Keystone XL's Rewards Outweigh Its Potential Risks

The pipeline will create jobs, but it would also increase carbon emissions and threaten pristine environments.

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Michael Lynch is the president and director of global petroleum service at Strategic Energy & Economic Research.

With the Obama administration's rejection of the Keystone XL pipeline expansion project, the issue has been described as a potential political battlefield in the upcoming presidential election. This is unlikely to improve the public debate, which is already rather pathetic. On one side, it is argued that the pipeline will create 20,000 jobs and greatly reduce America’s energy dependence; on the other, it would increase carbon emissions and threaten pristine environments and the Oglala aquifer with contamination.

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Criticisms of the job creation estimates are in a sense valid but also irrelevant. Anyone who has done studies of this kind (including this humble pundit) knows that these numbers are highly uncertain at the best of times and subject to manipulation. At the same time, there is no question that some jobs, quite a few likely, will be created and (unlike the cleantech industry) will not cost taxpayers anything. Instead, there will be a return to the government and the economy.

Attacking the pipeline as a contributor to global warming is at best disingenuous. Roughly one sixth of the carbon emissions will occur from the production of oil sands, whereas the bulk is from their consumption. In other words, consumers are the problem, not producers, and blocking this pipeline does not affect that. Oddly, most opponents of the pipeline would, I suspect, oppose resolving our narcotics problem by attacking producers, preferring to treat addicts.

The question of safety and potential oil spills is certainly a legitimate one, but again misguided. Recall that there are 160,000 miles of oil pipelines in the United States, and accidents are rare. The National Academy of Sciences estimates that more than half of the oil that enters North American waters comes from natural seepages, and most of the rest from small users. (Check the spot on the driveway where you park your car for an example.)

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Opponents of the project note the numerous small spills suffered in 2010, with one being 21,000 gallons (or 500 barrels). Obviously, this is cause for concern, but again, a pretty trivial amount—motorboats and similar vehicles are thought to spill about 1.5 million gallons a year into waterways.

But this is not to suggest that regulatory oversight is not needed. (If you believe in total deregulation, drive the streets of Boston for an hour.) Complacency is a major threat to any operation, as the Macondo disaster demonstrated, and the industry should certainly not object to stable, rational oversight, anymore than activists should argue against the pipeline.

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