Congress may push Obama for Keystone XL decision

Politico’s Morning Energy email today included a link to a draft legislation from the House Energy and Commerce committee to “direct the President to expedite the consideration and approval of the construction and operation of the Keystone XL oil pipeline.”

The “North American-Made Energy Security Act” contains a list of familiar arguments for the pipeline’s approval — energy security, job creation, etc. The lawmakers paint a picture of the pipeline enabling the U.S. to drastically turn away from “distant foreign sources” of oil.

Oddly, the bill is careful to note that approving the pipeline will “result in no significant change in total United States or global greenhouse gas emissions” — emissions that Republicans in Congress have repeatedly claimed we shouldn’t worry about anyway.

But the most interesting part of the bill is this:

The principal choice for Canadian oil exporters is between moving increasing crude oil volumes to the United States or Asia, led by China. Increased Canadian oil exports to China will result in increased United States crude oil imports from other foreign sources, especially the Middle East.

That’s fine and good, but the problem is that Keystone XL doesn’t prevent Canada from exporting oil to China. If anything, it makes it easier.

As we’ve noted before, the main reason Canadian oil producers want Keystone XL built is because current infrastructure confines exports to the Midwest, which is currently oversupplied, suppressing prices.

As David Livingston noted back in January, reaching the Gulf Coast not only opens up more U.S. markets for Canadian oil, it also opens up rapidly growing Asian markets (you may recall that a decommissioned pipeline parallel to the Panama Canal was recently reopened to run in reverse – from east to west).

So basically, Keystone XL doesn’t necessarily guarantee all that oil will flow to the U.S. The price of oil will be determined by the global market, and the oil will go to wherever demand is greatest, provided the infrastructure is in place to move it.

Photo by Ray Bodden via Creative Commons

2 thoughts on “Congress may push Obama for Keystone XL decision

  1. Thanks for shining some much needed light on this, Ken. More midwesterners need to learn more about this project and its potential effect on gas prices. But did you really mean to say “won’t result in increased greenhouse gas emissions”? If so, how can they claim this when so many experts, including James Hansen, have said otherwise?

  2. That’s what the language of the draft legislation says – I’ll put it in quotes to make that clear.