Canadian Prime Minister Stephen Harper's White House visit this month broached subjects ranging from geopolitics to energy security. Interestingly, the scope of concerns stemmed from a single issue: debate over a proposed pipeline to connect Canadian oil sands to U.S. refineries.
Despite more than three years and 10,000+ pages of careful analysis—which determined the pipeline would deliver no significant environmental risk while generating great benefits for both countries—the Obama administration decided to delay its final decision on the project until after the 2012 election. The move puts politics ahead of the public, so much so that even a provision in the $33 billion payroll tax bill that requires Obama to make a decision regarding XL within 60 days received bipartisan support last week, passing the Senate 89 to 10. The measure currently awaits House consideration, with both parties pressing for quick approval in order to extend the expiring payroll tax credit.
His delay undermines the president's work to manufacture a reputation as a job creator for America's working class. The pipeline stands to create 20,000 "shovel ready" jobs immediately and 340,000 over the long-term. Pundits speculate that with this decision the Obama campaign signified its willingness to sacrifice the U.S. blue collar vote to rejuvenate support from the left's environmental contingent—a demographic staunchly opposed to development of Canadian oil.
Yet, fallout from the president's Keystone XL delay may go far beyond the unemployed who were looking to the pipeline for potential job opportunities. His decision may cost all Americans when they drive up to the pump.
Though local energy production in Canada and North Dakota experienced significant increases this year, U.S. consumers failed to enjoy reduced energy prices from those supply bumps. The reason? Firms didn't have the pipeline infrastructure necessary to move the large supplies of North American oil, which is stockpiled in Oklahoma and commonly referred to as West Texas Intermediate crude, to drivers from New York to Los Angeles and most major cities and rural towns in between.
Instead, our country had to import the much pricier Brent crude from the North Sea. Everyone—even those near the refineries—had to pay more because the national average oil price wasn't able to be depressed as much as it could have been if we'd had the ability to transport U.S. resources to all domestic markets. The outliers increased the average price. As a result, U.S. prices were close to $20 more per barrel than necessary which, according to IHS Global Insight economists, correlates to the loss of 240,000 jobs and $65 billion in growth.
Rather than pushing for upgrades of America's pipeline infrastructure, the president has made a political decision designed to support a radical base at the expense of the country. Meanwhile, our cash strapped Congress is in desperate need of ways to bolster our nation's economic recovery without exacerbating our $15 trillion debt. Ignoring revenue generating, job creating opportunities like Keystone XL runs contrary to these goals and is not consistent with our national interest.
Because most experts agree that the United States will remain an economy energized mostly by traditional fuels for the next several decades, opposition to Keystone XL is de facto support for the alternatives to Canadian oil: increased domestic drilling and foreign imports. Unfortunately, domestic drilling is opposed by many of the same environmentalists that oppose Keystone and imports add few jobs here in the States.
Blanket opposition to oil and gas, the likes of which has paralyzed President Obama on his Keystone XL decision, is forcing the country to take steps backward in addressing economic and energy challenges. It's in our best interest to approve this high tech pipeline connecting the United States to our close ally and neighbor.