Time To Get On With It, Already

The controversy over the Keystone Pipeline System continues.  Adding to the controversy is the continued effort by President Obama’s administration to kick the can down the road.  Essentially, they keep moving a decision on the building of Phase IV (the “XL” or “eXport Limited” you see in the news as the source of so much contention between various factions) until after the next election. In a political sense this may be a good thing for those arguing on both sides of the issue as it gives them both continued fodder to use against the other in elections. Lots of people making lots of money to support their cause. In a real sense, however, it is at best ridiculous to continue to delay a decision and in a worse sense it could have an impact on the economy to continue to delay it. There is an old saying that “a bad decision is better than no decision” meaning that some action, which can be modified as the event unfolds, is better than dithering and having events unfold without direction.

I am hardly an expert on this subject, but in my opinion, it is time for the Obama administration to approve the new pipeline and to get on with it.  In truth, the arguments for and against it are exaggerated by all involved.  It will not significantly increase jobs in the United States and it will not significantly impact the environment in this country either given that our reliance on carbon based fuels will be a fact of life for years to come.  (This does not mean that we should give up on alternative methods of producing energy.  Quite the contrary.  To be viable into the future we need to learn to wean ourselves off fossil fuels.  However, the reality is that while those systems are being developed and coming on line, we will need to use what we have.)

In particular, since we now have to move fuel via train and truck tankers which, as has been proven dramatically in recent months, are prone to accidents that can have horrific results.  It seems to me that the use of a pipeline, while hardly fool-proof, is in any case safer than moving volatile liquids by rail or road.

For those that may not have followed this closely, I will try to summarize the issue.  (A more in-depth explanation of the issue may be found here.  A map of the current and proposed systems may be found here.)

In sum, the Keystone Pipeline System is designed to carry oil from Alberta Canada to the Gulf Coast of the United States and will run through the middle of the country.  The economic viability of the project is based on the relatively new technology that makes it possible to recover oil from shale and sand.  It is owned by the TransCanada Corporation.  Since that is a foreign company, and the pipeline crosses an international boundary, it was left to the State Department to study its impact and to recommend to the president whether it should or should not be approved.  Among the factors that impact the decision, and the primary source of much of the emotional debate, is the impact on the environment.  Arguments from both side of the aisle in Congress tends to be divided by which states perceive that they will benefit from the project, and those that use the project as a symbol of the fight to reverse the impact of fossil fuels on climate change. Besides the policy implications, I never forget that large amounts of money are involved on both sides of the issue and that they are playing for high stakes.

Those that politically support the expanded pipeline — parts of it are already in operation — primarily argue that it will lessen the need for the United States to import oil from outside North America, with Canada as a reliable and stable trading partner, and that it will create jobs for the economy.  Those that politically oppose its construction primarily argue that it will impact the environment in several ways: the possibility of oil spills in environmentally sensitive areas it crosses; the method used to extract the oil is not really akin to drilling but rather is closer to strip mining; and the biggest factor, they argue, is that it will add to climate change by adding more greenhouse gases to the environment, both by the burning of the oil, and because of the process used to extract it from the ground.

Lost in the argument, of course, is the fact that oil is a fungible commodity.  The price and availability is dependent on market forces and when converted to fuel it does not matter where it came from in the first place. While piping is cheaper than shipping it overseas (TransCanada has threatened to ship it to China if the United States does not build the pipeline), in the end the impact on the worldwide oil market is not significantly affected — it is driven mostly by availability rather than source.

Studies delineating the economic impact of the pipeline and the promised number of jobs created vary greatly with the groups presenting the information.  Most of the numbers have been grossly inflated by the proponents. The official State Department study indicates that somewhere around 2,000 jobs would be created while the pipeline was being built (about a two year process) with less than a hundred permanent new jobs.  The effect on the gross domestic product (GDP) would be almost nothing — a few billion dollars or a fraction of one percent.

Currently, the Senate is considering legislation requiring that the pipeline by built.  This would be a binding resolution, expected to pass easily in the House of Representatives. This follows in the wake of a non-binding resolution from last year that passed with 62 votes in favor.  There is some question as to whether the proposed legislation is Constitutionally legal as the Executive Branch is tasked with decisions relating to foreign powers.  Unknown is whether such legislation could survive a presidential veto which might be likely be it for environmental reasons or to prevent the Constitutional issues from setting a precedent. No one knows for sure if the president would veto it, but it is thought that a Senate override would fall short of the needed 67 votes to do so.

The Obama Administration has been reviewing the issue for approximately five years.  The State Department initially rejected the project in 2011 because the pipeline crossed aquifers in Nebraska that were a significant source of water in the Mid-West.  Since then the route was changed to avoid the most environmentally vulnerable locations.  The State Department deferred another decision in April of this year in order to continue to study its impact as expressed in what was considered an “unprecedented” number of inputs from the public.  However, the study is complete and seems to indicate that the environmental impact of building it or not building it will be nearly the same.

It is an emotional issue and is believed by those concerned to have ramifications beyond the actual facts of the case. I understand that.  However, it is time for the president to make a decision and get on with it.  The reality is that whatever his official decision, the issue will not die and is surely going to result in more lawsuits in addition to those that are already in the courts. It is time to resolve the issue and to stop trying to delay it again until after the next set of elections.  That in my mind, is poor leadership.  The issue has been studied to death.  It is time to act.  I consider myself to be an advocate of setting standards to limit or reverse climate change (whether or not you believe in climate change, how can one be for pollution?).  However, in this case, I see little reason to delay the completion of a pipeline that is already partially built and results in ever-increasing numbers of truck and train tankers on our roads and rail lines, especially when predictions are that those numbers will quadruple in 2014.

Just do it Mr. President.