February 28, 2012

THE PROPOSED KEYSTONE XL oil pipeline, which would cross the U.S.-Canada border and thus requires presidential approval, has been on hold since President Obama rejected it in January. But TransCanada, the pipeline’s would-be builder, announced Monday that it will build a segment, from Oklahoma to the Gulf of Mexico, that does not need presidential approval. The company also said it will reapply for permission to complete the rest of the line.

The White House embraced the announcement, and deservedly so. The Oklahoma-to-Texas segment will accomplish one of the primary goals of the Keystone XL project: alleviating an inefficient glut of crude in the central United States. Constructing it will help untangle the politics, too: Opposition to the full pipeline should moderate as the first stage creates construction jobs. TransCanada’s adjustment of the routing as it reapplies will diminish local concerns. That should give Mr. Obama, or his successor, an easier time approving the rest of the pipeline next year.

Logic would have dictated approval in the first place. Environmentalists have understandable qualms about the environmental impact of extracting unconventional oil. But, with the forceful backing of the Canadian government, oil companies are almost certain to find a profitable outlet for their oil-sands petroleum — if not in the United States, then perhaps in Asia. It is better to allow them to send their product south via pipeline than to force them to ship it abroad or to load it onto river barges and trains. Embracing that logic would mean, aside from employment and infrastructure benefits, less low-quality petroleum shipped in tankers from Canada to Asia, and less from the Middle East and Venezuela to refineries in the Gulf of Mexico, according to a State Department study.

Neither side has shone in this standoff. The administration said its rejection was based on a Republican-imposed deadline that did not allow for consideration of local objections to the pipeline route. But given that Mr. Obama’s decision followed three years of review and extensive environmental study, foreign investors could be forgiven for concluding that they must factor the possibility of arbitrary, interest-group-driven obstruction into their planning decisions. Pipeline backers, meanwhile, attacked the president with hyperbole, misleadingly held out the pipeline as a gas-price panacea and seemed more eager to whip Keystone into a political issue than to get the pipeline built. None of this will encourage foreign investment in projects that would help the country.