Keystone XL Decision by Obama won't keep oil from flowing

By Bill Walker
Today’s decision by President Obama to reject, at least temporarily, the permit to build the Keystone XL pipeline — which would carry the most climate-wrecking crude oil on Earth from Canada’s tar sands to refineries on the Texas Gulf Coast — is unquestionably good news. But by itself it won’t stop tar sands oil from flowing, or even keep it out of the United States.

This is not yet the death knell for the pipeline. Initial reports say TransCanada Pipelines may be allowed to reapply after a new route is selected that doesn’t endanger the Ogallala Aquifer, a vital source of fresh water for the Great Plains. TransCanada says it’s already got the new route picked out, although moving forward would require a lengthy environmental review process. And in the Senate, pipeline boosters are hatching a plan to hand the final decision back to Congress by invoking its power to regulate commerce with other nations.

But as the decision has been publicly framed, it’s always been a red herring.

Despite proponents’ claims, Keystone XL is not about the U.S. ensuring a secure supply of oil from a friendly neighbor, or creating construction jobs — a report by the Cornell Global Labor Institute says it would kill more jobs than it creates. Neither is it, strictly speaking, about keeping the oil in the ground, which NASA climate scientist James Hansen says is the difference between keeping alive any hope of stabilizing the climate or “game over.”

Existing pipelines already bring about 1.5 million barrels of tar sands crude a day to the U.S., making Canada — not OPEC, as many people believe — the nation’s No. 1 source of oil. Keystone XL would actually be an extension of an existing line that carries tar sands oil as far as Oklahoma. From there, most of it goes to Midwestern refineries. With Keystone XL’s approval now more in doubt, other companies are proposing smaller projects to carry tar sands oil from Oklahoma to the Gulf Coast. Increasingly, oil is also moving by tanker truck or rail — not as efficient as pipelines, but still profitable as oil gets more scarce and expensive.

Why is reaching the Gulf Coast so important to tar sands producers? Because oil from Keystone XL was never destined for Americans’ gas tanks. From massive refineries in Port Arthur, Texas, which have recently invested billions in upgrades to handle the thick, toxic crude oil from the tar sands, oil companies will produce fuel for export to Europe, where prices are higher, or to the growth markets of Latin America and Asia.

TransCanada, Canadian producers and the Canadian government have tried to brand the tar sands as “ethical oil” — in contrast to crude from the Middle East, violence-torn Nigeria or anti-capitalist Venezuela — although environmentalists question how ethical an energy source can be that disrupts the climate, destroys the forest, pollutes water and infringes on tribal lands. (Disclosure: Last year I worked for a coalition of environmental groups opposing the pipeline.)

The fact is that the U.S. doesn’t need tar sands oil. Fuel consumption is flat and will continue to decline as cars become more fuel-efficient. At the same time, domestic oil production is reaching historic highs. It just doesn’t make sense for TransCanada to invest $7 billion in a pipeline to supply a declining market. Tar sands oil production is projected to double by 2020, so the Canadian oil industry desperately needs access to growth markets.

To try to push the U.S. into permitting the pipeline, the Canadian government has threatened to play the China card. If Keystone is rejected, they say, they’ll simply sell the oil to fuel-thirsty China. Another Canadian company, Enbridge Energy, wants to build the Northern Gateway pipeline to carry tar sands oil to the West Coast for export to China and other Asian markets. That pipeline wouldn’t cross American soil, so U.S. approval is not needed.

However, opposition to Northern Gateway is even fiercer than the U.S. campaign against Keystone XL, and many observers doubt it will ever be built. That seems to support the argument that stopping Keystone XL will strand the tar sands oil — but there are other twists to the story.

Companies controlled by the Chinese government are quietly buying into Canadian tar sands ventures, and you have to figure that with or without a West Coast pipeline, they’ll find some way to get the oil to China. Finally, the Canadian government is exploring ways to ship tar sands oil through eastern Canada to the Atlantic for export to Europe.

It’s a complicated narrative, and we’ve barely scratched the surface. Bottom line: Keystone XL would mean Canada gets the money, China (or some other foreign buyer) gets the oil and the U.S. gets the pollution, the pipeline spills and the injustice of having a foreign company seize American citizens’ property.

For those reasons — which have little to do with halting global climate change — Obama’s decision was a no-brainer. But there is added symbolic importance. Permitting Keystone would have signaled that America was still committed to the dirty energy sources of the past. A final rejection of it would be a sign to the world that the U.S. is ready to lead on climate change.

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