The Fight Over Keystone XL Now Has A 60-Day Deadline -- Is This Good or Bad?

With the new rush to approve TransCanada's tar sands pipeline, let's review some key facts that should underlie any analysis of the proposed 1700-mile project.

Attached to the payroll tax deal was a provision forcing President Obama to decide within 60 days whether or not to approve the Keystone XL tar sands pipeline, before its route is even finalized. The deadline runs out on February 21, 2012. The State Department has made it clear it can’t do a proper review of the pipeline, especially considering that TransCanada has agreed to change the pipeline’s pathway in Nebraska but hasn’t even finalized the new route.

With this new and arbitrary deadline, the punditocracy is relitigating the question of whether it should be built. The DC political elite assumed that the pipeline was an inevitability, dismissive or ignorant of the popular opposition to a risky, foreign tar sands pipeline cutting across the center of the nation. Most were blindsided when the State Department announced it needed to review its obviously flawed assessment of the project, and when the state of Nebraska held an emergency legislative session against the pipeline.

With the new rush to approve TransCanada’s tar sands pipeline, let’s review some key facts that should underlie any analysis of the proposed 1700-mile project from Alberta to Texas:

The approval process for the Keystone XL pipeline was tainted by corruption.The federal approval process was run by a contractor for the pipeline company itself. Cardno Entrix was chosen and paid by TransCanada to draft the State Department’s environmental and historical impact statement, manage public hearings, and receive public comment. Big oil’s lobbying group American Petroleum Institute was also involved in drafting the environmental impact statement while running ads in favor of tar sands development. TransCanada, who employed former Hillary Clinton aides as lobbyists, has bullied landownersand moved towards construction without needed approval. In response to a congressional request, the State Department’s Office of the Inspector General has launched an investigation.

Keystone XL was not an American jobs bonanza. In 2008, TransCanada’s Presidential Permit application for Keystone XL to the State Department indicated “a peak workforce of approximately 3,500 to 4,200 construction personnel” to build the pipeline. The State Department’s more generous estimate, compiled by a TransCanada contractor, was for 5,000 temporary jobs. The only independent analysis conducted of the American job-creation potential of the Keystone XL pipeline finds that between 500 and 1400 temporary local construction jobs will be created, with a negative long-term economic impact as gas prices rise in the Midwest and environmental costs are borne. A deal struck between TransCanada and some American unions in September 2010 assumed rapid approval of the pipeline, which has obviously not come to pass. Other labor unions oppose the pipeline. Much of the temporary employment potential for Keystone XL is already in the past, with foreign-built pipe stockpiled in North Dakota.

Rapid Canadian tar sands development is not an inevitability. The Keystone XL pipeline is not the only tar sands project facing major headwinds. Stephen Harper, Canada’s oil-friendly prime minister, is telling reporters that if Keystone XL isn’t built, Canada will build a pipeline to its west coast and ship oil to Canada. Of course, Haper and the oil companies are hoping to do both — they want tar sands pipelines going in every direction. But the multi-year push to go west has been stalled just like Keystone XL. With fierce opposition from indigenous communities, the Enbridge Northern Gateway Pipeline — planned in 2005 — has been delayed to late 2013, and wouldn’t go on line before 2017.

There needs to be a rapid decarbonization of the global economy, incompatible with Keystone XL. Tar sands oil is even more toxic to the climate than conventional oil. As KC Golden writes, “IEA’s warnings against imminent climate ‘lock-in’ mean that any major investment in long-lived, capital-intensive fossil-fuel infrastructure must now be considered flatly immoral.” The expected lifetime of the 500,000-barrel-a-day Keystone XL pipeline is fifty years.

Unfortunately, these facts are being ignored by a lot of intelligent people weighing in on the Keystone XL fight. Econ blogger Matt Yglesias, who discloses that his uncle, prominent economist Paul Jaskow, is on TransCanada’s board, hopes for a world in which “America taxes carbon and continues to build out fossil fuel infrastructure.” That’s not a “sage compromise,” it’s a recipe for disaster, incompatible with a path of climate survival.

Yglesias cites economist and blogger James Hamilton, who also favors the Keystone XL pipeline. Hamilton argues approval of Keystone “should be an easy decision,” because the pipeline would make tar sands crude more expensive by allowing it to reach international markets, generating “$3.6 billion in annual value added.” That benefit, Hamilton claims, “would go to the people who work to build the pipeline, motorists who buy the gasoline, workers and companies that produce the oil, and the government that collects taxes from all the rest.”

The benefit certainly wouldn’t go to the few people who would work to build the pipeline — it’s not like they get royalties once their work is done. The “new real income and growth” that would come from relieving the Midwest tar sands glut wouldn’t in any way be evenly distributed. Essentially its only economic effect would be to transfer billions of dollars from Midwest motorists to Canadian oil producers, Texas refiners, and international commodity traders, while accelerating catastrophic climate change. It would exacerbate economic and political inequality, not improve it.



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