Monday, February 18, 2013

Keystone Pipeline Decision ... Which Way Will It Go?

President Obama is faced with a big time POLITICAL decision about North American energy independence, jobs, economic growth and our future relations with Canada, our close neighbor and ally.

Both labor unions and businesses support the Keystone pipeline's construction, as do most Americans.

The greenies, aka environmentalists, oppose it.

Politically, both unions and environmentalists support Democrats. That puts President Obama between the proverbial political rock and a hard place.

All North Americans (U.S., Canadian and Mexican citizens alike) wish for energy independence. Achieving that happy state of affairs will enhance both our continent's and nation's security, economic growth and global competitiveness.

In addition, it will bring more jobs to unemployed Americans and billions of dollars in additional tax receipts to the U.S. Treasury, both of which are badly needed.

So watching what the President decides to do about Keystone will be both revealing and instructive as to how serious he is about growing the U.S. economy during his second term in office.

Let's hope the greenies have nothing to celebrate and that in the end the President does what's best for America.

Obama Faces Risks in Pipeline Decision covers the Keystone situation well:
A protest on Sunday against the Keystone oil pipeline, a project that Canada is counting on and that environmentalists oppose.
President Obama faces a knotty decision in whether to approve the much-delayed Keystone oil pipeline: a choice between alienating environmental advocates who overwhelmingly supported his candidacy or causing a deep and perhaps lasting rift with Canada.       

Canada, the United States’ most important trading partner and a close ally on Iran and Afghanistan, is counting on the pipeline to propel more growth in its oil patch, a vital engine for its economy. Its leaders have made it clear that an American rejection would be viewed as an unneighborly act and could bring retaliation. . . . 
But this is also a decisive moment for the United States environmental movement, which backed Mr. Obama strongly in the last two elections. For groups like the Sierra Club, permitting a pipeline carrying more than 700,000 barrels a day of Canadian crude into the country would be viewed as a betrayal, and as a contradiction of the president’s promises in his second inaugural and State of the Union addresses to make controlling climate change a top priority for his second term....      
Michael Brune, executive director of the Sierra Club, predicted that Mr. Obama would veto the $7 billion project because of the adverse effects development of the Canadian oil sands would have on the global climate.
“It’s rare that a president has such a singular voice on such a major policy decision,” Mr. Brune said. “Whatever damage approving the pipeline would do to the environmental movement pales in comparison to the damage it could do to his own legacy.”
Mr. Brune was one of about four dozen pipeline protesters arrested at the White House on Wednesday, in an act of civil disobedience that was a first for the 120-year-old Sierra Club.
So far, Mr. Obama has been able to balance his promises to promote both energy independence and environmental protection, by allowing more oil and gas drilling on public lands and offshore while also pushing auto companies to make their vehicles more efficient. But the Keystone decision, which is technically a State Department prerogative but will be decided by the president himself, defies easy compromise.
“This is a tricky political challenge for the president,” said Michael A. Levi, an energy fellow at the Council on Foreign Relations. “The reality is everyone has defined the stakes on Keystone in such absolute terms that it is borderline impossible to see a compromise that will satisfy all the players.”
The proposed northern extension of the nearly 2,000-mile Keystone XL pipeline would connect Canada’s oil sands to refineries around Houston and the Gulf of Mexico, replacing Venezuelan heavy crude with similar Canadian grades.
Proponents say its approval would be an important step toward reducing reliance on the Organization of the Petroleum Exporting Countries for energy. Opponents say that the expansion of oil production in shale fields across the country has already reduced the need for imports. Environmentalists have singled out the pipeline because it would carry oil derived from tar sands, in a process that is dirtier than other forms of oil production and that releases more carbon dioxide.
The State Department appeared poised to approve the pipeline in 2011, but Mr. Obama delayed a decision based on concerns about its route through vulnerable grasslands in Nebraska. The pipeline company, TransCanada, submitted a revised route, and the governor of Nebraska approved the plan last month, sending the final decision to Washington.
The Keystone pipeline is treated mainly as a domestic issue in Washington. But for Canada’s Conservative government, which has its power base in the oil-rich province of Alberta, it represents a crucial moment in Canada’s relationship with its most vital foreign partner even if the oil sands are also a divisive issue within Canada. Mr. Obama and Prime Minister Stephen Harper are not close . . . . While Mr. Obama comes from the liberal wing of his party . . ., Mr. Harper is conservative even by the standards of his own Conservative Party . . . . His political base, the province of Alberta, is the heart of the Canadian oil patch. . . . 
Still, the amount of Canadian oil that the United States imports daily — 2.4 million barrels, roughly twice what it imports from Saudi Arabia — points up a cornerstone of Mr. Obama’s goal to decrease dependence on oil from the unstable Middle East and unreliable sources like Venezuela. The Keystone pipeline would increase Canadian oil imports by more than 700,000 barrels a day, the equivalent of roughly two-thirds of Venezuelan imports.

Canadian leaders are cautious not to threaten the Obama administration directly, but they suggest that if the pipeline is not permitted, the close relationship between the countries will be damaged and Canada forced to look elsewhere, particularly to China, for new energy markets.
“The signal of a rejection of a permit by the president would be a significant change in the Canada-U.S. relationship,” said Greg Stringham, the Canadian Association of Petroleum Producers’ vice president for oil sands and markets. “Canada, right now, with our potential growth in energy, is looking for security of demand wherever that might be throughout the world.” . . . 
Canada has powerful allies in the United States labor movement, which is pushing for the pipeline because proponents say it would generate tens of thousands of jobs, and in big oil companies like Exxon Mobil and Chevron that are heavily invested in the oil sands fields.
The rapid expansion of oil sands production has made oil critical to the Canadian economy. Canada has invested more than $100 billion in the oil sands over the last 10 years, shifting economic and political power westward to Alberta. Production is tied to 75,000 jobs nationwide, a number that is expected to multiply over the next 25 years, and nearly all of the country’s oil exports go to the United States.
The shortage of pipeline capacity has produced localized supply gluts, forcing the price of Canadian crude well below American and international benchmarks. If the Keystone pipeline is not completed, energy experts say, weak prices will make the economics of future oil sands projects questionable.
The Canadian Association of Petroleum Producers estimates that the country’s current production of 3.2 million barrels of oil a day will reach 6.2 million barrels a day by 2030, with oil sands representing an overwhelming share of the increase.
The producers and Canadian officials insist that more Canadian oil will reach United States markets one way or another, even if the Keystone project is not approved — most likely through a combination of rail, barges, trucks and pipelines once used to transport natural gas."
Summing Up
Business and labor agree with most Canadians and most Americans. We need the Keystone pipeline to be approved and built asap, if not sooner.
But that's been the case for several years now.
Will the President do the right thing for the future of our national security, the U.S. domestic economy and the well being of the Canadian economy?
That's the question. We'll eagerly await the answer as presidential can kicking is about over on this one.
It's time to bite the bullet.
Thanks. Bob.

No comments:

Post a Comment