President Obama’s Keystone XL Pipeline Decision

Keystone XL map
MAP BY TRANSCANADA OF THE EXISTING AND PROPOSED KEYSTONE PIPELINES

In 2008, TransCanada filed an application  for a presidential permit to build an extension to the Keystone Pipeline. This addition  came to  be known as  “Keystone XL,” (“KXL”) and was intended to add capacity to the existing pipeline.  After 7 years of political wrangling and gross distortions of the benefits and sometimes repercussions of building the KXL portion of the pipeline, President Obama announced on Friday that the permit would officially be denied.

The timing of the announcement is very interesting given that Canada has a new Prime Minister, Justin Trudean, who hails from the center of the country and of the political spectrum, replacing conservative Stephen Harper, an oil industry supporter who hails from Canada’s oil producing province of Alberta.  The transition is similar to the one the U.S. navigated when they transitioned from the Bush administration with heavy ties to the oil industry to the Obama administration.   It was definitely an easier decision to announce to Prime Minister Trudeau, who plans to reverse many of the climate change denying policies of the previous Tory government.

This was ultimately the right decision for many reasons.  The Keystone XL was being built to carry additional capacity from Canada’s tar sands to the refineries in Texas.  It is actually the fourth phase of the overall Keystone Pipeline project. The first three phases are as follows:

  • Phase I- delivering oil from Hardisty, Alberta, over 3,456 kilometres (2,147 mi) to the junction at Steele City, Nebraska, and on to Wood River Refinery in Roxana, Illinois, and Patoka Oil Terminal Hub (tank farm) north of Patoka, Illinois, completed in June 2010.
  • Phase II- running 468 kilometres (291 mi) from Steele City to storage and distribution facilities (tank farm) at Cushing, Oklahoma,completed in February 2011.
  • Phase III- running 784 kilometres (487 mi) from Cushing to refineries at Port Arthur, Texas was completed in January 2014, and a lateral pipeline to refineries at Houston, Texas and a terminal will be completed late 2015, going online a year later.

The Keystone XL was basically a duplicate of the Phase I, taking a different route and picking up some light crude from the fracking fields in North Dakota and Montana.  Phase IV (KXL)  supports an expansion of the Canadian oil sands which may have seemed like a good idea to some back in the earlier part of 2008 when the price of oil was almost double the current level but does not make much business sense given the latest price declines due to over supply in the market.   Expansion of Alberta’s tar sands has been put on hold by developers because it costs more to extract the oil than the current price they will receive on the world market.

The economics of the Keystone XL pipeline will only get worse as the cost of renewable energy decreases, and efficiency and energy storage breakthroughs that are being made on a daily basis make their way to the marketplace.

Below is President Obama’s statement in its entirety:

Good morning, everybody.  Several years ago, the State Department began a review process for the proposed construction of a pipeline that would carry Canadian crude oil through our heartland to ports in the Gulf of Mexico and out into the world market.

This morning, Secretary Kerry informed me that, after extensive public outreach and consultation with other Cabinet agencies, the State Department has decided that the Keystone XL Pipeline would not serve the national interest of the United States.  I agree with that decision.  

This morning, I also had the opportunity to speak with Prime Minister Trudeau of Canada.  And while he expressed his disappointment, given Canada’s position on this issue, we both agreed that our close friendship on a whole range of issues, including energy and climate change, should provide the basis for even closer coordination between our countries going forward.  And in the coming weeks, senior members of my team will be engaging with theirs in order to help deepen that cooperation.

Now, for years, the Keystone Pipeline has occupied what I, frankly, consider an overinflated role in our political discourse.  It became a symbol too often used as a campaign cudgel by both parties rather than a serious policy matter.  And all of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others.

To illustrate this, let me briefly comment on some of the reasons why the State Department rejected this pipeline.

First:  The pipeline would not make a meaningful long-term contribution to our economy.  So if Congress is serious about wanting to create jobs, this was not the way to do it.  If they want to do it, what we should be doing is passing a bipartisan infrastructure plan that, in the short term, could create more than 30 times as many jobs per year as the pipeline would, and in the long run would benefit our economy and our workers for decades to come.  

Our businesses created 268,000 new jobs last month.  They’ve created 13.5 million new jobs over the past 68 straight months — the longest streak on record.  The unemployment rate fell to 5 percent.  This Congress should pass a serious infrastructure plan, and keep those jobs coming.  That would make a difference. The pipeline would not have made a serious impact on those numbers and on the American people’s prospects for the future.   

Second:  The pipeline would not lower gas prices for American consumers.  In fact, gas prices have already been falling — steadily.  The national average gas price is down about 77 cents over a year ago.  It’s down a dollar over two years ago.  It’s down $1.27 over three years ago.  Today, in 41 states, drivers can find at least one gas station selling gas for less than two bucks a gallon.  So while our politics have been consumed by a debate over whether or not this pipeline would create jobs and lower gas prices, we’ve gone ahead and created jobs and lowered gas prices.

Third:  Shipping dirtier crude oil into our country would not increase America’s energy security.  What has increased America’s energy security is our strategy over the past several years to reduce our reliance on dirty fossil fuels from unstable parts of the world.  Three years ago, I set a goal to cut our oil imports in half by 2020.  Between producing more oil here at home, and using less oil throughout our economy, we met that goal last year — five years early.  In fact, for the first time in two decades, the United States of America now produces more oil than we buy from other countries.  

Now, the truth is, the United States will continue to rely on oil and gas as we transition — as we must transition — to a clean energy economy.  That transition will take some time.  But it’s also going more quickly than many anticipated.  Think about it.  Since I took office, we’ve doubled the distance our cars will go on a gallon of gas by 2025; tripled the power we generate from the wind; multiplied the power we generate from the sun 20 times over.  Our biggest and most successful businesses are going all-in on clean energy.  And thanks in part to the investments we’ve made, there are already parts of America where clean power from the wind or the sun is finally cheaper than dirtier, conventional power.

The point is the old rules said we couldn’t promote economic growth and protect our environment at the same time.  The old rules said we couldn’t transition to clean energy without squeezing businesses and consumers.  But this is America, and we have come up with new ways and new technologies to break down the old rules, so that today, homegrown American energy is booming, energy prices are falling, and over the past decade, even as our economy has continued to grow, America has cut our total carbon pollution more than any other country on Earth.

Today, the United States of America is leading on climate change with our investments in clean energy and energy efficiency.  America is leading on climate change with new rules on power plants that will protect our air so that our kids can breathe.  America is leading on climate change by working with other big emitters like China to encourage and announce new commitments to reduce harmful greenhouse gas emissions.  In part because of that American leadership, more than 150 nations representing nearly 90 percent of global emissions have put forward plans to cut pollution.

America is now a global leader when it comes to taking serious action to fight climate change.  And frankly, approving this project would have undercut that global leadership.  And that’s the biggest risk we face — not acting.  

Today, we’re continuing to lead by example.  Because ultimately, if we’re going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.

As long as I’m President of the United States, America is going to hold ourselves to the same high standards to which we hold the rest of the world.  And three weeks from now, I look forward to joining my fellow world leaders in Paris, where we’ve got to come together around an ambitious framework to protect the one planet that we’ve got while we still can.  

If we want to prevent the worst effects of climate change before it’s too late, the time to act is now.  Not later.  Not someday.  Right here, right now.  And I’m optimistic about what we can accomplish together.  I’m optimistic because our own country proves, every day — one step at a time — that not only do we have the power to combat this threat, we can do it while creating new jobs, while growing our economy, while saving money, while helping consumers, and most of all, leaving our kids a cleaner, safer planet at the same time.  

That’s what our own ingenuity and action can do.  That’s what we can accomplish.  And America is prepared to show the rest of the world the way forward.

Thank you very much.

 

Tracey Smith About Tracey Smith
Tracey is an accountant and entrepreneur with a passion for nature. This passion is what spurred her interest in renewable energy, and the rest is history as they say. Tracey is a principal in Energy Think Group, the publisher of Solar Thermal Magazine and Tek-Think. She is also the principal at Women's Financial Help Desk. She spends her free time in the outdoors with her horses and dogs. She loves to travel.

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