Which nation will be the world’s leading superpower a few decades from now? I fervently hope it is the United States, and I have great faith in American ingenuity. But the Obama administration’s rejection of the Keystone XL pipeline is a reminder of why our No. 1 position is in jeopardy.
The Keystone XL pipeline would bring oil from the Canadian oil sands and North Dakota’s Bakken Formation to U.S. refineries on the Gulf Coast. The pipeline has been in the regulatory approval process since 2008. Its eight-volume environmental impact statement was produced following myriad studies, hearings, public comments and reviews by multiple agencies and each of the states along the route.
However, the Obama administration decided the proposal had not been studied enough. It delayed a decision in November. Congress responded and gave President Obama 60 days to make the simple determination of whether the pipeline was in the “national interest.”
This seems like a truly simple determination. Iran is threatening to blockade the 20 percent of the world’s oil supply that flows through the Strait of Hormuz. The American economy is struggling from high unemployment. The volatility of oil prices, reflected in periodic spikes at the gas pump, is a threat to productivity. A privately funded pipeline project that would create tens of thousands of jobs while helping stabilize America’s energy supply clearly seems to be in the national interest.
Instead, the Obama administration found that a bureaucratic desire for more study outweighed the rest of the national interest.
The door is now open for Canadian oil to go to China. Canadians are already considering an alternative pipeline from the oil sands region to Canada’s West Coast, so oil can be transported on tankers to China. China will be happy to step in and gain long-term commitments to acquire the oil supply. Once those commitments are made and a West Coast pipeline is started, it may take years before new or expanded oil sands facilities again make oil available for U.S. markets.
The United States has, in essence, surrendered its place at the front of the line to purchase Canadian oil.
Even from an environmental perspective, the Obama decision is a loser.The world’s second-largest oil resource will continue to be produced. Instead of a straightforward pipeline to the U.S., the oil will travel by tankers across the Pacific. U.S. fuel requirements will be filled by oil tankers crossing the Atlantic. Jobs that could have been here will be overseas.
The ramifications for business investment in the United States are even more disturbing. The Keystone decision tells investors that the U.S. has an unpredictable business climate. Companies can invest years and many millions of dollars to seek permits and, ultimately, be stymied by politics.
Contrast our approach with China‘s. China astutely has assured its future supply of oil and other energy resources. Over the past decade, the Chinese have gone around the world negotiating long-term supply deals. The U.S., instead, has rejected an oil supply laid at our doorstep. Which nation is making better preparations to be the superpower of the future?
Gale Norton was secretary of the interior in the George W. Bush administrtion. She is president of Norton Regulatory Strategies.
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