Of course, there’s little question that more Canadian oil production would trim world oil prices slightly and thus help the U.S. economy. But the net impact of the Keystone XL pipeline would have been smaller than its proponents claim.
4. The pipeline would have set back the green economy.
The Natural Resources Defense Council, a key group opposing the Keystone XL project, claimed that the pipeline “is at odds with millions of clean energy jobs.” Others advanced more subtle variations: Senate Majority Leader Harry Reid (D-Nev.), writing to Secretary of State Hillary Rodham Clinton late last year, pitted pipeline construction against clean energy, asserting that “proponents of this pipeline would be wiser to invest instead in job-creating clean energy projects, like renewable power, energy efficiency or advanced vehicles and fuels.”
Clean energy is important, but these claims are unjustified. Entrepreneurs weren’t waiting on the sidelines to see what happened with Keystone XL before pouring money into biofuels or solar power. Nor were motorists putting off the choice between a Prius and a Hummer until the State Department weighed in. The future of the green economy will depend on whether the U.S. government can consistently penalize dirty energy across the economy — rather than in isolated spots such as this pipeline — as well as promote greater energy efficiency through regulation and offer direct support to sustainable-energy innovation.
5. If we don’t build the pipeline and buy their oil, the Canadians will sell it to China.
So what? World oil prices depend on how much oil is produced — not who sells what to whom. Whether the United States or China buys oil at the world price from Canada or Brazil or Saudi Arabia or Nigeria won’t affect U.S. economic fortunes. Some argue that buying oil from Canada rather than elsewhere would shrink the yawning U.S. trade deficit, since Canadians are more likely than others to spend their petro-profits in the United States. But Canada gets richer no matter whether it sells its oil to American or Chinese consumers, and its newfound wealth spills over to the U.S. economy regardless. What ultimately matters to our economy is not whether the United States or China buys oil from Canada — it’s whether Canada produces and sells that oil at all.
The fate of the Keystone XL pipeline will be of limited consequence to either long-term U.S. energy security or climate change (though its rejection will probably be ugly for U.S.-Canada relations). The Keystone decision ultimately became far more about symbolism than substance. It’s a shame that so much attention was diverted from things that matter more.
Michael Levi is a senior fellow at the Council on Foreign Relations and director of the council’s program on energy security and climate change.
Want to know more about the future of America’s energy supplies?
Steven Mufson on “The unpredictable forces behind oil prices”
Michael Levi on “Five myths about nuclear energy”
Daniel Yergin on “Oil’s new world order”