It all comes down to politicians’ fear of losing their jobs
By Rashid Husain Syed
TORONTO, ON/ Troy Media/ – The message finally seems to be getting through in Washington.
The release of the State Department Review was the final nail in the coffin for any environmental reason to delay a decision on the Keystone XL pipeline. The only remaining impediment is political – and even that is changing.
U.S. President Barack Obama is caught between a rock and a hard place – and he knows it.
First, the State Department Review thoroughly discredited any purported environmental concerns there may have been about the pipeline. Second, the review, released at the end of January, conceded that, with or without Keystone, the same amount of Alberta oil is going to be extracted anyway.
While acknowledging that using a barrel of Alberta oil emits 17 per cent more greenhouse gas than the average barrel refined in the United States, the review underlined that the development of the Alberta oil sands is driven by many other factors than a single pipeline. It firmly rejected the argument that stopping the pipeline would – in any way – thwart its development.
Even without Keystone, Alberta crude will still be produced and shipped to market, either through other pipelines or by rail, which is far more dangerous to both the environment and human life. Rail freight had already increased to 80,000 b/d in Canada by the end of last year from almost nothing in 2011. And unless the price of oil drops below $75 a barrel, the report added, oil sands producers can easily absorb the added cost of rail transport.
For those reasons alone, according to industry buzz, the project is one step closer to reality.
But, as always, it is political considerations rather than the strong business case or a lack of environmental concerns that will ultimately decide the pipeline’s fate.
The pipeline will run through states that have been losing population for an extended period of time and, with the exception of Montana, all are staunch Republican strongholds. It is also these states that are going to end up with the majority of both direct and indirect construction jobs from the project, attracting new job seekers and reversing the demographic trend.
No wonder, then, that the project is being supported by both Republicans – regarded as close to the industry – and Democrats in the oil and gas-producing states, including Democratic Senators Mary Landrieu of Louisiana, Mark Begich of Alaska and Mark Pryor of Arkansas. All face re-election this year and a rejection of the project could be politically damaging for them.
With the surge in U.S. domestic crude output, approval of the pipeline before the well of interest dries up remains strategically important to Canada. Suncor and Total last year had to scrap plans to build the $11.6-billion Voyageur mega-plant in Alberta, fearing the project wouldn’t be competitive with lower-cost shale oil. “What we’re seeing now is the Voyageur-type investment, it’s very difficult to justify doing that,” Suncor chief executive Steve Williams was quoted as saying.
But the pipeline not only adds to North American energy security; it would also put Canada on the global energy map in a big way. But without the infrastructure needed to transport and export its energy riches it will miss opportunity to sell oil at market value, underlines Brenda Kenny, chief executive of the Canadian Energy Pipeline Association while giving a talk in Guelph, Ontario.
“We are not getting value for our natural resources. We are trading energy cheap and therefore lagging in our ability to compete in world markets.” Even with 800,000 kilometers of pipeline in Canada, there’s still a shortage of pipeline capacity, she added.
Despite the current favourable conditions for its approval, if Keystone gets stalled Canada will have no option but to look to other markets. Prime Minister Harper has been hinting at this for some time now.
Canada has all the potential to be an energy giant. Keystone or no Keystone, Ottawa is determined to pursue the energy ambitions. For a change – that message is increasingly being heard in Washington too.