Obama Administration Rejects Keystone XL Pipeline

To no real surprise, the Obama Administration has rejected the application to approve the Keystone XL Pipeline. It is likely to remain an issue in the upcoming Presidential campaign, though.

Keystone XL Map

In a move that in the end surprises nobody, the Obama Administration has rejected the application to approve the Keystone XL Pipeline that would have brought oil extracted from regions in Alberta, Canada and potentially the Dakotas to refineries in the southern United States:

WASHINGTON — President Obama on Friday announced that he had rejected the request from a Canadian company to build the Keystone XL oil pipeline, ending a seven-year review that had become a flash point in the debate over his climate policies.

Mr. Obama’s denial of the proposed 1,179-mile pipeline, which would have carried 800,000 barrels a day of carbon-heavy petroleum from the Canadian oil sands to the Gulf Coast, comes as he is seeking to build an ambitious legacy onclimate change.

“The pipeline would not make a meaningful long-term contribution to our economy,” the president said in remarks from the White House.

The move was made ahead of a major United Nations summit meeting on climate change in Paris in December, when Mr. Obama hopes to help broker a historic agreement committing the world’s nations to enacting new policies to counter global warming. While the rejection of the pipeline is largely symbolic, Mr. Obama has sought to telegraph to other world leaders that the United States is serious about acting on climate change.

The once-obscure Keystone project became a political symbol amid broader clashes over energy, climate change and the economy. The rejection of a single oil infrastructure project will have little impact on efforts to reduce greenhouse gas pollution, but the pipeline plan gained an outsize profile after environmental activists spent four years marching and rallying against it in front of the White House and across the country.

The rejection of the pipeline is one of several actions Mr. Obama has taken as he intensifies his push on climate change in his last year in office. In August, he announced his most significant climate policy, a set of aggressive new regulations to cut emissions of planet-warming carbon pollution from the nation’s power plants.

Republicans and the oil industry had demanded that the president approve the pipeline, which they said would create jobs and stimulate economic growth. Many Democrats, particularly those in oil-producing states like North Dakota, also supported the project. In February, congressional Democrats joined with Republicans in sending Mr. Obama a bill to speed approval of the project, but the president vetoed the measure.

Both sides saw the Keystone rejection as a major symbolic step, a sign that the president was willing to risk angering a bipartisan majority of lawmakers in the pursuit of his environmental agenda. And both supporters and critics of Mr. Obama saw the surprisingly powerful influence of environmental activists in the decision.

“Once the grass-roots movement on the Keystone pipeline mobilized, it changed what it meant to the president,” said Douglas G. Brinkley, a historian at Rice University who writes about presidential environmental legacies. “It went from a routine infrastructure project to the symbol of an era.”

Environmental activists cheered the decision as a vindication of their influence. They had sought to block construction of the pipeline because it would have provided a conduit for petroleum extracted from the Canadian oil sands. The process of extracting that oil produces about 17 percent more planet-warming greenhouse gases than the process of extracting conventional oil.

But numerous State Department reviews concluded that construction of the pipeline would have little impact on whether that type of oil was burned, because it was already being extracted and moving to market via rail and existing pipelines.

“From a market perspective, the industry can find a different way to move that oil,” said Christine Tezak, an energy market analyst at ClearView Energy Partners, a Washington firm. “How long it takes is just a result of oil prices. If prices go up, companies will get the oil out.”

However, a State Department review also found that demand for the oil sands fuel would drop if oil prices fell below $65 a barrel, since moving oil by rail is more expensive than using a pipeline. An Environmental Protection Agency review of the project this year noted that under such circumstances, construction of the pipeline could be seen as contributing to emissions, since companies might be less likely to move the oil via expensive rail when oil prices are low — but would be more likely to move it cheaply via the pipeline. The price of oil has plummeted this year, hovering at less than $50 a barrel.

The recent election of a new Canadian prime minister, Justin Trudeau, may also have influenced Mr. Obama’s decision. Mr. Trudeau’s predecessor, Stephen Harper, had pushed the issue as a top priority in the relationship between the United States and Canada, personally urging Mr. Obama to approve the project. Blocking the project during the Harper administration would have bruised ties with a crucial ally. While Mr. Trudeau also supports construction of the Keystone pipeline, he has not made the issue central to Canada’s relationship with the United States, and has criticized Mr. Harper for presenting Canada’s position as an ultimatum, while not taking substantial action on climate change related to the oil sands.

This move comes just a few days after TransCanada, the company behind the pipeline, requested a delay in the review process while it negotiated leases for an altered route through Nebraska, however the State Department quickly rejected that request. At that point, the handwriting was on the wall and the outcome of the review process seemed self-evident. From the beginning, it has been clear that he Administration was at best reluctant about the entire Keystone project. In no small part, this was due to the President’s own focus on climate change issues and the initiatives he has made from the start of his Presidency regarding pursuing alternative forms of energy development, something that he has attempted to work together on with the leaders of Canada and Mexico. Additionally, the rising influence of the environmentalist lobby inside the Democratic Party meant that there has been pressure on the Administration from the beginning to reject the project. On the other side of the equation, though, there are union interests that have been strong supporters of the project that are a powerful force inside the party, and the fact that the economy was slow for much of Obama’s Presidency, combined with oil prices that were high enough to make extracting the oil in Alberta and the Dakota very profitable made it difficult to reject the project outright. For this reason, the Administration delayed its consideration of the project several times over the course of the past six years, with several delays announced just before the midterm and Presidential elections.

Throughout the entire process, though, the outcome seemed as though it was inevitable. Many expected the rejection to come after the 2012 Presidential election, or the 2014 midterms, but the fact that the Administration continued to delay making a decision was a strong indication of the differing political forces involved in the issue. Ultimately, it may have been the fact that worldwide oil prices have dramatically declined in the past year or so and that former Secretary of State Hillary Clinton recently came out against the project suggested that whatever political risk the President may have been taking in rejecting the project were no longer as severe as they might have been. Additionally, there was some anticipation that the President would make an announcement regarding this project before leaving to attend the international conference on climate change taking place in Paris next month. So, this being a Friday after the announcement of a very positive jobs report, announcing the decision is not entirely surprising.

Not surprisingly, Republicans are ripping the Administration’s decision:

Republican presidential candidates reacted forcefully to President Obama’s announcement rejecting the construction of TransCanada’s Keystone XL pipeline Friday, calling it politically motivated acquiescence to environmentalists and damaging the U.S. economy.

Florida Sen. Marco Rubio blasted the decision as a “huge mistake.”

“When I’m president, Keystone will be approved, and President Obama’s backwards energy policies will come to an end,” Rubio tweeted.

“The Obama Admin’s politically motivated rejection of the Keystone XL Pipeline is a self-inflicted attack on the U.S. economy and jobs,” former Florida Gov. Jeb Bush tweeted Friday shortly after news broke about the decision

[Reactions from other Republican candidates for President can be found in embedded Tweets at the link — DM]

Meanwhile, Bernie Sanders applauded the decision.

“Climate change is a global environmental crisis of huge magnitude. It is insane for anyone to be supporting the excavation and transportation of some of the dirtiest fuel on earth,” the independent Vermont senator and Democratic presidential candidate said in a statement. “As someone who has led the opposition to the Keystone pipeline from Day 1, I strongly applaud the president’s decision to kill this project once and for all.”

His chief opponent, Hillary Clinton, announced her opposition to the pipeline in September after a long silence on the issue.

We can expect that this decision, and Clinton’s support of it, will become an issue going forward. Guided in no small part by polling that indicates the American public has been largely in favor of the project, Republicans will continue to hit the Administration and the Clinton campaign for their opposition to the project. The additional possibility of pealing away some support of union members from Clinton over this issue will also likely play a role in swing states such as Ohio and other places in the Midwest. Additionally, the fact that the Canadian government continues to support the project even under the leadership of Justin Trudeau, the Liberal Party leader who was sworn into office just this week, will lead to some charges that the Administration is alienating one of our closest allies. TransCanada and the other pipeline interests, meanwhile, will likely sit on the sidelines to some degree waiting to see what happens in the 2016 elections. If a Republican wins the Presidency, they will most assuredly renew the application process. Additionally, future changes in the world oil markets could very well change the nature of the pressures and incentives facing whomever becomes President in January 2017. In other words, the Keystone XL pipeline is for the time being dead as a project, and may well be dead forever, but it will remain as a political issue going forward.

FILED UNDER: Barack Obama, Campaign 2016, Congress, Economics and Business, Politicians, US Politics,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. C. Clavin says:

    It will be a political issue because, as both Rubio and JEB! show above, the Republicans will continue to over-hype the effect the pipeline would ever have…but especially now with oil prices so low.
    I must have missed where Doug used this Obama quote:

    “For years, the Keystone pipeline has occupied what I frankly consider an overinflated role in our political discourse,” Obama told reporters at the White House. “It became a symbol too often used as a campaign cudgel by both parties rather than a serious policy matter.”

    I know Doug would not have missed an opportunity for some “both sides do it” fun-time.
    This has pretty much been my feeling about this since the beginning. My biggest problem with the entire shebang was giving the property of American citizens to a foreign corporate interest.
    A Conservative party would be opposed to that as well. Republicans…all for it.

  2. grumpy realist says:

    I’ve though that for some time, the Republican Party has been more interested in pushing this than the actual oil industry has been.

    There’s also the possible problems if the damn thing breaks. Oh well, I guess Texas et al. didn’t need any drinking water, anyway….

  3. Ron Beasley says:

    What you rarely hear mentioned is the major blockade has been the very red state of Nebraska. In addition with oil at less than $50 a barrel there is no way the Alberta tar sands are even close to economical. They have already cancelled new projects and have been shutting down existing ones.

  4. stonetools says:

    For someone like Doug, this decision is proof the pernicious influence that the anti-capitalist environmental lobby has over the Democratic Party. Stopping the XL pipeline , in the opinion of the Reason.org and the Pajamas Media, damns America to some low energy future of deprivation, whereas if we would just green light the pipeline and take the shackles off the fossil fuels industry, we would move forward into a future of unbounded prosperity, etc, etc…
    In reality, the Saudis , by increasing their supplies, has driven down oil prices and made shale oil unprofitable ( so much for a free market in oil!). The slow world economy has something to do with that too. The Obama Administration meanwhile has made sensible investments in green energy.

    Remember the supposedly useless stimulus? Ahem:

    The energy stuff wasn’t just big, it was ginormous. It’s hard to get people twice as excited about $90 billion as they would be about $45 billion, or 10 times more than they would be about $9 billion, but even $9 billion would have been ginormous. Ten years earlier, [President] Clinton pushed a five-year, $6 billion clean energy bill that went nowhere; at the time it was seen as preposterous and unrealistic, and it was. And here, 10 years later, $90 billion in the guy’s first month in office. Plus it leveraged another $100 billion in private money.

    Obama promised that he would double renewable power generation during his first term, and he did. In 2008, people had the sense that renewable energy was a tiny industry in the United States. What they forget is it was a tiny dead industry — because these wind and solar projects were essentially financed through tax credits, which required people with tax liability, and everybody had lost money, so nobody needed [the tax credits]. By changing those to a cash grant, it instantly unlocked this industry. Another thing that’s helped to create the wind and solar industry were advanced manufacturing tax credits, which were a gigantic deal. I think there were about 200 factories that got these credits. The classic example is Abengoa [Solar], which had shut down projects in Illinois, Texas, some other places. The day the stimulus passed, their chairman announced they were pouring $6 billion into U.S. projects.

    For advanced biofuels, [the stimulus bill] created this $800 million program that essentially financed new refineries. And so you got the first 18 advanced biofuel refineries in the country just through that 1 percent of the clean energy funding. And there were some loan guarantees for that as well. There was also a whole geothermal technology program that went from about $20 million a year to $400 million. It’s leading right now to a real boom in geothermal production.

    So the Obama Administration has done a lot to ensure America’s energy future. The XL Pipeline would have been a dead end , not the future.

  5. Just 'nutha ig'rant cracker says:

    It would seem to me that if a majority of people in industrialized nations really believed in AGW (as has been the contention for some time now IIRC), that expanding the supplies of carbon-based fuels would be counterintuitive. What am I missing that causes even the Liberal Party in Canada to support Keystone?

  6. OzarkHillbilly says:

    There was never any good reason for doing this at this point in time, and with oil so cheap even less reason. As to Americans being in favor of it, Americans are in favor of cheap gas. Guess what? They have cheap gas.

  7. stonetools says:

    @Just ‘nutha ig’rant cracker:

    Fossil fuel industry contributions to political candidates?

  8. grumpy realist says:

    It’s an interesting face-off. Looks like the Republican Party is more interested in pissing off the environmentalists than it is about Eminent Domain.

    But we knew that already, didn’t we? (Republicanism: whatever the Librulz hate, updated daily.)

  9. grumpy realist says:

    It could turn quite embarrassing if the Republicans tried to make this an issue because of the “loss of jobs” supposedly connected with the pipeline. Someone did the calculations and estimated the net number of additional jobs to be….33?

    That’s a hell of a gain for the additional risk of totally trashing the water supplies through which the pipe would flow.

  10. Tyrell says:

    @stonetools: But just what is the future ? That is what everyone wants to know. EV’s have not caught on, mainly because of the cost of a vehicle and the charge time. Hydrogen power has promise, and the natural gas fired turbine is being used. Also, there is the gas vapor engine that is a the gasoline engine refitted to run literally on fumes – 50+ mpg ! But that is an after market project. That sort of thing isn’t coming from the manufacturers or the government.

  11. Matt says:

    @Tyrell: Just a FYI but liquid gas doesn’t burn. It’s the layer of vapors/fumes above the liquid that does the actual burning (after having mixed with air). Your regular gasoline engine runs off vapors when the intake system is doing it’s job properly. The goal of the injector and the intake manifold is to encourage the mixing of gas particles with air which creates a vapor mist.

    I’m guessing you’re actually talking about some kind of lean running tech. Where you crank heat on the intake charge or something of that manner.

  12. grumpy realist says:

    @Tyrell: Fusion seems to be the next hot (in all senses of the term) thing. There are some groups that have decided to go away from the tokomak configuration and are using linear accelerators.

    I’m not holding my breath quite yet. But if they do manage it, it definitely solves our energy problems AND a lot of the carbon dioxide problem. (Plus, I want the helium for my Heavy Lift Zeppies, damn it!)

    Back to the drawing board….

  13. stonetools says:

    @grumpy realist:

    I’ll believe fusion when I see it demonstrated on TV. Fusion has always been 20 years away -since 1960. In the near future, I see a mix of power sources. Solar is becoming affordable, and I could see California being powered, at least partially, by a huge array of solar panels in the Mojave Desert , where it’s sunny 365 days per year. The Great Plains could do a lot more with wind, and so on. The good thing, Obama has done a lot to kickstart the renewable energy sector. Some of it will pay off big, and some has paid off already. As usual, liberals have done a piss poor job of defending the successes, while conservatives have trumpeted the failures to the skies. But there have been good results, just no magic bullets. Here’s a good article on the blue sky research stuff.Excerpt:

    ARPA-E is also investigating more futuristic biofuels. I tell a story in my introduction about how Chu was skeptical of photosynthesis. It’s been working pretty well for the last 3.5 billion years, but Chu thought it was too inefficient to make fuel. So the ARPA-E brainiacs started thinking about it, and invented an entirely new scientific discipline that they’ve dubbed “electrofuels,” essentially trying to genetically re-engineer exotic microbes that absorb energy without photosynthesis to produce fuel. It’s pretty wild. They had no idea whether this stuff would actually work, but at last year’s ARPA-E summit Majumdar held up a vial of electrofuel created in a North Carolina lab that has already powered a jet engine. Now the question is whether this kind of thing could be mass-produced at an affordable cost. As one of the ARPA-E guys told me: Now we know it works. We just don’t know if it matters.

    Now you and i make up two of the ten people who know that there government is funding successful research in future energy projects. Why they aren’t making more of this I have no idea. Of course, every third person knows, or think they know, about the “massive” Solyandra “debacle”.

  14. Tony W says:

    Did socialist-Obama reject the pipeline, or was it dictatorial-genius Obama? I’m struggling since the pipeline involves destroying some citizen’s property in favor of another citizen – and Obama seems to be on the side of the property owners in Nebraska.

    Politics makes strange bedfellows

  15. Andre Kenji says:

    @Just ‘nutha ig’rant cracker:

    What am I missing that causes even the Liberal Party in Canada to support Keystone?

    It´s not being built in Canada.

  16. bill says:

    is this the same pipeline that hillary was for before she was against?

  17. Just 'nutha ig'rant cracker says:

    @bill: Probably, but that would only show that she’s capable of changing her mind when confronted with better evidence (or other incentives that would be to her advantage–she may be venal and self-serving, after all).

    Not sure what your point is, but I discussed this at length in another post. How are you doing on improving your reasoning skills so that you can improve your persuasive powers?

  18. Tyrell says:

    @stonetools: Yes, the government does need to encourage and help fund research, protoypes, and projects, in conjunction with private industry. Let us not forget that Edison, Ford, Wright Brothers, Hughes, and Kodak worked without government funding.
    CNN ran an excellent program a few weeks ago about fusion. Fusion plants are being built now.
    But replacing the coal industry doesn’t solve the gasoline problem. All it would take would be some middle east “crisis” to run up the price of gas to $4 or more. And we cannot afford that. I remember well the gas crisis hoax of the ’70’s.

  19. Tony W says:

    @bill: I am no Hillary Clinton apologist, but I do feel for you Bill. It must be hard to wrap your head around the idea that people can get new information and change their minds about stuff.

  20. bill says:

    @Just ‘nutha ig’rant cracker: she changes her mind as the polling says to- just like her husband, the “great waffler”.
    lets see, just in the past few years she flipped on doma (which her husband signed into law), same-sex marriage, tpp, 2nd amendment support, illegal immigration….
    so really, what does she actually stand for?

  21. WR says:

    @bill: “lets see, just in the past few years she flipped on doma (which her husband signed into law), same-sex marriage, tpp, 2nd amendment support, illegal immigration….”

    Gosh, Bill, and it seems that in the same period of time the vast majority of Americans also changed their minds on many of these issues, too. Are they all running for president?