President Obama Wrong on Keystone

How the president put the interests of a few environmentalists before the interests of the entire nation

On Wednesday the Obama administration denied the application to build the Keystone XL pipeline, the $7 billion project that would transport Canadian crude oil between Alberta, Canada and Port Arthur, Texas via a 1,700-mile pipeline. This decision, which favors a small number of environmentalists, comes more than a month before the February 21 deadline Congress gave the President in November.

President Obama’s flawed decision will cost Americans tens-of-thousands of jobs, billions of dollars in economic output, and will continue down a flawed energy policy that leaves North American resources untapped in the face of growing Middle-East turmoil.

Keystone began making headlines in November when environmentalists held a multi-day protest outside the White House demanding President Obama deny the federal permitting needed to finish the pipeline. On the other side of the argument were labor unions including the United Association of Plumbers and Pipefitters, the International Union of Operating Engineers, the International Brotherhood of Teamsters, and the Laborers’ International Union of North America, who cite the thousands of jobs associated with the construction, maintenance, and operating of the massive pipeline.

Four days into the protests, President Obama succumbed to the protesters and announced he would delay the decision “until at least 2013, pending further environmental review.” It appeared that the President had dodged a political bullet, giving environmentalists a short reprieve without fully disappointing labor unions, whose support he needs for reelection. But this plan was squashed shortly before Christmas when the Republican-controlled U.S. House of Representatives inserted language into an important payroll tax deduction bill requiring the President to make a decision on Keystone by February 21.

In Wednesday’s denial, President Obama naturally blames House Republicans for forcing him to take a position before a robust environmental review could be conducted. But this is a red herring.

The Keystone proposal was submitted three years ago and at least two comprehensive environmental reviews by the U.S. State Department have concluded that the project will not adversely affect the environment. In order for this project to go forward, President Obama only needed to answer one simple question – whether or not the Keystone pipeline is in the national interest.

This should have been a clear and resounding, “Yes.” Ironically, the decision comes only a day after a report issued by the President’s Council on Jobs and Competitiveness, a panel of business leaders advising the President on a path forward for the economy. The report recommends that he “facilitate the safe, thoughtful and timely development of pipeline… projects to facilitate the delivery of America’s fuel and electricity and maintain the reliability of our nation’s energy system.” The President has long advocated for American jobs and energy security, and this pipeline fits the bill for both.

Low estimates by the State Department cite at least 5,000 jobs directly related with the project and TransCanada, the company associated with the project, estimates more than 100,000 jobs could be created over the life of the project, with an immediate 20,000 construction and manufacturing jobs created by Keystone.

It is clear that the project will be a major job creator, with organized labor already signing on to multiple labor agreements for the project. All that is waiting is the President’s approval.

Keystone is clearly more “shovel-ready” than any project advocated by the administration, without billions of dollars in taxpayer money behind it.

When it comes to securing energy for America, as Canadian Prime Minster Stephen Harper concluded, approval of the pipeline should be a “no brainer.”

Iran’s recent threats to close the Strait of Hormuz – a major route for more than one-sixth of global oil supplies – emphasize this. Canada is not only our largest trading partner; it has the third largest proven reserves of oil in the world, only surpassed by Saudi Arabia and Venezuela. Does it make sense to continue relying on an increasingly unstable Middle East to provide our energy when our closest ally to the North has proven reserves ready to transport?

This decision is a major blow to America on all fronts except one – the small group of environmentalist that repeatedly interferes with an improving American economy. To be clear, with more than three years of deliberation, President Obama only had one determination left to make – whether this pipeline was in our nation’s interest. In weighing his decision, the President clearly put the interests of a few, vocal environmentalists ahead of the rest of the nation.

Adam Peshek is a research associate at the Reason Foundation.