RFF researchers—myself among them—are scarcely unfamiliar with having our reading of natural resource issues undermined by current events. But, with respect to the Keystone XL pipeline—endorsed last week by President Trump—earlier insights remain almost entirely intact. Recall that two exhaustive (Obama administration) State Department environmental impact statements accorded the project solid supportive analysis. The principal revision in the second of the State Department’s reviews engendered a change in the pipeline’s route around Nebraska’s Ogallala Aquifer. Otherwise, the issues addressed in 2011 (see below) remain salient today. That may hardly matter as Keystone decisionmaking proceeds under the Trump administration. But it may quell any notion that, among contending—and highly ideological—factions, Keystone depicts irreconcilable extremes.
Ed. note: Except for minor editorial corrections, the post below is an unchanged version of the original, first published on August 10, 2011.
Before the end of 2011, the US Department of State will have made a decision—probably affirmative—certifying the construction of the $7 billion Keystone XL pipeline to carry oil sands crude from Alberta to the US Gulf Coast for refining. (It’s the trans-border nature of the project that entails State Department certification.)
The United States currently imports about two million barrels a day of Canadian oil sands—about 22 percent of total US oil imports. At full capacity, the pipeline’s output, initially around 700,000 barrels a day, is reckoned to reach 900,000 barrels a day.
The prospect of this expanded flow has provoked intense disputation—pro and con. Not for the first time in such controversies, the issues are economic, political, and environmental. Let’s measure the economic in terms of the price of oil, the political with reference to energy security implications, and the environmental to reflect concern over climate change and other ecological impacts. And in each case, let’s distinguish between issues and non-issues; and with a nod toward nuance, let’s make that relatively legitimate and relatively subsidiary issues.
On the economic front, one must remember that—for all its price volatility and occasional supply disruptions—oil remains a fungible commodity in a worldwide market and trade network, factors that ensure a significant degree of stability. The addition of 900,000 barrels per day of Canadian oil sands to this market of some 90 million barrels per day may reduce the price of a gallon of gasoline by a few cents, but don’t look for a bonanza.
At the same time—and here I revert to the political—the pipeline is attractive because it originates in a stable and secure environment like Canada, rather than in a country or region prone to military and government upheaval.
On the climate change topic, opponents frequently point to the much more carbon dioxide–intensive extraction process for oil sands compared to conventional crude oil. The former’s emissions have been estimated to be about twice that of the latter. But, on a well-to-wheel basis—i.e., from the oil well to the car’s tailpipe exhaust—oil sands exact a much more modest, even if not inconsequential, 20 percent penalty.
On the environmental front, there is the matter of toxic damages and other negative impacts inflicted on Alberta soils and waterways from what still remains today an evolving technology. Even so, what could the United States do about what is assuredly an issue that is in Canada’s own interests to manage?
Last but not least, opponents have pointed out that much of the planned pipeline route overlies the Ogallala Aquifer in the United States—a precious national water resource across the Great Plains region of the country. Indeed, following lengthy initial and supplemental environmental impact statements by the State Department, the Environmental Protection Agency (EPA), in a critical June 6, 2011 response, cites the risk that a major pipeline rupture and spill could impose on the Ogallala. For that, and a variety of other reasons, EPA calls for still additional State Department analysis of the pipeline’s impacts, including consideration of alternate routes.
Unhappily, but scarcely surprising, the Keystone pipeline conundrum is just one more benefit–cost dilemma where judgments and calculations deserve to be aired and differences resolved as rationally as possible.