To Approve or Reject Keystone XL -- That is the Question

Oct. 11, 2013

Pardon the reference to Hamlet, but doesn’t it seem to be taking a really long time to decide whether or not to approve the Keystone XL pipeline project? The extension of the Keystone pipeline was proposed in 2008. Since then, the project has entered the political football arena in Washington, kicked back and forth by business groups, environmentalists, Republicans and the White House.

A letter from 165 business executives on October 9 was the latest salvo in an effort by manufacturers and other industry groups to get President Obama to approve the project, which would extend the pipeline carrying Canadian tar sand oil from Oklahoma to Texas. The letter from the U.S. Chamber of Commerce, Business Roundtable and National Association of Manufacturers said the pipeline extension would result in $3.3 billion worth of investment and tens of thousands of American jobs.

“A strong, integrated energy distribution system that spans the continent promises to be a competitive advantage for the United States for years to come. The flow of oil, gas and electricity both north and south among the United States, Canada and Mexico directly benefits Americans by creating efficiencies and reducing overall energy prices for households and businesses. Plentiful, affordable energy could rejuvenate the U.S. industrial sector, and encourage investment.”

NAM president Jay Timmons commended the letter and said it confirmed the idea that the pipeline is about more than construction jobs.

“It is about the impact that approval or denial of this project will have on the economy in general, including on laborers, manufacturers, small and large businesses and communities throughout the supply chain.”

The Pew Research Center recently found that most Americans (65%) continue to favor building the Keystone XL pipeline.

“[A]s with other energy-related issues, there is a sharp partisan divide on the Keystone pipeline. But while an overwhelming majority of Republicans (82%) favor construction of the pipeline, so too do 64% of independents and about half of Democrats (51%).”

But environmentalists have made the pipeline a focus of their efforts to combat greenhouse gases. Ryan Lizza, a writer for The New Yorker, told NPR that the decision is controversial even in the environmental community.

"There's a debate among environmentalists of whether it was the right move. There are plenty of environmentalists who think that the most important thing they should be doing is demanding very aggressive EPA regulations on power plants and that would have a far bigger effect on reducing greenhouse emissions than stopping this pipeline. But the pipeline sort of took on a life of its own when there wasn't much else going on about climate change."

The next step in the Keystone XL regulatory process is for the State Department to issue a final environmental review of the project. A State Department official told Reuters' Timothy Gardner that the federal government shutdown could delay the review.

“Finalizing the environmental review ‘involves work with consulting agencies to discuss and address their comments as appropriate but most of those consulting agencies have had a large number of staff furloughed,’ the State Department official said.”

Environmentalists have been concerned that Keystone could become a bargaining chip in the government shutdown negotiations, or lack thereof. Before the shutdown occurred, some House Republicans told The New York Times they would tie raising the debt limit to approval of the project.

“'We feel like this is our only option,'” said Representative Lee Terry, a Nebraska Republican who is one of the leading pipeline supporters. Mr. Terry said members of his party were working to draft legislative language that would 'deem' the pipeline to be approved if an agreement is reached to raise the debt ceiling."

Jared Gilmour in the Huffington Post noted that "some Republicans, looking to get something out of the shutdown, see the pipeline as an appealing option that might also draw support from moderate Democrats who want to see it built."

Given that the Canadian oil is going to be transported and used somewhere, the president may indeed find Keystone an acceptable bargaining chip in the ongoing budget battles.

About the Author

Steve Minter Blog | Executive Editor

Focus: Global Economy & International Trade

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An award-winning editor, Executive Editor Steve Minter covers global economic and international trade issues, tackling subject matter ranging from manufacturing trends, public policy and regulations in developed and emerging markets to global regulation and currency exchange rates. As well, he supervises content production of all IW editorial products including the magazine,, research and informationproducts, and executive conferences. 

Before joining the IW staff, Steve was publisher and editorial director of Penton Media’s EHS Today, where he was instrumental in the development of the Champions of Safety and America’s Safest Companies recognition programs.

Steve received his B.A. in English from Oberlin College. He is married and has two children.

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