March 3, 2024

The Keystone to nowhere



Today’s Events in Historical Perspective

America’s Longest-Running Column, Founded 1932

The Keystone to nowhere

By Douglas Cohn and Eleanor Clift

WASHINGTON – Enough Democrats will join Republicans in voting for the Keystone pipeline that the measure will likely find its way to President Obama’s desk, where the White House has signaled it will face a veto. The 67 votes to override a presidential veto are likely out of reach for the GOP, but setting aside partisan politics, this is no great loss for the country.

Truth be told, this is a pipeline to nowhere. We have an abundance of oil right now; we don’t need more in the system. At some point in time, we will want that Canadian oil, but why spend the money now for oil we don’t need now?

Backers of the pipeline tout the jobs it will create. But with unemployment under 6 percent, the private sector is generating over 200,000 jobs a month. The overwhelming majority of the 42,000 jobs the State Department says will be created by building the pipeline will vanish once construction is complete.

Bottom line, we don’t need a jobs stimulus bill now, and we don’t need more oil. It’s not that companies should stop drilling, but why spend massive amounts of money for oil that’s not needed, and won’t generate much of a financial return. Why not keep it in the ground?

There are some genuine environmental concerns about Canadian tar sands oil, and they are highlighted by the fact that TransCanada, the company that is now the sole owner of the Keystone pipeline, will not be required to pay into the Oil Spill Liability Trust Fund. The Fund was created 25 years ago after the Exxon Valdez oil spill to help relieve taxpayers of the burden of clean up. It requires oil companies to pay a tax of eight cents per barrel to clean up any spills.

The State Department has said in a preliminary report that the pipeline would have a negligible impact on the environment, and giving TransCanada a pass on the Fund infuriates environmentalists.

The better argument for opponents to make is that in a world of diminishing resources, policymakers must distinguish between oil that should be pulled from the ground now, and oil that is better left in the ground.

Tar sands oil is hard to extract and more expensive to refine than liquid oil because of its thick, sticky viscous nature. It makes economic and environmental sense to leave it in the ground now, and extract it later when and if it becomes more viable economically.

A powerful ad running on cable news outlets proclaims the virtues of the Keystone pipeline, and says that President Bill Clinton, President George W. Bush, and even respected financier Warren Buffett all say the pipeline should be built.

It’s not surprising that Bush would support the pipeline. He’s an oil man from Texas, and he’s a Republican. His party is behind the big push for Keystone. As for Clinton, he was a pro-business president, and it’s fair to say that in his eight years in office, he cultivated a very positive climate for economic growth. Yet if Clinton were asked today whether he would support the pipeline, his answer might be very different than it was two years ago when he endorsed the project.

Ditto for Warren Buffett, who when asked early last year if he would support the pipeline, said yes. A year ago, oil was over a hundred dollars a barrel; today it’s under $50 a barrel with no sign of slowing in its downward trajectory.  Anything that happens in Washington has a political angle. But taxpayers should weigh the likely outcome of the Keystone fight as a matter of economics, not politics.

Twitter @WMerryGoRound

© 2015 U.S. News Syndicate, Inc.

Distributed by U.S. News Syndicate, Inc.


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