL: Obama Should Expedite the Approval Of the Pipeline

Two weeks ago, the last remaining substantive obstacle to the Keystone Pipeline was removed, as Nebraska’s governor approved TransCanada’s proposed route for the pipeline. Procedural hurtles still remain, as the State Department’s report on the environmental impact of the pipeline is still pending and is not expected to be finished until late March. A favorable report from the State Department is a prerequisite for Keystone’s construction despite the peculiarity of America’s foreign policy bureaucracy having the final say on the environmental effects of an infrastructure project. The Obama administration should approve Keystone posthaste, since the economic benefits far outweigh any environmental concerns about the pipeline’s construction.

Keystone’s opponents have three major environmental concerns: that oil from the Canadian tar sands emits more carbon than traditional oil, that the pipeline will “lock in” America to fossil fuel, and concerns over the risk of a spill from the pipeline breaking.

The first concern is purely symbolic, as if America does not receive the tar sands oil, than Canada will construct a pipeline with the Chinese and sell to them. Either way, the dirty oil and its carbon will end up in the air; the only real question is if America will reap the benefits of the oil or if the Chinese will. The second concern is likewise symbolic, as even if America adopts industrial policy to aggressively move towards alternative energy, this does not preclude making fossil fuels more affordable in the short-term while American transitions to different power sources. The final concern is serious, but ultimately unpersuasive. It is no coincidence that the environmental catastrophes of the last decades have involved either platform oil drilling or oceanic transport. Oil pipelines are among the safest way to transport oil, with America alone having over 2 million miles of pipeline and very few major spills. Additionally, TransCanada has agreed to adhere to 57 rigorous safety conditions, carries $300 million of insurance against a spill, and the pipeline route avoids crossing any ecologically sensitive regions of Nebraska. Although the chance of an oil spill can never be eliminated entirely, these precautions have lowered the danger to the point where the potential rewards far outweigh any risks.

While the environmental concerns are mostly symbolic, the benefits of Keystone are tangible and will be felt immediately. Although political messaging in favor of Keystone has mostly focused on the jobs that the pipeline would create, jobs are actually the least significant of Keystone’s remunerations. Even the most optimistic estimates show the pipeline’s construction creating one hundred thousand jobs, while more grounded studies project only 4,650 jobs. Regardless of which figure is used, the job creation from Keystone would be a drop in the bucket when contrasted against the amount of Americans currently unemployed. Rather than job creation, Keystone’s real economic benefit would be in lowering the price of gasoline and making the energy market more efficient by increasing pipeline capacity and thus alleviating the current bottleneck that exists between crude out oil out of storage tanks and into refineries. Pipeline capacity is one factor among many in the global oil markets, but all other factors being equal, gasoline will be cheaper if Keystone is built than if it is not.

Obama’s supporters in the pundit class like to present him as a pragmatist mislabeled as a liberal. A pragmatist would expedite the Keystone construction process to reap the benefits as soon as possible. Americans will soon see if their president is such a pragmatist.