The never ending argument about energy security in America has taken on new heights in America over President Obama’s decision to block one part of a 2,000+ mile pipeline known as Keystone XL. Environmentalists don’t like the idea of supporting energy-intensive Canadian tar sands. Conservatives claim that jobs are being lost and gas prices are going up because this pipeline was blocked.
But the truth of the matter is always somewhere in the middle. On the environmentalism side, it is worth considering that, while the tar sands are a dirtier form of drilling, it can be better regulated in a country like Canada versus a place like Venezuela. It is also less energy intensive to ship oil, even dirty tar sands oil, via pipeline, than it is to ship it in a container ship from halfway around the world. Oil will remain the dominant energy force for decades to come; I’d rather have it regulated here, than supporting fascism abroad.
On the same token, the hubbub about the Keystone XL pipeline being a job creator and lowering gas prices is much ado about nothing. Some estimates say that over 13,000 construction jobs would be created during the building of the pipeline through some especially hard hit areas of the country. Conservative critics claim that Obama’s blocking of the pipeline is costing Americans jobs, and raising gas prices.
Yet one doesn’t have to dig too deep to see the nonsense of this argument. How many people does it take to maintain a pipeline? Not many I’d wager. TransCanada, the company that wants to build the pipeline, estimates about 4,000 jobs will be created, most of them temporary. I’ve seen estimates that the entire length of the pipeline will employ just 1,300 people on a permanent basis. That won’t even budge national unemployment figures.
Another argument comes with rising gas prices. Some pundits say that by blocking the pipeline, Obama has indirectly caused prices at the pump to rise. But the Keystone XL pipeline would only bring an estimated 500,000 to 700,000 more barrels of oil into the U.S. per day. And much of that is slated for sale overseas (Brazil and other parts of South America in particular.) If anything, they Keystone XL pipeline would lead to higher gas prices.
A glut of oil is sitting in the MidWest, unable to be moved by a backed-up pipeline system (the rest of the Keystone line). This extra oil has suppressed prices in the MidWest, where a gallon of gas remains cheaper than along the more-populated coasts. The Keystone XL extension would move this oil to the south coast for refining, leading to an uptick in prices, especially in the MidWest. And that only makes sense to me. Why would TransCanada build a pipeline if it would cost them money by lowering gas prices? Even the Canadians are smarter than that.
Based on these facts, does the Keystone XL pipeline still sound like sound fiscal policy? Not to me. But is it better than the other option of importing more oil from unfriendly foreign producers? Sound off in the comments below.