Keystone XL and Trade
Posted January 22, 2015
During his State of the Union speech President Obama talked about expanding trade and building up the middle class. Both good objectives. And, while a president’s annual message to Congress usually is full of goals that are mostly aspirational, both of these are attainable – through energy.
First, the president could work to end the ban on the export of domestic crude oil, a relic of the 1970s and an era of U.S. energy scarcity. A supply of light sweet crude, mismatched for a refinery sector largely configured to handle heavier crudes, would be able to reach overseas markets. This would help support domestic production and jobs – many of them well-paying middle-class jobs – while benefitting our trade balance.
Likewise, the administration could stop slow-walking approvals for planned U.S. liquefied natural gas (LNG) facilities to export LNG to non-free trade agreement nations – again, spurring domestic production and jobs and improving America’s trade bottom line.
Both would increase the U.S. presence in global energy markets – expanding world supply, helping allies and strengthening American foreign policy – all consistent with our country’s status as an energy superpower.
Second and more specifically, the president could approve the Keystone XL pipeline. It’s needed energy infrastructure that would bring more than 800,000 barrels of oil a day from Canada and the U.S. Midwest, support tens of thousands of U.S. jobs – good middle-class jobs – and help strengthen the U.S. energy/trading relationship with Canada, our No. 1 source of imported oil.
In that sense, Keystone XL is way more than “a single oil pipeline,” as the president put it this week. It would be part of expanding North America's energy infrastructure, which in turn would help increase U.S. energy security.
Here’s what we know about Keystone XL and Canadian oil sands. In its last environmental review of Keystone XL, the U.S. State Department said the pipeline would have no significant environmental impact, climate or otherwise. It said the project would support 42,100 jobs during construction and add about $3.4 billion to U.S. GDP.
State also said that Canadian oil sands development will grow, and it has. According to Canadian officials, production was 1.7 million barrels per day (mbd) in 2012, growing to 1.9 mbd in 2013. It is finding its way to market, in part with rail transport growing from less than 20,000 barrels per day in 2011 to 180,000 barrels per day in late 2013, according to State’s report. This is important because the United States still relies on imports for about a third of the oil it uses.
We know that Canadian oil boosts America’s energy security. As for trade, the U.S. also benefits in a couple of ways.
Here’s how. While oil imports from Canada (oil sands and otherwise) are increasing, growing from 2.2 million barrels per day in 2008 to nearly 2.6 million barrels per day in 2013 …
… imports from Venezuela are declining – from 1.1 million barrels per day in 2008 to 725,000 barrels per day in 2013:
This is good for the U.S. because Canada, a close ally, also is a more stable supply source. It’s also good from a trade standpoint. According to government data, for every dollar spent on imports from Canada, the U.S. receives 90 cents back in exports sold to Canada. That compares to a rate of 36 cents on the dollar in our trade with Venezuela.
Whether you’re talking about energy security or economics, trading with Canada remains a very good deal for the U.S. That Keystone XL would help facilitate that trade is another compelling reason the pipeline should be approved – in turn, helping our economy and helping create jobs here at home.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.
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