January 19th, 2012
01:50 PM ET

Keystone XL Pipeline blown way out of proportion

Editor's Note: Sarah O. Ladislaw is a senior fellow with the Energy and National Security Program at the Center for Strategic and International Studies in Washington, D.C.

By Sarah O. Ladislaw - Special to CNN

On Wednesday, the Obama administration officially denied the TransCanada application for a Presidential Permit for a 1,700-mile-long pipeline, known as Keystone XL, which would bring approximately 800,000 barrels of oil per day from the Canadian oil sands to the U.S. Gulf Coast.

The White House and Department of State press releases and statements make it clear that from their vantage point the decision to deny the permit was not based on the merits of the project but was forced on them by “the rushed and arbitrary deadline insisted on by Congressional Republicans,” which “prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment.” Proponents of the project reject this line of reasoning citing the nearly three years of investigation into the environmental and economic consequences of the pipeline that preceded this decision.

In November 2011, coming into the final phases of the Presidential Permit process and ostensibly on the cusp of making a decision, the Obama administration extended its timeline for considering the permit application until 2013, when questions arose about the environmental integrity of the pipeline through the environmentally sensitive region of the Nebraska Sand Hills, causing the Nebraska state legislature and governor to insist on an alternative pipeline route.

The Obama administration announcement to delay its decision was construed at least partially as politically motivated given the intense opposition to the pipeline from environmental groups. In response, congressional Republicans sought and passed legislative measures (then signed into law in December as part of the payroll tax cut extension) to force the administration to make a decision in 60 days’ time, in an effort to move the pipeline project forward or risk the political backlash from pro-pipeline labor unions of denying the project.

True to its word, yesterday the administration denied the permit based on the assertion that the 60-day deadline did not provide enough time to adequately review the project. In response to the decision, congressional Republicans accused the administration of killing tens if not thousands of U.S. jobs and sending secure Canadian oil to China (a presumed alternate market destination for oil sands). TransCanada pledged to resubmit an application for the pipeline and keep the production schedule on track, citing the hope for an expedited permit process on the next application. Environmental groups applauded the administration’s decision, while sounding a cautionary note of opposition to any future efforts to resurrect the pipeline project.

The main questions to follow in the coming days are mostly political. Will the administration get credit from environmental groups for denying the permit, or will plans to move forward on another permit process overshadow this momentary easing of pressure from environmental groups? Will congressional Republicans seek new legislation to push the project forward in some way, either through the previous or a future permitting process? But some questions are market oriented. Will TransCanada be able to keep in place contractual arrangements with producers, refineries, contractors, etc. to keep the project going, or does this open up opportunities for other projects to fill the gap?

In November 2011, the CSIS Energy and National Security Program published a Commentary on the undue political attention being placed on this pipeline as a proxy for the larger energy issues being debated in the country, and we still largely stand behind that analysis. In many ways, the importance of the decision to grant or deny the permit has been blown way out of proportion. The pipeline is neither the savior of U.S. energy security nor the death knell to U.S. low-carbon energy policy. With or without the pipeline, a few basic facts remain unchanged.

First, both the Canadian oil sands and U.S. mid-continent crude slated to flow through the pipeline will find a way to market, through alternative pipeline routes or via tanker, truck, or rail. In the near term, the transport options may be more expensive, less efficient, and less environmentally sound, but the global demand for these resources means that markets and outlets will be found.

Second, Canadians will continue to pursue policies that improve on and expand the production of Canadian oil sands. Perhaps the most underreported aspect of this entire Keystone XL debate is all the work being done in Canada to improve the environmental impact of oil sands across the board. It is still hard to claim that oil sands are environmentally benign, but at least Canada’s government, industry, and environmentalists are working together to chart a path forward. After decades of working to create an integrated energy market between the United States and Canada, our neighbors to the north have every right to start questioning the stability and continuity of the United States as a market for their energy products.

Third, denial or approval of the Keystone XL Pipeline will not bring the United States any closer to discovering real answers about how to pursue a lower-carbon pathway in this country. Many in the environmental community argue that we should be investing more in alternatives to oil, and they are right. But in the absence of coordinated U.S. policy to do this on a more expedited basis, it is nearly impossible to force that kind of a transition by stopping oil production one pipeline at a time. U.S. policymakers should not be let off the hook on this larger policy question by placing disproportionate focus on a single pipeline debate.

Unfortunately this is not the last of the Keystone XL Pipeline saga. When and if TransCanada resubmits its application for a Presidential Permit, one can expect an equally political and contentious debate to resume.

The views expressed in this article are solely those of Sarah O. Ladislaw.

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Topics: Energy • Jobs • United States

soundoff (38 Responses)
  1. joshua

    this fits in nicely with Obama's desire to get to $5 per gallon gasoline and his push for the Chevy Volt. Neither are wanted by the American people.

    January 19, 2012 at 2:42 pm | Reply
    • j. von hettlingen

      We are going to see higer prices. If one doesn't want to depend on imports, the exploitation of Alberta's oil sands and the oil off the coast of Florida is the only alternative. The enviroment will have to bear the brunt.

      January 19, 2012 at 5:33 pm | Reply
      • ruthie

        Cree Indian Prophecy:
        is this what you want for us?

        January 20, 2012 at 11:39 am |
    • Methuselah

      Breathtakingly ignorant. You do realize that you, the taxpayer, give the oil companies over $4B a year in subsidies and tax breaks, 4 times the support given to clean energy technologies?

      And do you understand that the price of oil is set on the global market by speculators and OPEC, not Obama?

      Do you even understand that the price of oil is never, ever, EVER going to drop appreciably in your lifetime?

      See: International Energy Agency declares "peak oil" threshold crossed in 2006.

      January 19, 2012 at 7:45 pm | Reply
      • mikaman3000

        When alternative energy is wanted by the American people, then it will happen. Until then how about you LEGO that EGO and let that deluded mind of yours heal itself. To force clean energy on the American people when we all know it's not economically viable is truly ignorant, not to mention dangerous.

        January 20, 2012 at 4:37 pm |
    • Farallon5

      Unfortunately, it will likely take $5 gallon (or more) gasoline to make those "American people" you mentioned think twice about their addiction to petroleum. If we as a country pulled our collective head ouf the sand we would realize that we cannot continue to live like it is 1950 anymore. Get over it. Is it patriotic to cede our county's greatness to China or India or Europe who understand the importance of clean energy and are leaving us in the dust? No, but that's what you are in effect doing by not demanding quicker action on clean energy. Don't let the oil lobbyists buy your elected officials.

      January 19, 2012 at 11:48 pm | Reply
      • Nelbert

        Spoken like a true blue Kool-aid drinker.

        January 20, 2012 at 8:36 am |
    • ruthie

      really? i am one of the american people, and i want both of those things! only when gasoline becomes really expensive will anyone get serious about alternatives. gasoline is far more expensive in the rest of the world than it is in the u.s. right now. still, cars are on the road in those countries. we use far too much oil in this country precisely because it has always been relatively cheap here. same with food. we obviously consume too much of that, too. we have become a fat, lazy country.

      January 20, 2012 at 11:22 am | Reply
  2. George Patton

    I cannot understand for the very life of me why the KeystoneXL Company doesn't build it's pipeline west to the city of Vancouver, B.C. which is far closer than Texas and where refineries can be built. It would far cheaper for them and help many Canadians find work. Am I the only person here to think of this? Evidently yes!

    January 19, 2012 at 2:56 pm | Reply
    • Ben

      NAFTA does not allow Canada that option. The pipelines through the Midwest are the precursor to the Highways that run Parallel to the pipelines. The Goal is to connect Canada, and Mexico to the US Market. The Federal government plans to build it, the political battle is over which Party gets the most benefits.
      Canada would be smart to build a pipeline to Vancouver, but they conceded that option when they signed NAFTA.

      January 19, 2012 at 4:41 pm | Reply
      • Cormac

        You'll have to explain why NAFTA requires this.

        January 19, 2012 at 7:16 pm |
      • Methuselah

        No true. The proposed Northern Gateway pipeline across British Olumbia to Canada's west coast is being debated in the Canadian Parliament right now. But the First Nations tribes, like farmers and ranchers across the US Midwest, don't want oil spills on their land or in their water, either.

        With dozens of spills in just one year on the original Keystone pipeline already in operation, they know it is just a matter of time, and refuse to have their lands become the sacrifice zone for the world's oil addiction.

        January 19, 2012 at 7:17 pm |
    • Scott

      It's easier to build a pipeline south through the prairies then west through the Canadian Rockies. That is a principal consideration – cost of the line. However, as you know, the challenge of a mountain route is certainly not insurmountable (pardon the pun).

      January 20, 2012 at 1:00 pm | Reply
  3. Muin

    Canada might be better off pursuing asian market for better price than U.S market.

    January 19, 2012 at 3:37 pm | Reply
    • Methuselah

      Duh, that is what this is about. The Keystone XL pipeline is an EXPORT pipeline for China, and will raise gas prices for Americans. Google "keystone export pipeline". This has everything to do with helping Canada access Asian markets. Canada is sitting on a gold mine of Black Death and they want to make billions off of China, bypass American markets and let Americans pay for the damages and clean up.

      Plus even the owner of the pipeline admits it will only create, at most, 6000 temporary jobs at any given time. And only 50 permanent jobs. Not worth the danger to our water, farmland, or future.

      January 19, 2012 at 7:37 pm | Reply
      • Oppose keystone

        Exactly. But the fact that the pipeline is intended to provide access to asian markets by going through us tax free export zones is rarely discussed in the media. Most people think the pipeline is to provide oil for us markets but Canada already has access to us markets but not world markets. The Canadian president tries to bluff that they will build a pipeline in Canada and just sell the oil to china when that is their plan no matter where the pipeline is built. Canada already has access to us markets but not world markets. The reason for the pipeline is to bypass us markets. We will be cutting our own throats if this approved. Add in the potential for environmental damage and it's a disaster waiting to happen.

        May 9, 2012 at 6:31 am |
  4. Sharon

    Can't our country do two things at the same time. Find cheaper crude oil and look for alternative energy solutions? I guess it's no big deal to our President since he doesn't have to worry about his travel budget as we, the 50% of the wage earners/taxpayers will have to pay that bill too.

    January 19, 2012 at 3:49 pm | Reply
  5. Shoop

    Does anyone know the estimated time it will take to complete such a project? I assume between 3-5 years.

    January 19, 2012 at 6:08 pm | Reply
  6. Methuselah

    Wow, all those words and not one mention of climate change, or the fact that the Alberta tar sands produce more greenhouse gases than all of Canad's car & truck fleet combined, or the fact that 98% of climate scientists warn we must end our addiction to oil as soon as possible if we want our children to have even a hope of a livable climate. As Upton Sinclair said, "Never expect a man to understand something when his job depends upon him NOT understanding it."

    The bottom line is: your money or your children's lives. Looks like Canada values money over everything.

    Don't believe the scientists? Be sure to tell your grandchildren about your disdain for science,, so they will know to thank you for obstructing necessary action, when we still had the chance, that you doubled down on the dirtiest oil on earth because you were selfish, greed, lazy, and valued money over all. Will they thank you when the oil, the water, and the food all run out? Meh, what do you care? You'll be dead by then! Burn it all up, right?

    January 19, 2012 at 7:32 pm | Reply
    • ruthie

      thank you. i was just about to say that!

      January 20, 2012 at 11:28 am | Reply
  7. Skymind

    Oil is a globally traded commodity and price shocks such as we have seen this last month affect all sources of crude and all consumers more or less equally. Canadian oil has no impact on this effect as long as global demand continues to lead supply growth.

    The International Energy Agency (IEA) forecasts that under the most aggressive non-OPEC oil development scenario possible, OPEC’s share of the global oil market still rises from 41% in 2009 to 52% by 2030[xiv]. This is because even with full development, non-OPEC oil simply cannot keep up with rising demand and the decline of existing capacity.

    OPEC producers generally underinvest in their oil production capacity in order to maintain the highest possible price the market can withstand. When more oil is brought to market OPEC producers simply maintain their underinvestment policy keeping prices where they want them. If anything, by increasing non-OPEC supply OPEC producers are saved the effort and expense of investing in new capacity.

    The only way to reduce price is to reduce demand.

    January 19, 2012 at 7:51 pm | Reply
    • ruthie


      January 20, 2012 at 11:29 am | Reply
  8. McBob79

    Only the left wing media could really come up with a term like "overblown" for the president rejecting an opportunity to put more Americans to work. Of course there needs to be a larger energy policy, but the facts are that this project would create jobs, would bring friendly oil to the country... that's not up for debate. People need to get it through their f'ing thick skulls... we are not going to stop using oil in the foreseeable future. That's a fact! So drill now, get friendly oil while working on alternatives in the future. Who is the stupid bich that wrote this article?

    January 19, 2012 at 9:55 pm | Reply
    • Shoop

      This project hasn't been scrapped, just postponed. The original pipeline route traveled over an important body of water in Nebraska that provided drinking water to 8 states. The pipeline is already being rerouted so they can avoid this area. Try and realize that so much more goes into planning such projects than most people realize. The scope of such an endeavor will cover at least 3 years; by forcing an administration to make a decision in 60 days is just irresponsible and not in the best interest of the country as a whole. The project will create American jobs regardless if its construction were to start in 2012 or later years. The project is estimated to create less than 10,000 total jobs anyways (split between both the U.S. and Canada) and only for a period of a few years. This is not a good solution to fix the unemployment rate of American workers. In the grande scheme of things, taking an extra few months to review a multi-billion dollar pipeline project wont set things back in any significant way. The attempts to force this thru in 60 days was to try and appeal to right wing lobbyist in time for the election this year. While the oil is "friendly", extracting it is incredibly energy intensive, meaning the energy cost of removing useful oil from the sands cost much more when compared to other removing oil form other "deposit forms". Remember that the U.S. consumes 18.8 million barrels of oil per day. The 800,000 b.p.d. estimate in this article is the highest estimate that i have found online yet. Most sources est. around 700,000 b.p.d. No we will not stop using oil in the foreseeable future. And to be quite honest, i don't see oil use to disappear at all for quite some time. It would be good to see crude oil use being replaced with bio fuels and other renewable sources. The idea isn't to eradicate oil use all together, but to limit it's use.

      January 20, 2012 at 1:45 pm | Reply
  9. Scott

    Once again proof that the extreme left favors trees over people.

    January 20, 2012 at 1:11 am | Reply
  10. matt a.

    To J. Von Hettlingen: You seem to be obsessive.

    January 20, 2012 at 7:44 am | Reply
    • Abdo

      #17:Hey, at least a cniylder explosion would be quicker than a high octane burn fueled with 15 or 20 gallons of gasoline.ReplyLike or Dislike: 0  0

      February 11, 2012 at 11:40 pm | Reply
  11. moderateGuy

    Bottom line is, the creepy excuse for a "president" made this decision based solely on political calculus – how many votes can he gain from enviro cultists versus how many he will lose from working Americans? Since he is pretty much losing the entire white working class, this was a pretty easy decisions from the narcissistic point of view...and has there been any other view in the White House over the past 3 years?

    January 20, 2012 at 1:15 pm | Reply
  12. talshar

    bottom line – made this decision based solely on political calculus.

    ^ Bottom line is, you can't read:

    In November 2011, coming into the final phases of the Presidential Permit process and ostensibly on the cusp of making a decision, the Obama administration extended its timeline for considering the permit application until 2013, when questions arose about the environmental integrity of the pipeline through the environmentally sensitive region of the Nebraska Sand Hills, *causing the Nebraska state legislature and governor to insist on an alternative pipeline route.*

    January 20, 2012 at 1:24 pm | Reply
  13. talshar

    *causing the Nebraska state legislature and governor to insist on an alternative pipeline route.*

    ^ GOP illiterates can't even comprehend at a 4th grade level. So sad.

    January 20, 2012 at 1:25 pm | Reply
  14. Patrick M

    Why has the question, or statement, not been made to have a refinery built near the Canadian border then ship the oil by train to locations south? Why do we need to sell the oil on the open market? Why not stop buying oil from unfriendly nations and ensure our own energy security? Every barrel from our friend Canada will strengthen North America and reduce the money sent to our enemies. Why do we need to risk our natural environment? We have options to move the oil now.

    January 21, 2012 at 2:16 pm | Reply
  15. The Tin Man

    Until the costs of using green energy are the same or less than fossil fuels, please bring us more oil. Thank you.

    January 29, 2012 at 5:37 pm | Reply
  16. Giovanni

    he did it to hmlseif by his chosen acts. but really? did he really think his "home?" state Hawaii is in Asia? oh my goodness, this country is being run by a dangerous, criminal clown! what's a high IQ for a clown? 50?

    February 9, 2012 at 8:26 pm | Reply
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