The Economic Case Against Keystone

It's been well established that the Keystone XL pipeline -- which congressional Republicans are seeking to authorize right now -- presents unacceptable risks to the planet. Keystone's completion would enable the full exploitation of Canada's tar sands oil deposits, raising global temperatures by an estimated 0.7 degrees Fahrenheit. This, according to leading scientific authorities, would mean "game over" in the struggle to save the climate.

But approval of Keystone also presents a lesser-known risk: to America's economic future.

For decades, Americans have been trapped in the boom-bust cycle of resource extraction. Approving Keystone XL will further bind America to an industry that is rapidly losing ground to more sensible and sustainable energy solutions.

Keystone XL makes sense if you believe America's future depends upon becoming the next Saudi Arabia or Russia -- a petro state whose fortunes rise and fall with the global price of a fickle commodity.

But any casual observer can tell you that oil markets are in a tailspin. 2014 saw the price of oil drop from over $100 per barrel to less than $50 per barrel today. Energy and fuel efficiency is increasing, and alternative energy sources are rapidly becoming more affordable, changing the current and future face of the energy industry. Financial experts are starting to worry about assets becoming stranded in the industry -- hundreds of billions invested in fossil fuel projects that are losing long-term viability. Even with Keystone XL, current crude prices make it uneconomical to further develop the Canadian tar sands.

Oil's wild price fluctuations are painful not only for people involved in exploration, extraction, and refining. U.S. Steel announced layoffs recently due to the lack of demand for steel pipes used in exploration. Millions of investors and pensioners across the country are worried about their portfolios because they are invested heavily in energy and utilities--the secure dividends and returns they used to deliver are no longer sure bets.

The certainty that once buttressed the traditional energy sector is washing away -- we no longer live in a world where driving to work or turning on the lights requires consuming fossil fuels. Our homes, cars, and workplaces are more efficient than ever. Wind and solar projects are beginning to beat out traditional sources of energy in the marketplace -- but the ultimate shift to sustainable energy is dependent upon Congress having the foresight to see the transition through.

Sustainable energy projects offer industry, energy consumers, and workers the opportunity to get off of the coal, oil, and gas carousel. Solar and wind power, advanced electric grids and battery systems, and plug-in vehicles like the Ford Energi and the Chevy Volt are the future -- and these will provide jobs in stable fields like research, development, and manufacturing for the next generation. And unlike the volatility of the fossil fuel industry, sustainable energy projects follow the price trajectory that Henry Ford established a century ago -- make it cheaper, make it better, and make it faster. This model is readily apparent in the solar industry, where the cost of photovoltaic solar modules has dropped by roughly 80 percent since President Obama took office.

While energy independence and security must be a top priority, these objectives can best be achieved through policies that Congressional Democrats and President Obama have championed and will continue to champion: a permanent schedule for renewables' subsidies and tax credits; streamlined regulations for investing in sustainable industries; and the training and development of a STEM workforce that will help America win the next 50 years of global energy technology competition.

The decision by congressional Republican leaders to make Keystone XL their first legislative priority reveals a lack of both imagination and judgment. Right now, what's best for the environment is what's best for economy: investment in green and sustainable energy independence rather than dirty and unpredictable fossil fuels.