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Anti-pipe folks say he's just "kicking the can" to boost election hopes, pipe supporters say he's killing jobs

In one fell swoop the President of the United States (POTUS) Barack Obama managed to infuriate Canadians and Republican U.S. politicians alike.  Those are typically mutually exclusive feats, but his decision to bow to activist pressure and shelve the development of a critical oil pipeline is drawing criticism from both sides.

I. To Oil Sand, or Not to Oil Sand, That is the Question

Dubbed the Keystone XL pipeline, the pipe in question was supposed to stretch 1,700 miles across the U.S. plains, transporting process oil sands crude -- a low to mid-grade crude to U.S. refineries in Texas for procesing into fuel (the initial removal of sand would occur at local facilities in Alberta). 

Currently the Alberta tar sands are underutilized due to insufficient refining capacity.  Meanwhile refineries in Texas sit idle due to insufficient domestic oil supplies.  The pipeline would have remedied both problems, pumping the equivalent of 700,000 barrels a day (249.2m barrels a year) into the U.S. market.  

The U.S. uses 19.15m barrels/day, so the new supply would offer approximately 3.7 percent of the domestic demand.  While that may sound trivial, it would allow the U.S. to potentially entirely drop one of its more hostile sources of foreign oil, such as Venezuela (806,000 barrels/day) or Iraq (637,000 barrels/day).

Aside from the direct savings in life and financials stability that could yield, the pipeline also offered more benefits.  According various studies the construction would create between 5,000 and 20,000 jobs.  It would also give $5B USD in new tax revenue.

Iraq Militants
The pipeline could completely eliminate American dependence on volatile Iraqi oil, a dependence that has cost the lives of many American servicepeople. [Image Source: Dalje]

Like everything in the world, though, there was a perceived downside for these gains.  First, the pipeline would likely cross through personal property dropping local value.  Second, it could potentially elevate local risks of toxic oil spills -- a major public fear in the wake of the 2010 Deepwater Horizon oil spill.

Last, but not least oil sands require a more intensive separation process than standard oil.  The cost of getting all that sand out is a 10 to 30 percent emissions hike in greenhouse gases [source].  As you might guess, the amount of emissions is tied to the cost of the refining process, so the final number would like be closer to a 30 percent increase, than the lower estimate.

However, that emissions hike occurs largely at the extraction level, meaning that as long as Alberta finds someone to sell/ship its crude to, the emissions hit will be taken, regardless of whether that someone happens to be the U.S.  It's unclear whether the pipelines environmentalist adversaries realize this and are just morally opposed to being involved.

Recent studies have shown that in the last decade global temperatures flatlined, even as greenhouse gas emission continued to rise.  Yet many environmentalists and their powerful political allies remain convinced that the long-term trend will be continued warming.  Many of these parties predict a doomsday "runaway warming" scenario, in which soaring temperature amount to mass humans deaths.

Groups like 350.org, Bill McKibben, Bold Nebraska's Jane Kleeb, and Friends of the Earth decried the potential environmental (mostly global warming) impact of the pipeline and threatened to drop support for President Obama if the project was granted a speedy approval.  If these groups sound familiar, they're among those who attacked the POTUS on his support of modern nuclear power -- pressure that the President Obama caved to in the wake of Japan's Fukushima nuclear accident.

Further threats to the project came from the Republican-controlled Nebraska State Senate, which looked to take legal action [PDF] to block the pipeline.  The state senators were upset about the oil pipe crossing the state's key water supply (aquifer).

It didn't help that the State Department received a complaint [PDF] that the pipe operator TransCanada (TSE:TRP) -- the pipeline company -- had a business relationship with the "independent" contractor hired by the State Department to conduct the review.  The pipeline supporters saw their attacks on the President regarding insider actions with "green" firms like Solyndra turned back on them.

Reports of robocalls erroneously indicating public support also have been circulating around the blogosphere, damaging the momentum for approval.

II. POTUS Caves to Pipe Critics, "Kicks the Can" to 2013

As an apparent result of these cumulative protests the Obama administration has punted the approval process two years out.  The State Department announced this week, that approval "could be completed as early as the first quarter of 2013."

The key words there are "could" and "2013".  The State Department primarily blames the Nebraska state government, commenting, "Given the concentration of concerns regarding the environmental sensitivities of the current proposed route through the Sand Hills area of Nebraska, the Department has determined it needs to undertake an in-depth assessment of potential alternative routes in Nebraska."

But it's seems likely the decision also had something to do with the Obama administration fearing the loss of votes in the upcoming 2012 presidential elections.

President Obama faced enormous pressure, even from his own staff.  Department of Energy Secretary Steven Chu (Ph.D) was reportedly fearful that the project would kill alternative energy jobs and investment.  He pointed to a Cornell University study, which claimed that the project would result in net job loss due to a negative impact on the alternative energy sector.

Cornell Report
A Cornell University report broke with most analyses, claiming the pipe would cost jobs.
[Image Source: Cornell University]

III. Obama Receives Most of the Punishment, Little of the Praise for Choice

Ironically the move is earning the President less support than he may have hoped.  While Daniel Kessler, spokesperson with Tar Sands Action, commented, "This is a major victory.  It's a testament to the thousands of people who came out to protest in the streets, and we think the president responded to that," other critics scoffed at the decision.

Glenn Hurowitz, a senior fellow at the activist think tank Center for International Policy, writes in a piece in The Huffington Post, "This is an extraordinary achievement for the thousands of grassroots activists... [but] I'm a little dismayed at suggestions that this kick-the-can decision means environmentalists will enthusiastically back President Obama in 2012. Is the price of an environmentalist's vote a year's delay on environmental catastrophe? Excuse me, no."

Meanwhile opponents are pointing their barbs primarily at Obama, overlooking the activist and local political action.  Writes American Petroleum Institute President Jack Gerard, "This decision is deeply disappointing and troubling.  Whether it will help the president retain his job is unclear, but it will cost thousands of shovel-ready opportunities for American workers."

House Speaker John Boehner (R-Ohio) was even more pointed commenting, "More than 20,000 new American jobs have just been sacrificed in the name of political expediency. By punting on this project, the president has made clear that campaign politics are driving U.S. policy decisions -- at the expense of American jobs."

In short, as with many of his recent actions President Obama finds himself receiving most of the punishment, but little of the praise for actions he set in motion.  In trying to walk the tightrope of pleasing both sides, he has badly slipped -- many anti-pipe advocates are reprimanding the President for merely shelving rather than killing the decision, while the pipe's supporters are attacking the President for shelving the product.

President Obama is sad
President Obama faces criticism from all sides for the way he punted on the pipeline approval. [Image Source: JEWEL SAMAD/AFP/Getty Images]

TransCanada is disappointed, but hasn't given up on the pipe.  It's sunk $1.7B USD into steel, which will now sit in warehouses for two more years.  Company president and CEO Russ Girling optimistically comments, "We remain confident Keystone XL will ultimately be approved.  This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed."

One poll [source] found 85 percent of Americans to strongly or moderately agree with taking advantage of oil sands.  The poll was sponsored by the American Petroleum Institute, but it was conducted by the respected Harris Interactive agnostic metrics firm.  If those numbers are even close to reality, the president may be in trouble should he be pitted against a strongly pro-oil sands candidate like Ron Paul.

If the U.S. chooses not process Alberta's oil, there's already someone stepping up to the plate to take its place -- China.  It's looking to pour billions to building an alternate pipeline to west coast of Canada for affordable shipping to Asia.  The only thing standing in its way?  You guessed it -- local property holders and environmentalists in western Canada -- who are apparently just as eager to block the project as their American counterparts.

Sources: The U.S. State Department, CNN Money, The Huffington Post, Mining.com



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This article is over a month old, voting and posting comments is disabled

By Captain Orgazmo on 11/17/2011 8:30:01 PM , Rating: 2
The reason that the bitumen extraction and upgrading cannot possibly cause waterway pollution is because they recycle the water used in the plants. There is literally no effluent outflow into rivers like in stereotypical old fashioned industrial estates. The newest projects don't even need tailings ponds (large dugouts lined with multiple layers of non-permeable membranes, or even concrete).

It infuriates me when people complain about our (Canadian) industry practices, with sensationalist media coverage as their only source of knowledge on the subject. Nobody mentions how for example, in the Persian Gulf, if a well produced less than 2000bbl/day, they'd just let it flow into the water. Or how in Nigeria, BP seriously contaminated whole river deltas through sheer laziness, with the government turning a blind eye, starving local populations of the fish depend on to live.

I will try to find the article you mention, sounds interesting. Solar power has obvious promise, it just needs a bit more development to really become practical. China has the clear upper hand in such developments and cheaper manufacturing, due to their lack of concern for the environment and workers, and their national-socialist style of government that can sink billions without an electorate to worry about.

As far as the public sector unions I am talking about, it is a problem Americans have only just begun to get a taste of. For example, Alberta has a population of about 3.7 million, and a provincial budget of $38 billion! 50% goes towards our public-funded healthcare monopoly, with wages, pensions, and benefits consuming 75% of the health budget. Not only that, they get yearly wage increases of about 6% (double the private sector average), and indexed pensions. Before massive government reforms in the early 90's, Crown Corporations ran all sorts of things like telephone and utilities, and even liquor stores! Two of my uncles who worked for the government and have been retired 10 years currently make more money from their public-funded pensions than I do, and I work in the "greedy" oil patch! That is clearly not sustainable. Norway, similar to Alberta in size, population, and oil-production, has managed to save a whopping $500 billion in the same amount of time that we have saved a measly $14 billion. America would be well advised to prevent the "bureaucracy from expanding to accommodate the expanding bureaucracy."


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