Keystone XL Opponents Running Out of New Ideas

Mark Green
Posted August 13, 2014

Ever since the Keystone XL pipeline first started clearing environmental reviews by the U.S. State Department, opponents basically have been left with arguing that State missed one thing or another in an effort to drag out the federal review. Of course, the credibility of the tactic has suffered evaporation with each successful State review, now five in all.

That’s the context for the latest bid to undercut State’s thorough analysis – an analysis that claims that State underestimated Keystone XL’s emissions impact by failing to consider that the pipeline would increase supply and drive down global prices leading to increased demand (and emissions).

The economic foundation is suspect, as Alberta University Professor Andrew Leach writes in an article for MacLean’s, here. The gist of Leach’s argument:

KXL isn’t really a level shift in the supply curve, and thus the authors don’t actually make the case for there to be any global price effect associated with the pipeline.  … (I)t’s certainly incorrect to assume that the existence of single pipeline impacts all oil sands supply costs, or that not allowing it would render that oil supply unavailable at any price.    

In other words, Keystone XL doesn’t significantly impact the pace of oil sands development … which is exactly what the State Department has said multiple times now. State’s last Keystone XL review, issued earlier this year:

Section 1.4 (market analysis) notes that approval or denial of any one crude oil transport project, including the proposed Project, is unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the United States (based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios.

Analysis by IHS CERA came to a similar conclusion, finding that Keystone XL will have “no material impact” on greenhouse gas emissions because “even without the Keystone XL pipeline, we believe that oil sands production would grow at a similar rate.” Again, if oil sands development isn’t linked to Keystone XL, it doesn’t make sense to attribute emissions from increased supply to Keystone XL.

The Canadian government this week dismissed the critical study, saying it was based on faulty assumptions. The Associated Press reports:

The (report’s) authors acknowledge their study doesn’t answer whether Keystone XL would encourage oil sands expansion or simply provide an outlet for growth that would have happened anyway. The federal government says that’s a key point that undermines the study’s findings. Ottawa also says the study doesn’t factor in that Keystone crude would replace Middle East sour crude that causes more pollution.

The bottom line: Keystone XL has been under study for nearly six years. The review – by Washington and in the public square – is exhaustive, in the sense that questions some try to pass off as having been overlooked have, in fact, been addressed already and then some. This “new” study? As the folks at Oil Sands Fact Check point out, it also was considered and dismissed by the State Department.

The Keystone XL pipeline is in the U.S. national interest. As a coalition of associations argued in a letter to Secretary of State John Kerry last month, State’s own review said the project would create more than 42,000 jobs and result in $3.4 billion in additional revenue to GDP. The letter:

The Keystone XL Pipeline has been studied longer than any pipeline project in U.S. history. Since the initial permit application was filed in 2008, more than 10,000 miles of oil and natural gas pipeline have been built in the U.S.; this is enough pipe to cross our country nearly four times. However, after nearly six years of studies showing no significant impacts – yet positive benefits to our energy and economic security – politics are still trumping good policy.

Keystone XL has been delayed too long, postponing jobs and deferring a great opportunity to increase U.S. energy security. Enough with the politics, faux studies and other delaying tactics. It’s well past time to build the Keystone XL.