Why the Keystone XL Pipeline Should Be Approved Now
Environmentalists tout Canada's oil sands as "dirty oil" and worry about environmental impacts during construction and in the event of pipeline leakage. Supporters argue it would provide the United States with a politically stable source of oil and a means for Canada to bring its oil to market. President Obama has a unique level of power over Keystone XL, as it requires a "presidential permit" due to its cross-country reach.
Obama has repeatedly said he would veto any Keystone XL legislation that arrives on his desk and even rejected the permit application for the pipeline approval three years ago. However, there are many ways the completion of the Keystone XL pipeline will benefit the U.S. and Canada, and it should be built now even while the price of oil is low.
Why Is Oil Sand Considered Dirty Oil?
Beyond the concern that pipelines can leak and pollute land and water supplies, there is concern over the production method for oil in Alberta as it's in the form of oil sands. Alberta's oil sands are the third-largest oil reserve in the world, after Saudi Arabia and Venezuela. Oil sand is a natural a mix of sand, clay, minerals, water and bitumen. The bitumen, a viscous oil, must be separated and treated before being used for fuel, and requires quite a lot of energy to extract and refine. Additionally, the process involves surface mining, which creates large holes in the ground, uproots trees and ships separated sand to landfills, although disturbed land does go through a reclamation process.
When it comes to greenhouse gas emissions, however, the State Department released an environmental review stating the heating required to separate the bitumen would likely not have an effect. It might not be preferable in some ways to traditional oil production, but North America can better compete with OPEC if this pipeline is built.
There are four major benefits of approving the Keystone XL.
1. Politically Stable Source of Oil
Our oil doesn't always come from friendly sources. As of 2013, the U.S. Energy Information Administration reported that 32 percent of U.S. oil imports came from Canada, while 38 percent came from OPEC countries. These countries include Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, the United Arab Emirates, Algeria, Nigeria and Angola, among others. The political dynamic between the U.S. and these countries, as well as other importers like Russia (5 percent in 2013) could change on a dime, and the U.S. experienced the fallout previously of having its oil imports tied to unfriendly exporters during the Arab oil embargo that skyrocketed prices and made it nearly impossible to obtain gasoline in the U.S. Domestic oil production has greatly changed since the 1970s, however, taking further advantage of the resources of a friendly exporter, Canada, and those at home in the form of shale oil could prevent geopolitical changes from affecting domestic gasoline access in the future.
Alberta's oil reserves have no value for the country if they can't be delivered to a market that will use it. The Keystone XL pipeline will move 830,000 barrels of crude a day from Canada's oil sands through Montana, South Dakota and Nebraska -- the heart of America's shale reserves -- to the rest of the Keystone pipeline, where the crude can be refined in the Gulf of Mexico. This move would help Canada make use of a resource with great financial potential.
2. Safest Form of Oil Transportation
Declaring any one form of oil transportation safest is largely dependent on whether your metric is death, oil released, land area or water contaminated, habitat disturbed or CO2 emitted. Considering the alternative of transporting oil from Canada via train or pipeline, pipeline wins in terms of speed, cost and spillage. About 70 percent of crude oil and petroleum in the U.S. is transported by pipeline -- and 97 percent is transported in Canada this way.
According to Forbes, an increase in oil production in North America has increased our use of train transportation for the crude oil. A lack of new pipelines to transport this increased supply is causing trains to get larger and the risk of spillage to increase. According to the Association of American Railroads, 400,000 carloads of oil were transported in 2013 via train compared to just 9,500 in 2008; in 2013, more crude oil was spilled in rail accidents in the U.S. than in the entire period of 1975 to 2012. Compared to oil tankards that can spill in the ocean and cause damage like that of the Exxon Valdez disaster, which is still causing damage in the 1,300 miles of ocean it polluted, new pipeline technology is advanced and safer.
It's true that pipeline spills have accounted for more damage than train spills in the past. The new Keystone XL pipeline will be built with the newest leak detection technology and boasts the safety of 57 new safety proceedures to its design. According to TransCanada's website, the Keystone XL pipeline will "be safer than any other pipeline constructed and operated in the United States," according to the final environmental impact statement the State Department and U.S. Pipelines and Hazardous Materials Safety Administration issued. According to the Keystone XL pipeline's official website, satellite technology will be implemented to monitor 20,000 points of data regarding the pipeline's operational conditions.
3. Temporary Job Opportunities
Although the Keystone XL pipeline doesn't promise long-term job opportunities (the State Department projects just 50 permanent jobs will be created) 42,100 jobs will be created for two years during the construction phase along with an estimate by TransCanada, the company building the pipeline, of 9,000 created positions. True, these jobs might not provide long-term security, but will still equip approximately 51,150 people with work experience that can be carried on to other opportunities.
4. Oil Prices Will Rise Soon
A new Washington Post and ABC News poll found that there's less urgency felt toward the passing of the Keystone pipeline, with just 34 percent of Americans responding that it should be built now. But really, the current plummet in the price of oil is actually the strongest reason why the pipeline should be built now.
Oil is abut $46 a barrel, representing a 58 percent drop in price since June 2014. This is largely due to an economic downturn in Europe and China, which has created an oil surplus of 1.5 million barrels per day. This surplus is driving down prices, though OPEC stated in late November it would not adjust its oil production levels, as many OPEC countries -- including its largest oil producer, Saudi Arabia -- have lower costs of production than other countries and do not want to lose market share by decreasing production, expecting others to do so.
Essentially, countries with lower production costs are willing to ride out a period of lower prices as smaller producers and countries with higher production costs cease to be profitable, opening up more market share when the supply decreases and prices increase once more.
So why should the U.S. be building the Keystone XL pipeline now? While oil prices are low, it's not financially feasible for North America to produce shale oil and refine oil sands. However, once prices increase, American oil production will follow and we'll want the infrastructure in place to support it. U.S. energy independence might not have arrived as scheduled, but there's still a reason to pursue it. Between unfriendly oil sources and the ability to put oil production jobs and needed infrastructure in the hands of Americans, it's a future that OPEC doesn't want to see and one we should pursue swiftly.
Edward Stepanyants contributed to this report.