The protesters outside the White House have furled their banners and headed home. Now the Obama administration will decide whether to issue a presidential permit for the 1,700-mile Keystone XL pipeline extension—a $7 billion project to bring heavy, “sour” crude oil extracted from tar sands in Alberta, Canada, down through Montana and the Plains states to refineries on the Gulf Coast, notably in Port Arthur, Texas.
Even as the protesters savaged the scheme as a fearsome environmental disaster, the State Department issued its final environmental impact statement on August 26. Not surprisingly, it was favorable to the project, furnishing such nuggets of encouragement as “analysis of previous large pipeline oil spills suggests that the depth and distance that the oil would migrate would likely be limited unless it reaches an active river, stream, a steeply sloped area, or another migration pathway such as a drainage ditch.”
There will now be a ninety-day review period. If federal agencies aren’t unanimous, then the final say-so is up to Obama. It’s a sound bet that Obama will issue approval. Would the ductile president risk a thrashing from Republicans for putting birds ahead of jobs? Right before Labor Day he gave the business lobby what it sought on postponement of new air quality standards.
But undoubtedly the prime rationale put forward by the president will be security of supply and energy “independence,” meaning supply from the fine, upstanding Calgary-based TransCanada Corporation, as opposed to “not secure and reliable sources of crude oil, including the Middle East, Africa, Mexico, and South America.”
We saw this bait-and-switch game a generation ago amid the battles over oil in Alaska, where the North Slope drilling and pipeline were approved by Congress only because the oil was intended to buttress America’s energy independence. Congress required the oil companies operating on the North Slope to refine the crude in the United States, with no exports permitted.
In fact, the companies had a long-term strategy to export Alaska’s crude to Asia. In 1996 President Bill Clinton, extending Lincoln Bedroom sleeping privileges and a Rose Garden birthday party to Arco’s former CEO Lodwrick Cook in exchange for campaign cash, signed an executive order OK’ing foreign sales of Alaskan crude.
This time there will be no twenty-five-year pause. From day one of the Keystone XL scheme the oil companies’ plan has been to take the heavy crude from Alberta, refine it in Texas and then ship it out in the form of middle distillates—diesel, jet fuel, heating oil—primarily to Europe and Latin America.
Contrary to the lurid predictions of declining US oil production, disastrous dependence on foreign oil and the need for new offshore drilling, not to mention the gloom-sodden predictions of the “peak oil” crowd, the big crisis for the US oil companies can be summed up in a single word: glut.