By Merrill Matthews
Here’s a little-known fact: The Keystone pipeline system has been transporting oil sands from Canada to U.S. refineries in the Midwest for three years — with no major leaks and, more importantly, no major complaints from environmentalists.
The Keystone pipeline project includes four phases. The Keystone XL that has received so much media attention is only the last phase.
Phase 1 has been operating since 2010, carrying oil from Alberta across three Canadian provinces and six states to refineries in Illinois. Phase 2 put a link connecting the Phase 1 pipeline from Steele City, Nebraska, to Cushing, Oklahoma, a major U.S. oil refining and storage hub. It went operational two years ago, again with no major problems or complaints.
Phase 3 is currently under construction, extending the pipeline from Cushing to the Gulf refineries in Texas. President Obama even gave a speech in Cushing in March 2012–during his reelection bid–praising the pipeline extension as good for the economy.
The Keystone XL, the proposed Phase 4, would build a separate pipeline from Alberta, crossing only three states (Montana, South Dakota and Nebraska), and connecting to the existing pipeline in Steel City
While the Keystone XL would have the capacity to deliver more oil–830,000 barrels a day vs. 590,000 for Phase 1–its U.S. footprint is more than 200 miles shorter than Phase 1.
Environmentalists complained that Phase 4 would transport oil across environmentally sensitive areas of Nebraska. Governor Dave Heineman expressed similar concerns. So the pipeline builder, TransCanada Corp., has proposed to reroute the pipeline, which satisfied the governor and the Nebraska legislature. Even the U.S. State Department has said the risks are minimal
One reason TransCanada located the Phase 4 route where it did was to transport up to 100,000 barrels a day of U.S. crude oil from the Bakken reserves in North Dakota and Montana. That means the Keystone XL would be shipping high-quality U.S. oil to U.S. refineries.
Mr. Obama has recently turned defensive, claiming that the pipeline won’t create many permanent jobs. But pipeline jobs are infrastructure jobs, and the president is promoting more infrastructure spending to create jobs.
Phases 1 and 2 directly employed nearly 9,000 workers on U.S. facilities and pipelines. Phase 3 currently employees about 4,000 workers. Those aren’t debatable projections; those are real Americans working at high-wage jobs. And the pipeline jobs won’t cost the government a dime. In fact, the government will gain revenue from them.
The Keystone XL is also a trade-deficit reducer. News reports say that the U.S. trade deficit declined by 22 percent in the last quarter, primarily due to importing less oil. Rejecting the XL means that much of that Canadian oil will be shipped to China for refining instead. And seeing that oil go elsewhere when foreign hot spots like Syria can drive up oil prices or threaten supplies is not a good idea.
Unfortunately, environmentalists don’t seem to care about the Keystone XL’s economic merits. They have decided to draw a line in the oil sand at Phase 4. But surely they know that the U.S. leads the world in refining. If Canadian oil is going to be refined, and it is, better to do it under U.S. standards and quality controls. And U.S. workers get the benefits.
The fact is that the Keystone XL pipeline is simply an extension of an already existing program that is working well, creating jobs and expanding U.S. manufacturing. It should be an easy, and quick, decision for any president concerned about the economy.
Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Dallas, Texas.
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