The Keystone Conundrum


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The basics of the Keystone XL project are fairly straightforward. The pipeline would ultimately deliver over 800,000 barrels per day of Canadian crude to refineries in Texas and the Gulf Coast. That’s about 10 percent of daily US consumption, which is not an insignificant amount. Construction of the pipeline would add several thousand jobs directly, in terms of those actually involved in construction. More importantly, it would result in creation of over one hundred thousand jobs indirectly throughout the multi-billion dollar supply chain.

Most importantly, the jobs and wealth created would not require a penny of public sector spending. Government doesn’t have to subsidize Keystone XL in any way, which is all a friend of free markets should need to know. Keystone XL makes sense because it pays for itself. If it didn’t, there is no way that the private sector would line up to fund the project.

Objections to the project range from the bizarre to the absurd. Some opponents claim that the Canadian crude that Keystone XL will deliver is far more expensive to process than other sources of crude. But, if that were the case, why on earth would private sector investors line up to throw money at such a project?  Others claim that because this crude carries more contaminants that some other crudes, it will therefore cause more pollution. That objection is equally silly since US refineries are subject to the same emissions limits at all times, no matter what sort of raw material they start with.

The House version of the bill contains another provision that is sure to upset environmentalists: a directive that would force the EPA to stop implementation of rules targeting industrial boilers. The Boiler MACT rules are a classic example of regulatory overreach, hugely expensive with very little environmental benefit in return. Killing Boiler MACT would be a boon to American’s beleaguered manufacturing sector and would provide some certainty to businesses that are trying to plan future capital investments.

Both the pipeline and the boiler rules are but a piece of the larger budget issue, but it is interesting to find that both have found a place at the negotiating table. It may be a sign that Congress is starting to come to its senses about energy and environmental policy. That would be good news indeed.

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  • oldtimer

    They preach save the environment, and how this pipeline will hurt. How many birds have /and continue to be killed by those hideous windmills? We need to drill our own oil. What made this country great was that we did it all, we needed no other countries. Lets get back to basics. Encourage manufactures to come back.

  • stern

    The environmentalist lobby has got the whole oil sands picture completely backwards. Let's consider.

    What are the oil sands? Huge bitumen deposits – sand literally soaked in oil.

    What does the industry do? It extracts the oil and, when an area has been cleaned out, leaves it in far better shape environmentally than they found it.

    In simple terms: the oil sands are nature's own oil spill. The oil sands industry cleans it up.

    • LibertyLover

      The environmental lobby does not care about the environment. They use environmental issues as a wedge to split-apart Americans so that they can force anti-industrial anti-American policies on the gullible public.

  • FriendofGaryCooper

    There is no way American should have to pay a penny more than $2 a gallon for
    gasoline. The Keystone XL pipeline would create 20,000 jobs, and make Canadian oil more readily available for U.S. refineries to turn into gasoline. Don't believe me? Look at what's going on in North Dakota–at the jobs created by the oil discovery up there. But far be it from Obama. or the EPA to do anything to help Americans. Let's impeach Obama'
    right away, and dismantle the Dept. of Energy.

    • dan

      RE: The DOE. Agree. If we look at a number of gubmint agencies performance over time, the results is less. DOE — obstructs domestic energy production (along with Interior); Education — worse results at higher and higher input costs; Labor — for exactly what pray tell?; Commerce — another for exactly what results pray tell? Justice — more and more laws passed protecting classes and groups, thus more growth in the "injustice" industry. And finally the EPA — ever pursuing and making the perfect (utopia) the enemy of the good.

  • Wesley69

    Whether the Congress suddenly has a revelation about the need to get secure, friendly sources of energy, while important, is being held hostage by a President who does everything with a poltical intention in mind. If he is reelected, he WILL transform this country. He is dedicated to Green Energy. This flirtation, if it is even that, will last only as long as the election.