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Delaying Keystone XL pipeline delays jobs, improved energy security

Nov 11, 2011
Carter Wood

A week ago President Obama made a point of saying he would be the ultimate decision maker on whether to approve the Keystone XL pipeline. On Thursday, the State Department pushed off action on the $7 billion project until 2013, claiming the need to further research the pipeline's route. A roundup of reaction follows...

Business Roundtable issued a statement, "Delay of $7 Billion Keystone XL Pipeline is Blow to Job Creation, Energy Security." BRT President John Engler said: "The State Department claims to need even more time for review, but this project has undergone years of exhaustive analysis. One thing we already know for sure: This delay is delaying jobs.”

The White House released a statement from President Obama endorsing the delay by the State Department, an Executive Branch agency. Meanwhile, the White House website continues to promote jobs creation under the banner, "We can't wait,"  and "The time to act is now."

Trans-Canada Corporation responded calmly in a release, "TransCanada to Work with Department of State on New Keystone XL Route Options":

"We remain confident Keystone XL will ultimately be approved," said Russ Girling, TransCanada's president and chief executive officer. "This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed."

But Girling acknowledges while Keystone XL remains the best option for American and Canadian producers to get their oil to the U.S. Gulf Coast, today's announcement by the DOS could have potential negative ramifications, especially where shippers and U.S. refiners are concerned.

"Supplies of heavy crude from Venezuela and Mexico to U.S. refineries will soon end," said Girling. "If Keystone XL is continually delayed, these refiners may have to look for other ways of getting the oil they need. Oil sands producers face the same dilemma - how to get their crude oil to the Gulf Coast." 

Canada's Finance Minister Jim Flaherty is not so sanguine about the project's completion. He tells Bloomberg the delay could mean Alberta oil sands will instead be exported to Asia.

"The decision to delay it that long is actually quite a crucial decision. I'm not sure this project would survive that kind of delay," Flaherty said yesterday in an interview at the Asia-Pacific Economic Cooperation summit in Honolulu. "It may mean that we may have to move quickly to ensure that we can export our oil to Asia through British Columbia." 

The American Petroleum Council's Jack Gerard saw politics at play in the State Department's decision to delay the project. From API's release, "White House decision on Keystone XL puts politics above jobs":

There is no real issue about the environment that requires further investigation, as the president's own State Department has recently concluded after extensive project reviews that go back more than three years. This is about politics and keeping a radical constituency opposed to any and all oil and gas development in the president's camp in November 2012.  

 

The National Petrochemical and Refiners Association noted the message being sent to Canada. From the NPRA's President Charles Drevna, "NPRA Says Keystone XL Pipeline Delay A Blow to America":

The State Department and President Obama’s decision to delay approval of the Keystone XL pipeline will strike a blow against American workers who need jobs, against American consumers who need energy, and against America’s economic and national security.

Turning our back on our good friend and ally Canada will exponentially increase the odds that Canadian oil is shipped to China and other countries overseas and will harm American fuel manufacturers and their employees.

The Calgary Herald's Deborah Yedlin writes a tough column,  "Pipeline decision signals U.S. not open for business"

So much for the U.S. being the bastion of free enterprise and respecting due process.

With the State Department announcing Thursday it wants to explore alternative routing for TransCanada's Keystone XL pipeline, after the project has been subject to 36 months of review - dutifully following a prescribed process that resulted in thousands of pages of documentation - the U.S. has signalled to the world it is not open for business.

Businesses need certainty and transparency to make investment decisions; that has been destroyed with one news release.

The Wall Street Journal editorialized, "Keystone Cop-Out."

President Obama used to be fond of "shovel-ready projects." He's also demanding that Congress pass his jobs bill immediately because 9% unemployment is a crisis, and, by the way, he's for making the U.S. less reliant on energy from tyrants. So how about putting 20,000 Americans to work on a North American energy project that's as shovel-ready as they come? Sorry, Mr. Obama is voting present. 

Organized labor had vigorously supported the project. In the Lincoln (Neb.) Journal-Star a day before the State Department's announcement, Terry O'Sullivan, General President of LIUNA -- the Laborers' International Union of North America, wrote, "Keystone XL opponents have let down America's workers":

[We] have become deeply alarmed at the strident, inflexible rhetoric that some in environmental, academic and Hollywood circles have embraced around the Keystone XL pipeline. As these activists pressure the White House in a last-ditch effort to delay or block the pipeline deal, they should be more concerned about the damage done to our country should the deal fall through.

Torpedoing the Keystone deal would be a direct attack on thousands of men and women who are desperate to be employed: Americans who have lost their jobs, their homes and their livelihoods.

We do not see any comment from O'Sullivan after the State Department's announcement Thursday. (Updated 12:52 p.m.); Politico reports O'Sullivan's reaction:

“Environmentalists formed a circle around the White House and within days the Obama administration chose to inflict a potentially fatal delay to a project that is not just a pipeline, but is a lifeline for thousands of desperate working men and women,” Terry O’Sullivan, general president of the Laborers’s International Union of North America, said in a statement. “The administration chose to support environmentalists over jobs — job-killers win, American workers lose.”

The Building and Construction Trade Department of the AFL-CIO launched a campaign last week supporting the pipeline, as the union president, Mark H. Ayers, wrote that the most important issue was JOBS.

Author

Senior Communications Advisor
Business Roundtable

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