The End of the (Pipe)line?

Six reasons why Obama has delayed a decision on the Keystone XL pipeline.

At the G20 Summit in France on Nov. 7, 2011, Canadian Prime Minister Stephen Harper expressed optimism that the TransCanada Keystone XL pipeline project still had “overwhelming support” in the United States, despite the loud noises in opposition to the construction of the pipeline by environmentalists. The prime minister was right in his estimation of the strong support that still exists for the $7-billion project among business groups, labour leaders, congressional Republicans, and particularly those within the oil-industry lobby.

But the large protests on Nov. 6 outside the White House seem to have ramped up opposition to the pipeline project. Now, not only environmentalists, but also many high-profile actors and entertainers, and several U.S. politicians, are beginning to question whether the construction of the 2,700-kilometre pipeline from Alberta’s tar sands to Texas refineries is in the best interest of the United States. Even the U.S. president, who initially saw the pipeline construction as having potential to create jobs for a U.S. economy, which has been hit by a nine per cent unemployment rate, does not seem all that sanguine about this project. Indeed, President Obama has delayed the decision on the construction of the pipeline until after the 2012 Presidential elections.

There are at least six reasons why U.S. President Obama has been rethinking his position on the pipeline.

First, it's possible that there was a conflict of interest when it comes to the environmental-impact study that was done for the U.S. State Department. That study was carried out by Cardno Entrix, a consulting firm that lists TransCanada as one of its major clients. This consulting firm was involved in third-party contract work on four previous TransCanada permit applications. TransCanada actually recommended Cardno Entrix to the U.S. State Department from among other potential firms that could have done the environmental-impact study. If this is not a conflict of interest, I don't know what is. It is not surprising that Cardno Entrix came to the conclusion that the pipeline would have minimal environmental impact.

Second, lobbyists for the oil companies, like Paul Elliott, have been trying from day one to influence the U.S. State Department's process and Obama's decision. This might constitute a violation of U.S. federal laws. Some U.S. environmentalists have pointed out that Elliott, who helped run U.S. Secretary of State Hillary Clinton’s 2008 presidential campaign, is now TransCanada’s chief lobbyist.

It is possible that Elliott might be using his political links to Clinton, to gain access to State Department officials and eventually influence their decisions and recommendation to the U.S. president.

Third, opposition to the pipeline is growing exponentially. Not only are environmentalists against it, some farmers and prominent politicians are against it – especially from Nebraska. Lawmakers in Nebraska, for instance, tried to block the controversial project by passing a bill that would give the state the authority to approve the building of such pipeline across the ecologically-sensitive Sandhills and the state’s Ogallala Aquifer which provides irrigation and drinking water to Nebraskans. This opposition has caused the U.S. State Department and the U.S. President to consider the possibility of rerouting the pipeline so as to reduce the chance of environmental damage in Nebraska; something that would require a new environmental impact study. Many young people, who appear to support Obama’s re-election, have warned the president not to approve the pipeline. The project could lead the president to lose support among his young demographic. No wonder that President Obama has now indicated his intention to delay the decision on the construction of the pipeline until after the 2012 Presidential election.

Fourth, there are now questions about whether or not the pipeline is actually in the United States' best interest. Would building the pipeline cause gas prices to jump for farmers in the United States? And, where is the steel coming from to build the pipes? Chances are the steel will not come from the United States, or even Canada, but from Russia and probably India.

Fifth, what if there is environmental damage as a result of a leak in the pipes? The costs of cleanup for such potential damage need to be taken into consideration in the final decision. Recent earthquakes along the route that the pipeline would be built have been a wake-up call for some supporters of the TransCanada pipeline project. The potential for leaks in the pipeline getting into the Ogallala Aquifer is a frightening prospect for many Americans who remember the BP oil spill and the environmental damage it caused.

Finally, sixth, TransCanada said this project would create 20,000 construction and manufacturing jobs and possibly 250,000 indirect jobs. These statistics would normally be great news for an incumbent president who is trying to generate jobs in a declining economy, but there is now some doubt that the construction of the pipeline will actually create the jobs that TransCanada claims will be created. Some estimates now show that no net jobs will be created because the pipeline construction might kill as many jobs as it creates. Indeed, it is now clear that TransCanada inflated its estimates on job creation that would result from the building of the pipeline.

The fact that President Obama has now delayed the decision on this pipeline is a clear indication that he has been listening to the opposition voices on this matter. Let's put it this way, Obama doesn't need a hot-potato issue like this one to derail his already fledgling chances of being re-elected.