Shariq Anis

KEYSTONE PIPELINE EXTENSION Position Paper - Keystone XL Pipeline Extension – Should The Keystone XL Pipeline Be Extended From Canada Through The United States? 1 KEYSTONE PIPELINE EXTENSION 2 Should The Keystone XL Pipeline Be Extended From Canada Through The United States? I. Introduction As explained by Epilerin (2014) the Keystone XL pipeline extension was the name given to the 1664 mile long 3 feet in diameter pipeline project that was planned to transport 830,000 barrels of crude oil per day from Canada’s oil sands to refineries in Texas. This project is an extension of keystone’s pipeline already in place. Terry (2012) in his paper opines that this project provides one of the most promising economic opportunities, seven billion dollars in investments and creates thousands of new jobs. The “luxury of letting long-term environmental concerns” should not obviate us from the existent threats to “to our nation's energy security” (Terry, 2012). II. Background As Terry (2012) has stated US dependence on oil is increasing rapidly with the US being the largest consumer of oil products. Demand for oil is growing worldwide while production is keeping hard to keep pace with growing demand. Oil production in Canada is on the rise with Canada having an estimated 170 billion barrels of recoverable oil available. Canada needs a trading partner and if the US forgoes this opportunity than the opportunity would be gone forever. In the US there is an existent extensive and highly complex network of energy pipelines and addition of Keystone XL pipeline should not be a cause for newer concern. These networks are essential for creating jobs, economic growth and reducing the dependency of US on oil from KEYSTONE PIPELINE EXTENSION 3 less stable countries. Environmentalists are not convinced citing environmental costs, increased carbon emissions and global climate change (Gravelle & Lachapelle, 2015). III. Sides of the Issue Slade (2012) raises some pertinent questions. Will the Keystone project give lower gas prices? Will the number of jobs increase? Will the Keystone project reduce reliance from unfriendly and unstable nations? Is the US delaying considerations of more environmentally friendly energy options? How environmentally damaging be an oil spill from this new project, specifically on the largest aquifer in the world, Oglala? Proponents argue that Keystone would help decrease gasoline prices in the US; it will strengthen US National Security, and it will create US jobs. Critics on the other hand state that benefits would be scarce while environmental degradation would be immense. Carbon emissions would increase, the potential for the oil spill and hazards of oil extraction are all too large to ignore. Keystone addition is intended by the Canadians as a conduit for pushing its oil to the Gulf Coast for pricing it according to the world markets, so this pipeline is not likely to result in lower prices. Further excess of oil in Midwest would be transported to the Gulf and refineries on the Gulf would be exporting Canadian oil to higher Brent prices and the US would also be getting the oil at Brent prices, not at a discount. Regarding US energy the Keystone addition would bring more Canadian oil replacing oil from volatile countries. Interestingly even without the addition of Keystone more Canadian imports would be the result so this benefit cannot be isolated to Keystone only. Pallister (2012) presents pros and cons of Keystone addition. The cons include the process of extraction of oil from Tar Sands. Tar sands require three to four times more energy for extraction KEYSTONE PIPELINE EXTENSION 4 of oil than conventional oil drilling, as bitumen must be strip-mined or melted for extraction of oil. The chances of Leaks and spills increase as oil-sands crude is more corrosive than traditional crude. Further cleanup of spills is more difficult as special techniques are required to handle spills. Oil from Tar Sands has more toxic elements that contribute to health issues, further greenhouse emissions for production is three times higher than from conventional sources. Pipeline construction would go across grasslands, forests, and wetlands. The pros, on the other hand, are the creation of new jobs up to 20,000 direct and 118,000 indirect jobs. Canada is much stable country than Mexico, Saudi Arabia, and Venezuela. Also additional $5.2 billion would come in as property taxes to communities during project’s life. Similar investment into construction materials, engineering services would positively affect the local economies. IV. Actions Besides creating thousands of jobs, the Keystone addition would help increase US GDP over the coming years. The total spending during the lifetime of the project would be around $21 billion dollars and would generate approximately 119,000 man years of employment. The cost of energy would decrease when supply is increased, and reliability of supply is ensured. Energy prices would also come down when external fluctuations are minimized. The domestic economy would grow by approximately $29 billion and create 250,348 jobs in private sector if normal price index of oil is ensured (Terry, 2012). V. Conclusion The equation is simple – private sector invests $7.6 billion and twenty thousand additional jobs accomplished by private sector investments. On the other hand, if the federal government were to KEYSTONE PIPELINE EXTENSION provide comparable stimulus than taxpayer investor would not be getting any returns and job market improvements would be transient. This economic argument is a clear reason why crossborder pipeline should be dealt with the expert agency so that political considerations are not utilized for making decisions. Economic benefits clearly show the overwhelming need for the pipeline and having an expert agency for making the decision would be rational and fact-based (Terry, 2012). 5 KEYSTONE PIPELINE EXTENSION 6 References Edwin, S. (2012, December). THE KEYSTONE PIPELINE ADDITION: ASSESSING THE POTENTIAL ... Retrieved April 9, 2017, from https://dspace2.creighton.edu/xmlui/bitstream/handle/10504/42887/46CreightonLRev27. pdf?sequence=1 Eilperin, J. (2014, February 4). The Keystone XL Pipeline and its politics, explained. The Washington Post. Retrieved April 9, 2017, from http://www.highbeam.com/doc/1P-.html?refid=easy_hf Gravelle, T. B., & Lachapelle, E. (2015). Politics, proximity and the pipeline: Mapping public attitudes toward Keystone XL. Energy Policy, 83, 99-108. doi:10.1016/j.enpol- Pallister, J. (2012). Keystone XL Pipeline. Science Scope, 35(9), 8. Terry, L. (2012). Keystone XL: The Pipeline to Energy Security. Retrieved April 09, 2017, from https://dspace2.creighton.edu/xmlui/handle/10504/42888