Obama Rejects Reason, Kills Keystone XL

This article is more than 2 years old.

Update: see my new post TransCanada Exec: Obama Block Of Keystone XL 'A Real Shame.'

So the Obama administration rejected Keystone XL. Oh sure, they want us to think it's just a delay, a kicking of the Keystone can down the road. Officially, the state department just sent TransCanada (NYSE:TRP) back to the drawing board to look at a variety of other pipeline routes that do their best to avoid the Sandhills in Nebraska and areas overlaying the Ogawalla Aquifer. But don't be fooled. This is a rejection plain and simple.

In the process of selecting the proposed route, TransCanada plotted and studied 14 different pipeline paths and submitted 10,000 pages of environmental studies. They've already studied this thing to death. So when the state department says this new review could be done by early 2013, can we really expect any different outcome than more delays?

Robert Redford, the actor, was happy with today's announcement. In a statement released by the Natural Resources Defense Council today Redford said, “This is American democracy at its best: a President who listens to the voice of the people and shows the courage to do what's right for the country. Thank you, Mr. President, for standing up to Big Oil. Thank you for standing up for us all.”

Frances Beinecke, the president of the NRDC ladled on more praise. “President Obama is displaying leadership and courage in putting the interests of the American people before those of Big Oil. He has taken another significant step in the fight against climate change and in our march toward a clean energy future, which will mean healthier lives for all.

The only response I can summon to that is a big … whatever. If they really wanted to protect the land and the water of the Midwest they would focus on stopping the agribusiness giants from pouring mountains of hydrocarbon-derived fertilizers directly onto the land, chemicals that trickle down into the water table and through watersheds into the Mississippi.

Besides, it's not as if delaying a pipeline from Canada will do anything to hurt Big Oil. The United States will continue to consume 19 million barrels of petroleum products per day and will continue to import roughly 10 million barrels per day from the rest of the world.

That oil, wherever it comes from, will be traversing continents in pipelines that likely aren't built to the specifications that the government would demand of TransCanada. That oil will be shipped to the United States in tankers that belch into the air the exhaust of millions of tons of bunker oil. Great victory.

Maybe we can get the world off of its oil addiction, someday. But, Mr. Obama, if your goal is to get America to use less oil and gasoline, then put a tax on it, don't hamstring national security.

Meanwhile, what happens if someday Israel decides to bomb Iran and Iran moves to block oil shipments out of the Persian Gulf? The U.S., without a pipeline like Keystone XL, will be in more of a pickle when it comes to securing oil supplies.

And what if someday Venezuela's ailing President Hugo Chavez dies and is replaced by civil war in Venezuela instead of a more reasonable man who reinvigorates Venezuela's oil production? The U.S., without a pipeline like Keystone XL, will have a tougher time replacing the million barrels a day we get from Venezuela.

And what if Mexico fails to stem its declines in oil production and stops exporting oil to the U.S.? It's ok, we'll just use less, and pay more, and suffer slower growth and fewer jobs as a result.

Wouldn't you rather have a superfluously good supply chain, a wealth of logistical options in a time of plenty -- instead of facing shortages in an emergency?

Yes, any pipeline needs to be built to the highest possible standards. Yes, any material leakage from any pipeline is unacceptable. Yes, crude from oil sands does have a higher "carbon footprint" because of all the processing that goes into it. But as long as Canada is dedicated to developing and using the resource, the U.S. would be insane not to build the strategic infrastructure to buy it.

The White House and the State Department understands and appreciates this. It's too bad that they find it easier to just say no than to pledge publicly to work with TransCanada to build the safest, most reliable pipeline the world has ever seen.

