White House on Energy Hot Seat
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By Robert L. Bradley, Jr.
As part of the newly-signed payroll tax cut bill, the White House has 60 days to decide whether to approve the Keystone XL pipeline.
This project has become a hot-topic political football as of late. Back in November, the President's team announced it would delay its decision until after next year's election. Officials claimed they needed more time to evaluate the potential environmental impacts of the $7 billion, 2,100-mile project to transport crude oil from Alberta, Canada to major American refineries in the Gulf Coast.
Not content to wait until 2013, Republicans inserted a Keystone approval provision into the payroll tax extension. After some legislative wrangling, the provision morphed into the 60-day window the White House is now staring down.
Whatever the eventual outcome, President Obama's desire to delay this pipeline is just the latest example of his pernicious proclivity for putting politics over sound policy when it comes to energy regulations.
The President simply doesn't want to bare the political costs of deciding either way on Keystone until after his reelection bid. He's wants to remain non-committal. But organized labor, another one of Obama's prized constituencies, is as disappointed as extremist environmentalists are elated.
Canada's oil will go somewhere. The market demands it. If not to the U.S. Gulf Coast -- as currently planned -- the oil could easily flow west, where China will pick it in tanker at a port in British Columbia.
The Canadian government has already instituted rigorous protections to ensure the area surrounding oil extraction points aren't damaged. And the State Department recently concluded a wide-ranging study of Keystone and determined that there were no potential environmental effects from the pipeline requiring further investigation.
Shambling on Keystone might be smart politics -- but there's no good policy reason to delay approval. And there is a huge cost of delay, which can be captured in just four letters: J-O-B-S.
Keystone XL requires miles of pipe to be welded and installed, and at least 30 new pumping facilities to be constructed. American workers would staff many of those operations.
Indeed, if Keystone XL were allowed to proceed as planned, oil sands development and related operations would directly create thousands of new jobs. Tens of thousands additional positions would be created indirectly at businesses along the pipeline's pathway.
That same political strategizing driving the Keystone delay also undergirds the White House's stance on hydraulic fracturing.
Colloquially know as "fracking," this technique has proven invaluable in extracting natural gas buried under the earth's surface. It involves pumping a high-pressure mixture of water and sand into the rock surrounding deposits to free up gas for collection.
In the Marcellus shale -- a massive reserve running from Ohio and Pennsylvania into New York -- fracking is the only way for developers to get access to gas located deep underground. Unfortunately, policymakers high and low have succumbed to environmentalist alarmism on fracking.
New York -- with the tacit support of the White House -- has instituted a fracking moratorium and effectively prohibited exploration of the parts of the Marcellus that run under the state.
Again, the cost of currying favor with environmentalists? Jobs. According to the Department of Environmental Conservation, Marcellus development in New York could generate up to 80,000 new local positions.
Energy companies should have to comply with commonsense regulations to prevent environmental damage. And of course policymakers need to consider non-economic costs when deciding to approve major energy projects.
But politicking has now gotten in the way of good thinking. This administration and its allies are holding up vital new energy projects -- and it's costing Americans new jobs.
And if the oil is exported by tanker to destinations such as China, Obama will have left the environment and the economy worse off. Lose-lose rather than win-win -- now that would be monumental.
Robert L. Bradley Jr. is the CEO & Founder of the Institute for Energy Research and author of Edison to Enron: Energy Markets and Political Strategies (Scrivener Publishing and John Wiley & Sons).
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