Tea Leaves: Yes, Oil Sands

October 14, 2011

National Journal Magazine

Amy Harder

Environmental activists are working to ignite President Obama’s political base in opposition to a proposed pipeline that would send carbon-heavy oil from oil sands in Alberta, Canada, to refineries on the Texas Gulf Coast. In fact, green groups call the Keystone XL pipeline project Obama’s most consequential environmental decision between now and Election Day 2012.

They should brace themselves for an unpleasant surprise.

Critics of the 1,700-mile pipeline, intended to carry 700,000 barrels a day, say that it would exacerbate global warming by promoting the mining and processing of heavy oil sands, which emit more greenhouse-gas pollution than conventional oil drilling. At State Department hearings last week, residents of the six states that the pipeline would cross voiced fears that construction and leaks might contaminate water sources, disrupt ranches and Indian lands, and damage public health. But others in those states—Montana, South Dakota, Nebraska, Kansas, Oklahoma, and Texas—said they favored the pipeline because of the jobs it would bring to their communities.

Ah, the magic word: jobs. It counts as the biggest reason that the Obama administration seems ready to approve the pipeline, maybe as soon as year’s end.

Let’s consider the advantages that the project offers a beleaguered president. Touting the economic benefits of the pipeline could help Obama fend off attacks from business groups and also appeal to independent voters worried about the weak economy. He could count on taking heat from his environment-minded supporters, as he did last month when he shelved a tougher ozone standard. But by many accounts, the administration is betting that it can balance economic, energy, and environmental needs in going forward with Keystone, while reassuring critics by imposing the sternest environmental standards of any such project to date.

“Environment is only a part of it,” Kerri-Ann Jones, assistant secretary of State for oceans and international environmental and scientific affairs, told reporters after a public hearing last week in Washington. The department’s review of the national interests at stake, she said, also covers “issues related to energy security and economic development and growth.”

TransCanada, the corporation that has proposed the pipeline, has said that the project would create 13,000 U.S. jobs. The State Department estimates that it would be between 5,000 and 6,000 jobs. Environmentalists accept the smaller range of estimates but dispute the larger figure.

Other factors point to a presidential thumbs-up. One has to do with the rhythm of the administration’s environmental decisions. The verdict on Keystone will probably follow by only a month or two the Environmental Protection Agency’s issuance, over the coal industry’s opposition, of a tighter standard on power plants’ emissions of mercury. The administration’s stance on mercury, curbing emissions to protect public health, should make it easier for environmentalists to swallow their disappointment on the pipeline.

Nor is it evident, Obama can argue, that spurning this dirtier oil would accomplish much. If the United States doesn’t import the oil from Canada’s oil sands, somebody else—China, say—surely will, and the global climate will heat up regardless.

As the third criterion in deciding on the Keystone pipeline, by the State Department’s account, energy security also militates for approval. The pipeline would enable Obama to tout a reduced U.S. reliance on oil from the unstable Middle East.

The oil, once refined in Texas, however, would not necessarily remain in the United States. Oil Change International, a Washington-based group that advocates the use of cleaner energy in place of fossil fuels, reported recently that Valero, which plans to ship oil through the Keystone pipeline, has told investors it intends to export diesel.

The opposition is heating up. The State Department’s environmental impact statement, issued last month, concluded that the pipeline would have no “significant impacts,” a finding that drove hundreds of protesters to the White House gates and inspired hecklers at presidential appearances in St. Louis and Portland, Maine. The New York Times reported last week that the State Department assigned the drafting of the impact statement to Cardno Entrix, a Houston-based company whose major clients include TransCanada. EPA criticized two earlier draft impact statements as “inadequate” but hasn’t yet responded to the final report.

The environmental worries remain significant. Still, the administration’s competing criteria—economic health and energy security—are expected to prevail. The boon for the economy, especially, is bound to resonate with the nation’s recession-scarred voters. Nothing can matter more to a president who hopes to land a second term.