Energy & Entrepreneurs

Obama Administration Delays Places Pipeline at Risk

by Raymond J. Keating

The Obama administration has decided to put off a decision on the extension and expansion of TransCanada Corp.'s Keystone XL pipeline, which would transport Canadian sands crude oil to refineries on the Gulf Coast.

Specifically, the State Department, with the stated support of President Obama, will push off the issue until 2013.

Keep in mind that this project has been under review since 2008, and the State Department already issued an impact statement on August 26 finding that the pipeline would have no significant impact on the environment. But now the State Department wants to take more time to assess alternative routes for the pipeline.

What's really at work here? It seems to be about the President's re-election. Specifically, it appears to be an effort to keep the radical green movement's support.

That's disingenuous, as the project obviously deserves to be approved on the clear merits. But even from a political perspective, far more important to any political campaign are jobs and the economy.

The Obama administration's decision to further delay this project means putting thousands of jobs on hold. For example, as estimated by the Canadian Economic Research Institute, the investment in this project would generate a $521 billion boost over 25 years in U.S. GDP, and growth in U.S. jobs from 21,000 jobs in 2010 to 465,000 jobs in 2035.

One aspect of pipeline opposition came from various elected officials in Nebraska, who were concerned about the pipeline going through state's Ogallala aquifer in the Sand Hills area. But on November 14, after the State Department's delays were announced, TransCanada agreed to re-route the pipeline to avoid this area.

But that, of course, is not enough for the radical environmentalists. As the Los Angeles Times reported: "TransCanada Corp.'s agreement to skirt the porous, watery region atop the nation's most important agricultural aquifer was celebrated by Nebraska ranchers and conservationists who have battled the pipeline. But it posed a new dilemma for environmentalists, who had hoped to scuttle the project because of concerns about climate change, air pollution and the potential for leaks along the 1,700-mile route."

Of course, the hard-core opponents to this pipeline simply oppose the use of carbon-based energy. But even if the pipeline were defeated, the oil would still be tapped and used. It simply would be shipped elsewhere, to the detriment of U.S. entrepreneurs, businesses, jobs and consumers. After the Obama administration announced its additional delays, Canadian Prime Minister Stephen Harper noted that supplying energy to Asia, including China, would be a priority for his nation.

In the end, delays due to government dithering and politics mean lost revenues and profits for the businesses involved. The Obama administration must be aware of this, and considering the politics, perhaps they just want this project to just go away. Indeed, President Obama does not seem all that interested in boosting economic growth, expanding jobs, and expanding our access to affordable, reliable energy. Again, that's bad politics and bad economics.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.