Will the Keystone XL pipeline ever get built? Not if President Obama and the Environmental Protection Agency get their way.
Obama has threatened to veto a bill making its way out of Congress that would approve the long-awaited, 1,100 mile pipeline project, despite overwhelming support from the American public and the estimated 42,000 jobs it would create.
In an effort to keep the project stalled, the EPA this week warned the State Department that, among other things, the recent steep drop in the price of oil and the added CO2 in the atmosphere from the pipeline mean it shouldn’t be built. (The State Department’s own massive review of the project last year, you may recall, found that in fact the pipeline would have very little impact on the environment or the climate.)
But the EPA’s argument on oil prices falls apart with any scrutiny. Just as oil precipitously and unexpectedly dropped in the past year, it could just as quickly snap back to the $80 level or higher without warning. Long-term investments are based on long-term demand forecasts, not on short-term market conditions.
Moreover, the idea that the EPA is uniquely qualified to judge market conditions for oil is, well, ludicrous.
“The economics of the Keystone XL pipeline, or any pipeline for that matter, should be determined by the marketplace,” Jack Gerard, president of the American Petroleum Institute, said Tuesday. “This is private capital. This is private investment. Let it follow the market and let the market determine what should or should not be built.”
“When we announced Keystone XL back in 2008,” TransCanada Corp. spokesman Shawn Howard said in a written statement picked up by the Wall Street Journal last month, “the price of oil was between $30 and $40 a barrel. No one was suggesting the project was not economic then.”
Then there’s the EPA canard about CO2. In its letter, the EPA claims the CO2 from the project would be roughly equal to “7.8 coal-fired power plants.”
It’s true that the crude from oil sands that will be shipped through the Keystone project yields a slightly higher amount of CO2 per barrel than regular crude. But that’s not the question. Canada is going to exploit its oil sands one way or another, whether the U.S. builds the pipeline or not. So the CO2 will be produced. Either we benefit from it, and refine it in our refineries, which are the best in the world at making clean fuel, or someone else will — like the Chinese, who are eager to get their hands on Canada’s bountiful petroleum resources.
Over the next 40 years or so, virtually all projections call for rising use of crude oil worldwide. It’s to our advantage as a nation to control as much of that future output as possible.
Source: Investor’s Business Daily