Approving Keystone XL Pipeline Would Create Jobs and Lower Gas Prices

The Obama administration should stop stalling and permit the Keystone XL Pipeline.

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Thomas Pyle is the president of the Institute for Energy Research

Yesterday, the House of Representatives passed legislation to require the Obama administration to reach a decision on the Keystone XL crude oil pipeline, which would run from Alberta, Canada to Houston, Texas, by Nov. 1 of this year. Seeing that the project proposal was first submitted in 2008, the House insisted that the administration has had more than ample time to reach a final conclusion.

The economic benefits of this pipeline are numerous. In addition to reducing the United States' reliance on imported oil from hostile foreign countries and volatile regions, the project is expected to create 20,000 direct high-wage jobs. Furthermore, the states along the pipeline route are anticipated to receive an additional $5.2 billion in property tax revenue and thousands of indirect jobs relating to the project. [Read more about unemployment.]

Anti-energy groups always have a long list of reasons for opposing the efficient, safe transportation of oil to America. During the construction of the Trans Alaska Pipeline System, these groups claimed that the project would severely impact the native caribou in Alaska. In reality, the caribou population has at least doubled since then.

In fighting the Keystone XL, anti-energy groups are now railing against pipeline safety. But the truth is pipelines are safer than trucks or tankers as a mode of transportation for oil. There are over 55,000 miles of pipeline transporting oil in the U.S. with almost no incidents of spillage. Of the leaks reported from the existing Keystone pipeline from 2001—2010, 50 percent were less than 3 barrels and 80 percent were less than 50 barrels. Contrast this figure with the capacity of oil transported per day—approximately 700,000 barrels—and leakage incidents seem comparatively minor.

Opponents of the project also cite the greenhouse gas emissions caused from the use of oil sands as a reason to prevent its construction. In fact, synthetic crude oil from oil sands emits only between 5 percent and 15 percent more greenhouse gas than conventionally derived petroleum products. In addition, 70-80 percent of total oil sands emissions come from the downstream combustion of refined products (tank-to-wheel), which are the same regardless of whether the fuel derives from oil sands or other conventional crude.

While the Obama administration seems to have turned its back on a strategically important source of oil produced by one of our staunchest allies, there are plenty of other markets willing to embrace oil sands. In December 2009, PetroChina signed a deal with Athabasca Oil Sands Corporation, giving it 60 percent control over the latter's MacKay and Dover oil sands deposits in Alberta. In April 2010, Sinopec, a state-owned Chinese company, paid $4.65 billion for ConocoPhillips' 9 percent stake in Syncrude Canada Ltd, signaling China's ambition to support the new-found abundant energy potentials. India also has its eye on Canadian oil sands, with its Ministry of Petroleum and Natural Gas calling Canadian crude a "target area." Hence, the United States' rejection of oil sands would only hurt domestic energy customers without reducing oil sands production or greenhouse gas emissions. [See a collection of political cartoons on President Obama.]

The developing nations of the world clearly recognize the huge economic benefits of Canada's oil sands. As long as the State Department continues to dither on permitting this project, America will continue to miss out on this hugely valuable opportunity. If the Obama administration is truly interested in creating jobs and price relief for American families, the Keystone XL project is a great place to start.

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