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You Make the Call: The Keystone XL Pipeline

For four years, the question of whether or not we should let TransCanada (TRP) build the massive Keystone XL oil pipeline across the United States has gone unanswered.

YouMakeTheCallBut now the clock is running out, and the responsibility of making a final decision falls squarely on the shoulders of President Obama.

Unfortunately for him, there’s no right answer here.

If Obama approves the pipeline’s construction, he’ll not only be turning his back on the environmentalists who supported his election, he’ll also be backtracking on his pledge to fight climate change.

However, to reject the pipeline would mean spurning one of America’s staunchest allies and forfeiting the chance to reduce oil imports from places like Saudi Arabia and Venezuela.

Indeed, there are strong cases to be made on both sides of this argument. So rather than tell you what to believe, we’re simply going to lay out the facts and let you play commander-in-chief.

Should the United States approve the Keystone XL Pipeline or not?

You make the call…

The Case For the Keystone XL Pipeline…

Proponents argue that the Keystone XL Pipeline would create jobs, reduce our dependence on foreign oil and solidify our relationship with Canada.

That’s all true… to an extent.

TransCanada has said that finishing the pipeline would create about 20,000 new jobs, but that’s more than a slight exaggeration. As TransCanada’s CEO, Russ Girling, recently admitted, the real figure is closer to 6,500. And even those would be temporary construction jobs.

Still, those jobs are nonetheless important at a time when the U.S. economy is less than vibrant.

And that’s not all. In addition to jobs, the pipeline would bring a steady supply of new oil – as much as 700,000 to 850,000 barrels per day. That’s equal to about two-thirds the amount of heavy crude we import from Venezuela.

Indeed, while U.S. oil production is growing exponentially, we still import about 40% of our total supply – often from sources far less reliable than Canada.

Furthermore, Canada has made it clear that to reject the pipeline would be disappointing to say the least. The country has invested more than $100 billion in its oil sands over the last decade. Oil production now accounts for 75,000 jobs nationwide, and that number is projected to grow substantially over the next 20 years as Canada doubles its output.

As it is now, virtually all (99%) of Canada’s oil exports go to the United States. But that could change if the pipeline is not approved. Indeed, Canadian Prime Minister Stephen Harper, who has made the Keystone XL Pipeline the centerpiece of his resource-based economic and political strategy, has already threatened to take his country’s oil elsewhere.

“I am very serious about selling our oil off this continent, selling our energy products off to Asia,” he recently told CTV National News. “I think we have to do that.”

So to summarize: Approving the Keystone XL Pipeline will create jobs, bring more oil to America and improve relations with our closest ally this side of the prime meridian. And while environmentalists are justifiably concerned about the negative ecological impact of producing oil from tar, that practice is going to continue regardless of whether or not the pipeline is built.

Indeed, Canada is going to produce the oil no matter what. It’s simply a question of who’s going to get it.

So what’s the problem?

The Case Against the Keystone XL Pipeline…

The objections to the Keystone XL Pipeline begin and end with the environment.

Oil from tar sands is simply more taxing on the environment than traditional crude. It takes more energy to produce and it emits more carbon.

The Keystone XL’s supporters claim that tar sands oil only produces 6% more carbon than conventional crude oil, while other reports estimate the amount to be more than 20%. Still, by any measure, it’s worse.

Rejecting the pipeline would save a maximum of about 180 million tons of carbon dioxide per year.

That’s significant, considering it’s getting harder and harder for climate change deniers to hold their ground.

The 12 hottest summers on record happened in the last 15 years. In fact, 2012 was the hottest year, and July the hottest month, ever recorded in the United States. At one point, 64.82% of the contiguous United States suffered from at least moderate drought – also enough to set a new record.

And while climate scientists avoid blaming any single weather event on global warming, many say that climate change almost certainly played an important role in the destruction caused by Superstorm Sandy.

Furthermore, in addition to the general threat posed by climate change, there’s also a more localized concern about an oil leak in America’s heartland.

That’s a very real risk, considering Michigan recently experienced the costliest onshore spill in U.S. history. In 2010, corrosion and “organizational failures” resulted in 20,000 barrels of oil being released into the state’s Kalamazoo River.

The culprit? Calgary-based Enbridge (EEP).

As it happens, TransCanada’s first line of defense is the same technology that failed to stop the Enbridge spill. But even if it works perfectly, as much as 2% of the pipeline’s daily volume could escape from tiny leaks that are hard to detect.

That may not sound like much, but even a 1% leak from the Keystone XL would gush as many as 8,300 barrels of oil per day and cause a spill three times the size of the Michigan disaster within a week.

And all of this for oil we don’t really need.

Indeed, the United States may be importing oil right now, but in 20 years’ time it could be a net exporter. Since 2008, U.S. oil production has surged a stunning 28% thanks to new, unconventional supplies. And the numbers aren’t going anywhere but up.

Domestic output jumped to 6.4 million barrels per day last year – the largest amount since 1997 – according to the American Petroleum Institute. And the Energy Information Administration (EIA) predicts U.S. crude oil production will grow by 900,000 barrels per day (bpd) in 2013 – the largest amount on record – to 7.3 million bpd.

Meanwhile, the International Energy Administration’s (IEA) has U.S. oil production peaking at about 11 million barrels per day in 2019, and becoming a net exporter by 2030.

As for demand, it’s on the decline as natural gas becomes a bigger part of the U.S. energy landscape.

From that perspective, we’re essentially risking an environmental disaster for little to no return. Few jobs stand to be created, and the amount of oil we’d get in return is negligible.

From this perspective, the chief beneficiaries aren’t American citizens, but rather the same oil giants that are already turning billions of dollars in profit and walking away from the environmental disasters they create relatively unscathed.

So you make the call…

Jason Simpkins

, Energy Editor

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