Ten Reasons Why the Keystone Pipeline Will Be Built
Obama can’t afford to oppose this commonsense measure.


Robert Bryce

Over the past two weeks or so, several hundred protesters assembled outside the White House to oppose the proposed Keystone XL pipeline, which is designed to transport bitumen produced from oil sands in Alberta to refineries on the Gulf Coast. During the protest, actor Daryl Hannah, climate scientist James Hansen, and author and activist Bill McKibben were among some 1,200 people who were arrested.

The protesters are hoping that President Obama will block the $7 billion pipeline. Their rationale: The pipeline will result in major increases in carbon-dioxide emissions, and therefore it must be stopped or catastrophic climate change will ensue. Protest as they might, a State Department report found that the pipeline will not have a major environmental impact.

Here are ten reasons why the Keystone pipeline will be built.

1. Canada’s oil production is rising, Mexico’s is falling. For many years, the U.S. has relied most heavily on crude imports from Mexico and Canada. Over the past ten years, Canadian crude production has risen by 600,000 barrels per day while Mexico’s has fallen by about that same amount. I’d rather have a reliable, long-term supply of crude from Canada than rely on overseas suppliers, whether they are part of OPEC or not. How long can we rely on the Canadian oil sands? Probably for decades. The resources there are estimated at over 100 billion barrels.

2. U.S. oil production is rising, but we will still need to import oil, and lots of it. Thanks to the shale revolution, domestic oil production could rise by as much as 2 million barrels per day over the next few years. That’s great news. But that increased production will not cover all of America’s needs. The more oil we can get from North America, the better.

3. Some of the oil moving through the Keystone XL will likely be exported, but that’s no reason to stop it. Critics of the pipeline, including Oil Change International, say that much of the oil in the line will “never reach U.S. drivers’ tanks.” That may be true. But U.S. oil exports are not new. American refineries are now exporting about 2.3 million barrels of refined products per day. Why? U.S. refiners are among the best in the world. They are importing lots of lower-grade crude oil and turning it into diesel and other fuels the world demands. Indeed, over the past six years, U.S. oil exports have more than doubled.

4. The pipeline will help America’s balance of trade. Refining is manufacturing. The U.S. is importing unfinished goods (in the form of Canadian crude), finishing them, and exporting them. That’s a good thing. 

5. U.S. oil demand may be relatively flat, but it’s not going away. Opponents of the pipeline claim that there’s no need to build the Keystone XL, because U.S. oil demand is sluggish. That’s true, but the U.S. will continue to need lots of oil for decades to come. Here’s the latest prediction from EIA: “U.S. consumption of liquid fuels, including both fossil fuels and biofuels, rises from about 18.8 million barrels per day in 2009 to 21.9 million barrels per day in 2035.”

6. Like it or not, oil is here to stay. U.S. oil consumption — as a percentage of its total primary energy consumption — now stands at about 37 percent. That’s the exact same percentage as in 1949. Given the amount of money that has been spent over the past six decades on reducing our dependence on oil, the hard fact is that petroleum is a miraculous substance. Nothing else comes close to oil when it comes to energy density, ease of handling, flexibility, convenience, cost, or scale.

7. We should be getting as much oil as we can from as close to home as we can. But we can no longer rely on Mexico. Pemex, the country’s national oil company, is not investing enough money in new drilling projects even though its most important field, Cantarell, is declining rapidly. Nor can Pemex count on getting more money from the Mexican government, which is spending heavily on its war against the drug cartels. Indeed, Mexico may already be a failed state. The cartels are under siege by the federal police and federal soldiers, but the slaughter just a few weeks ago of more than 50 people at a casino in Monterey shows that the narcos are still running wild. Canada, meanwhile, has an ultra-stable government. And given its enormous oil deposits, it’s apparent that Canada can be an essential player in America’s effort to secure reliable energy supplies.