Pres. Obama just Dealt a Death Blow to the Keystone Pipeline

November 6th 2015

Alex Mierjeski

President Barack Obama rejected the Keystone XL Pipeline Friday, the Associated Press reports.

The President confirmed the move in a press conference

The move is a victory for his administration and environmentalists, and a defeat for the oil industry, Republicans in Congress, and the Canadian energy company TransCanada, which had submitted an application for construction.

After months of contention around the controversial oil pipeline snaking from Canada to the Gulf, the decision could help bolster the Obama administration's standing and credibility in the upcoming climate summit in Paris. Obama has said that reaching an agreement at the summit with world leaders would be a crowning achievement in his final term.

AP reports that the move will also set up confrontation from energy interests and Republicans in Congress, as well as those running in the 2016 election.

Can you explain the Keystone Pipeline again?

At this point, you’ve probably heard of the Keystone XL Pipeline—the final piece of the mostly completed Keystone pipeline project, which would have run crude oil from Alberta, Canada, south through the middle of the United States to the Gulf of Mexico. Although the completed pipeline would have been only 1,700 miles long, a veritable drop in the bucket of the 2.6 million miles of existing oil and gas pipelines snaking beneath the U.S., it’s been at the center of a fierce, years-long debate.

But before you get caught up in the debate, here are some sober facts to keep in mind.

Given the charged nature of the debate, it might come as a surprise to learn that around 40 percent of the project was completed. It is broken up into two segments, with a 298-mile pipe stretching from Steele City, Nebraska, to Cushing, Oklahoma, and another 485-mile segment between Cushing and Nederland, Texas. The final segment would have stretched from Alberta to Steele City. The completed pipeline would be able to move, at capacity, 830,000 barrels of crude oil every day.

The crude oil is delivered to facilities where it is then refined into things such as gasoline and other fuels. The production industry is currently booming in the middle of the country, and the pipeline would have taken on some of this crude for transport.

Why don’t environmentalists like it?

Something of a sticking point for environmentalists is the source in which the oil is found, and the process by which it is extracted. To get a moveable product from Canada’s tar sands, producers must heat the sands in order to separate out the crude oil. This process, in part, contributes to the estimated 17 percent more greenhouse gas emissions that oil sands production yields relative to traditional oil drilling.

The State Department released an environmental review earlier this year concluding that Keystone wouldn’t contribute significantly to greenhouse gas emissions—the oil will be produced with or without the pipeline. Environmental groups still would rather have the oil left in the ground. But the decision is nonetheless significant thanks to, among other things, the recent U.S.-China climate agreements to curb emissions over the next 20 years.

Could Keystone lower gas prices?

On the other end, some have argued that increased access to North American oil sources will help stabilize and lower domestic gas prices. (That is, we'll have less price fluctuation at the pump as a result of instability in the Middle East, for example).

But this is disputed. President Obama said that we risk providing a funnel for oil sent “through our land, down to the Gulf, where it will be sold everywhere else. That doesn’t have an impact on U.S. gas prices.” There’s even indication that the completed pipeline could actually increase local gas prices.

Could Keystone create jobs?

Proponents of the pipeline, who include Republicans (generally), construction workers, unions, and energy companies, also say that it would have created thousands of valuable, well-paying jobs. And some of the numbers back these claims up. The State Department has estimated that during the construction phase, about 42,000 direct and indirect jobs would generate around $2 billion in earnings. Unfortunately, though, that job number drops to about 50 (or less) following construction. (Oil companies like the pipeline, in part, because it requires so little to operate successfully.)