WASHINGTON – Is The US State Department (read President Barack Obama) going to finally authorize the Canada to the US Keystone oil pipeline, to be built by TransCanada? The political signs are not at all good. And why would Obama say “no” to a pipeline that will carry additional Canadian oil to the refineries in Texas?
Politics, not energy policy
Sadly, this will have nothing to do with the merits of the issue. This is all about politics and the demonization of carbon based energy. The accepted narrative in the environmentalist camp (these are all Democrats, and they voted for Obama) is that Canada’s heavy oil extracted from oil sands, (the greens prefer the pejorative but technically correct expression “tar sands”), is the worst of the worst when it comes to high polluting crude.
Heavy oil requires a lot of energy to be extracted, and fuels made from it contain more greenhouse gases. Therefore, according to the greens, the US Government should not allow more of this toxic stuff to get to America.
Of course, it is true that Canada’s heavy oil pollutes more. But not that much more. And, in any event, we already use heavy oil from Venezuela and other countries, including Canada. Besides, if you look at total world consumption, (about 90 million barrels a day), using more of this Canadian oil, (the pipeline will carry less than one million), will not make much of a difference.
Obama will not go against his constituency
And yet, since this oil has been stigmatized as super bad by the environmentalist, President Obama is in a bind. If he approves the pipeline, as he should, he will face fierce protests from within the Democratic Party. However, if he does not he will pay no special political price. The Republicans do not get along with this President anyway. By giving them an additional reasons for disliking him, Obama will not change an already poisoned Washington political climate.
This being the political context, would the US be better off having this TransCanada Keystone pipeline, even at a time of oil super abundance and falling prices? Do we really “need” to get more oil from Canada?
The answer is “yes”.
US is still a major oil importer
Notwithstanding the oil glut and falling prices, America is still a major oil importer. This will not change in the near future. America must import almost half the oil Americans consume every day. Therefore, from an energy security stand point, it makes sense to get more crude from Canada, a trusted and geographically close ally, this way reducing our imports from OPEC or other countries.
Of course, the pipeline opponents claim that this decision on Keystone has nothing to do with energy security, because the additional Canadian oil that will be refined in Texas will be turned into gasoline for export markets.
May be so. But getting additional supplies from a friendly neighbor is still an advantage for America. Most certainly, in case of future supply disruptions, gasoline made in Texas using Canadian crude will be sold in America.
Add to supplies from North America
In other words, it is smart for the United States –a net oil importer– to add to the total imports from North America, as opposed to getting oil from the Persian Gulf.
Besides, this new Keystone pipeline will also carry some of the US oil from North Dakota.
And finally, let us keep in mind that a lot of heavy oil from Canada is already coming into the United States, via rail cars. This transportation system (that does not require Government approval) is less efficient, more dangerous, (as a few spectacular accidents have demonstrated), and more expensive.
Building the Keystone pipeline will allow more of the same Canadian oil to come to America –but at a lower cost. There will be an additional advantage in creating more energy flexibility for the US, while diminishing reliance on oil from OPEC. This is mostly about increasing supply (from a trusted ally) in a more cost-effective, more efficient way. For all these reasons, this pipeline should have been approved long ago.
But this has not happened, and it may not happen, because these days pretty basic energy policy decisions are hostage to ideology. Once you have demonized a piece of energy infrastructure by claiming that the crude it will carry would trigger planetary disasters, it is hard to retreat and say that after all this oil will not cause any real damage.
It is really sad to acknowledge that this is the way we make important energy policy decisions in America. But this is unfortunately the case.