Forum Right, 1/31/12

For Obama:  Politics Trumps Sound Energy Policy

By David H. Landon

Two weeks ago in a symbolic act to appease environmental groups, Barack Obama placed his presidential re-election above the economic health of the country. There is no other way to make sense of the President’s decision to reject the Keystone XL pipeline. Not only will the decision have zero effect on protecting the environment, but it damages future U.S. energy needs and is costing the U.S. jobs.

The U.S. currently uses 20 – 21 million barrels of oil per day. In 2010, to meet that daily need, the U.S. imported approximately 11.8 million barrels of oil per day which accounted for 49% of petroleum consumed in the United States. The top two sources of U.S. imported oil are Mexico and Canada. These two countries make up approximately 35% of the imported oil to this country and our friend Canada, now with the development of the Athabasca oil sands region, seems poised to add to their percentage of our imports. As much as we may want to switch to alternative energy sources, the fact is that U.S business and industry will continue to meet its current energy needs with petroleum for the foreseeable future.

Under 54,000 square miles of the sparsely populated boreal forest and peat bogs of Alberta, Canada, are the Athabasca oil sands. Those oil fields contain an estimated 1.7 trillion barrels of heavy crude oil. This represents the second largest oil reserve in the world, second only to Saudi Arabia.  With modern oil production technology, at least 10% of these deposits, or about 170 billion barrels were considered to be economically recoverable at 2006 prices.  The fact of the matter is that Canada will sell this resource to some willing buyer.

The Obama administration has been trying to find a reason to table the Keystone XL Pipeline project almost from the day they took office. The State Department had spent three years evaluating Keystone. State appeared ready to approve the project by the end of 2011. Then Obama, citing opposition to the pipeline’s route in Nebraska, reversed course and postponed a decision to 2013, after the next presidential election. The Nebraska legislature however, reached an agreement with TransCanada and was working on an alternative route through Nebraska that avoided the Sandhills, a large wetland ecosystem. Everyone was now onboard with the project except Barack Obama.

These underground pipelines aren’t anything new here in the U.S. At present time there are over 200,000 miles of petroleum pipelines crisscrossing the country. Add to that an additional 200,000 miles of natural gas pipelines and you begin to understand the widespread use of this method of delivering America’s energy needs. The technology used in these pipelines has continued to improve and they have a laudable safety record. It’s not like TransCanada, the company that was constructing the pipeline, was introducing some new concept. Underground pipelines have been serving as the vascular system of American industry for the past sixty years. It is both safe and efficient.

There are a number of ways Obama’s decision has hurt the United States. For starters it rejects a cooperative effort with our number one trading partner, Canada. This pipeline would have delivered Canadian oil to Oklahoma and Texas refineries. The U.S. would have benefited from the estimated 20,000 construction jobs needed to complete the project.  Our Gulf coast refineries would have been paid to refine the crude into petroleum which would have created additional jobs. The decision leaves the U.S. more dependent upon importing foreign oil from the Middle East; a foreign policy position to which there is universal opposition for obvious reasons.  At a time when the U.S. economy could use a shot in the arm, those 20,000 union jobs in the pipe-laying industry will now not be filled.

The big winners as a result of the Obama rejection of the Keystone XL Pipeline might be the Chinese. If U.S. policy remains unchanged there is a strong possibility that a pipeline will be constructed from Alberta west to the Pacific in order to reach Asian markets. Canada’s largest pipeline owner has applied to build a 730-mile pipeline, called Northern Gateway, which would end at the Pacific port of Kitimat. The port at Kitimat would enable tankers to take up to 525,000 barrels of Alberta crude per day to China, Japan and South Korea. Our Canadian friends are sitting on a fortune and an irrational American energy policy will not deter them from getting their product to market. Unfortunately for the U.S., that market could end up in Asia.

Not everyone is lamenting the Obama decision. Obama loyalist, Warren Buffet’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanada’s Keystone XL permit. With no pipeline to move the product, the crude can be loaded onto tanker cars shipped by rail from Alberta to the Texas refineries. It will create a carbon footprint that would make a grown environmentalist cry. “But at least we blocked the pipeline,” so goes the battle cry. Obama loyalists seem to always make money with the Obama energy policy. George Soros is cashing in on Brazilian off-shore drilling thanks to the Obama administration’s financial guarantees for the Brazilian program. But of course, there will be no deep off-shore drilling here in U.S. waters!

How about an energy policy that benefits Americans?  That would be a pleasant change. This debate over the proposed pipeline has never been a debate of oil versus alternative energy sources. This is a debate about whether you want to get your oil from our friends in Canada or from OPEC, Venezuela or Nigeria.

David H. Landon is the former Chairman of the Montgomery County Republican Party Central Committee. He can be reached at DaveLandon@DaytonCityPaper.com.

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