Just Get On With It Already

As many of you know, the first real order of business for the new Congress last week was to address the building of the Keystone XL pipeline.  This is the project that will bring Canadian shale oil from Canada to the Gulf of Mexico down the middle of the United States.  The project is 1200 miles of pipeline from the Canadian border to Nebraska where it will meet up with existing pipelines.

As I’ve written before, to me this is a tempest in a tea pot (and I do not mean Teapot Dome).  Let’s just get on with it and build the thing.  Too much time, energy, money and political capital have been spent on an issue that has not really been addressed on the merits, or lack thereof, of the issue, but rather on the symbolism attached to it by both those that support the project and those that oppose it.

Last week the House voted 266-153 on a measure that pushes the project forward.  The Senate is preparing to debate their version of the bill and it is likely to be a long and contentious session because in addition to the emotion surrounding the issue, there is a long list of proposed amendments to the bill ranging from the science behind climate change to the requirement to use United States produced steel in the construction of the pipes used.

President Obama has already threatened to veto any bill requiring its construction.  Primarily, the stated reason is that it violates the Constitutional powers awarded to the Executive Branch of our government. The argument is that the State Department makes the final recommendation to the president because it involves foreign nations and treaty obligations.  Perhaps.  Primarily, in my view, the president threatened a veto of an as yet unpassed bill in order mollify his supporters that have decided this pipeline is an affront to our national goals regarding the environment.

To this writer, the emotion surrounding the issue has taken over any modicum of common sense. Those that support the pipeline claim that it will rejuvenate the economy, create tens of thousands of new jobs, and support a renewed infrastructure.  Those that oppose it argue that it will be environmentally destructive and create Green House Gas (GHG) emissions of biblical proportions (well, maybe a slight exaggeration on my part).  As usual, the truth is somewhere else.

Both supporters and opponents point to the same impact study conducted by the State Department. The report, known as the Final Supplemental Environmental Impact Statement for the Keystone XL Project  analyzes the “environment” in the largest sense — that is both the natural environment and the economic environment and the impacts the project probably will and will not have on the United States. (You can find the Executive Summary that contains the most pertinent facts here.)  Not surprisingly, supporters and opponents have cherry picked the facts that best support their argument.

In looking at some of the numbers bandied about, keep in mind that the Canadian shale oil deposits are already being used and that oil from them is already being transported to sites around North America. Not building the pipeline will not keep the Canadians from developing those sites.  There is also a fly in the ointment as I write this and that is the fact that the price of oil plummeted over the last few months. Good news for those of us at the gas pumps, but it may have an impact on the development of the oil shale deposits as estimates project that oil needs to be in the $65-$75 range in order to make a profit. However, such projects are not started and stopped in short order.  Currently experts do not believe that oil will stay at such low prices forever, and they are planning two to three years out when the price of oil is likely to be profitable again for these, and other similar deposits.

One of the most disputed facts thrown about is the number of jobs created with this project. Proponents argue that the State Department study says that 42,100 jobs will be created.  Opponents say that the study says that it will only be about 50 jobs.  They are both right.  The study says that while building the pipeline, 42,100 “direct, indirect and induced” jobs are created of which 3900 would be as a result of actual construction and last for about a year (or, the report says, half that number for two years, depending on how fast it gets built).  The 3900 would be “direct” jobs. The “indirect” are things such as the folks that manufacture the pipes for the line, or trucks to move dirt and the like.  The “induced” are things like restaurants, movie theaters and other businesses where people with money in their pockets from working on the line will spend their hard-earned cash. Note that they do not say that these will all be “new” jobs as is often argued.  The report actually says that there will be about 50 new jobs when construction finishes (45 permanent workers and 15 contractors). But for argument’s sake let’s use the 42,100 figure.  That equates to an increase of 0.02% to the annual economic activity of the country.  For one year.  Not exactly the savior of the economy it is made out to be.  For further comparison, there have been approximately 250,000 new jobs created each month for seven of the last nine months.  The Keystone pipeline is, at best, a drop in the bucket.

Likewise those predicting an environmental disaster use the State Department report to their advantage. But they also leave out some key data.  Remember, the oil is going to go to market. Regardless of U.S. environmental wishes, the Canadians are going to move that oil.  Currently, much of it goes by trucks and rail cars.  This is the “no action alternative” referred to in the report.  In other words, if the pipeline is not built.  According to the report, Green House Gas (GHG) emissions will increase by 28-42% if the pipeline is not built.  Likewise, it seems that moving the oil by pipe is safer to the community than having trucks and rail cars that are subject to accidents move it.  The report also addresses the possibility of oil spills via a leak in the pipeline, and while agreeing that it could have significant local effects, the overall chance of it is very small and the overall environmental impact would be small.  There is a lot of experience gained in building the tens of thousands of miles of current pipelines and the technology today is significantly enhanced.

To be clear, I think that our country must move to develop non-fossil fuel alternatives as quickly as possible.  I am not for pollution and I believe that we have significant work to do to clean up our environment, to which fossil fuels are a major contributor of pollution.  The reality, unfortunately, is that we are not there yet.  Perhaps some day, but not yet.  Building this pipeline will have little to no impact on cleaning up the environment as it will exist over the near future.  Likewise, building or not building this pipeline will have little impact on jobs in the economy.

Thus my point.  To me, this is indicative of the way the House and Senate operate today.  Little real progress occurs while litmus tests of purity on emotional issues take priority and pose as substantive measures supporting the “American people.”  The reality is that the arguments for and against the Keystone pipeline have little to do with the good of the country and a whole lot more to do with the well-being and financial gains of the members of political parties that take one side or the other and exploit it for their gain.

President Obama can move past this by announcing tomorrow that he has accepted the State Department’s report and approved the building of the pipeline.  No legislation necessary.  Maybe then we can move on to the issues confronting our country that have true bipartisan support such as tax reform and rebuilding our roads, bridges and other infrastructure that is the real lifeline of our economy.