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Obama 'Takes Stand,' Rules Against the Keystone XL Pipeline

Both sides are hyping the presidential decision as pivotal, with Bill McKibben hailing it as "a brave decision" and Jack Gerard characterizing it as "a clear abdication of presidential leadership." Let's try to deconstruct the hype to assess what the decision really means.
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We must separate the substance from the rhetoric and symbolism.

TransCanada's proposed Keystone XL pipeline, which would bring tar sands oil from Canada to refineries in Oklahoma and Texas, has been a hugely divisive issue.

Environmentalists have vociferously opposed it, citing the extra greenhouse gas emissions from burning this kind of oil (just how much extra is unclear -- see here and here) and the potential to damage sensitive ecosystems from pipeline failures (see here, here, and here).

On the pro-pipeline side, energy industry folks claim that the oil from the pipeline is essential to secure America's energy future and would create a whole slew of new jobs (anywhere from 20,000 to 250,000), helping put our economy back on track.

It's been up to President Obama's administration, specifically the State Department, to decide whether the pipeline is in the national interest and thus can go forward, or is not and thus cannot.

The administration's handling of that decision has not been especially smooth, with fits and starts and even rumors of an all-but-done deal (see here and here).

Last November, the State Department announced that the proposed route through Nebraska's environmentally sensitive Sand Hills region required additional review, thus pushing the decision to 2013, conveniently after the 2012 presidential election.

That review notwithstanding, Congressional Republicans, presumably trying to force the president's hand on the matter, folded a provision into the completely unrelated payroll tax bill, which had that special, needs-to-be-passed-before-Christmas-break timing sauce. To get his desired tax holiday extension, the president had to agree to make a yay-or-nay decision on Keystone by Feb. 21, 2012. At the time it seemed like a gotcha moment for the Republicans.

But yesterday, in announcing his determination that the pipeline "would not serve the national interest," the president did a respectable job of finessing the trap laid for him. Basing his decision not on an assessment that the pipeline would be harmful but on the "insufficient" 60-day window afforded by the law passed in December, he said he was unable "to obtain and assess the necessary information" and thus had to rule without all the facts. In other words: don't blame me, blame the Republicans.

Now both sides of the issue are hyping the presidential decision as pivotal, with environmentalist Bill McKibben hailing it as "a brave decision" and Jack Gerard, president of the American Petroleum Institute, characterizing it as "a clear abdication of presidential leadership."

Then there's presidential hopeful Rick Santorum, who slammed both environmentalists and Obama in saying the decision amounted to "pandering to radical environmentalists who don't want energy production, who don't want us to burn more carbon." On the accuracy meter, I'd score that statement a 1 out of 3: right about burning less carbon, clearly wrong about not wanting to produce energy, and "radical" is a bit over the top, don't you think?

Let's try to deconstruct the hype to assess what the decision really means.

Foreign Oil and Energy Independence

Not surprisingly, some are characterizing the president's pipeline halt as a blow to our energy security and independence and a gift, in the form of petrodollars, to Middle East oil sheiks. Presumed Republican presidential nominee Mitt Romney, for example, said the decision shows that Obama isn't serious about "achieving energy independence." Such conclusions seem off the mark.

  1. Energy Security: The tiny amount of oil coming into the United States from the XL pipeline would have represented less than 4 percent of our total consumption. And it's projected that a significant amount of that would not be used domestically but would be sold to other countries.

  • Energy Independence: The United States already gets most of its oil from Canada. The pipeline would neither alter that supply nor affect our dependence on "foreign oil."
  • Geopolitical Implication: The price of oil, for the most part a fungible commodity, is essentially determined by total global consumption, not who buys it. The same goes for the number of petrodollars that flow to foreign nations hostile to the United States. Because we're such a large consumer of oil (about 20 percent of the global total), how much we consume has a huge effect on oil prices and therefore the profits of foreign producers. Whether we build the pipeline or not is essentially irrelevant. How much oil we consume and whether we institute oil-saving policies, like miles-per-gallon standards on automobiles, are what counts.
  • Environmental Protections

    1. Climate: The president's decision is at best a symbolic victory for those wanting to clamp down on carbon dioxide (CO) emissions.
    • The extra amount of CO that would be emitted by the pipeline's tar sand oil would make the smallest of blips in our national emissions -- on the order of a few percent.
  • It's a virtual certainty that that tar sand oil will find a consumer elsewhere (see here and here).
  • Ecosystem Protection: Concerns that the pipeline would have traversed some very sensitive and valuable ecosystems (including the Ogallala Aquifer) were justified. And so the environmentalists do have cause for some celebration there.
  • But even without the Obama decision the pressure against the proposed path for the Keystone XL pipeline was building. For example, Nebraska has stepped in and
    : the first giving the state pipeline-siting authority, and the second requiring that the pipeline's path be altered to avoid environmentally sensitive areas (more on this

    The Book Not Closed

    Do not assume this decision marks the end of the Keystone XL saga. TransCanada has already announced plans to reapply for a permit (with a rejiggered route for the pipeline) and House Republicans are planning hearings on the decision. Even the president has indicated his decision may not be set in stone. Catch the subtle caveat in his statement: "[T]he Keystone XL pipeline project, as presented and analyzed at this time, would not serve the national interest" (emphasis mine).

    Stay tuned.

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