Keystone XL Pipeline Debate Heats Up on Capitol Hill

Jacob Harper  |

The proposed XL leg of the Keystone Pipeline, the controversial oil-supply conduit that would funnel Canadian tar sands oil through the Upper Midwest to shipping centers in Oklahoma, is facing renewed pressure for passage from Republicans. On July 23 Senate Republican John Hoeven (R-ND.) said Republicans were not satisfied with the current timeline of passage of the Keystone Amendment, and would be pushing harder to speed up passage.

The Keystone XL, if approved, would not traverse Hoeven’s home state of North Dakota.

The issue is fraught with emotion on both sides, as the Keystone has come to symbolize the sacrifices the world must make to keep the oil flowing. And arguments for and against the pipeline are heating up, and as heated arguments usually are, arte bereft of hard data.

 In June President Obama assured he would give his blessing to construction if environmental benchmarks were met and approved by Secretary of State John Kerry. This didn’t satisfy Senate Republicans, who on July 23 threatened to stall an energy efficiency bill for the second year in a row in order to secure a hearing on the pipeline.  

The Keystone Amendment is currently attached to the efficiency bill, which enjoys bipartisan support.

The pipeline gained further support following the oil train disaster in Lac-Megantic in early July. TransCanada quickly dismissed any intimations support for the pipeline could increase following the disaster.

Environmental opposition to the Keystone is gaining traction. Advocacy group The National Resources Defense Council released a study said the Keystone XL would drive production of tar sands oil up and cause more pollution. The owners of the pipeline, TransCanada Corporation (TRP) dismissed these claims, with a spokesperson saying the report contained “nothing new.”

The political wrangling is further complicated by not just the potential environmental impact, but the financial one as well. As reported by Consumer Watchdog on July 15, the increased flow of oil through the Midwest would raise oil prices, as oil has become artificially cheap as a result of the Midwest’s unique geographic position as an oil bottleneck. The study holds that oil would be diverted through the Midwest via the Keystone, lowering supplies and raising costs.

This claim is disputed by Duke University professor Stephen Kelly, who claims the effect of the pipeline on American oil prices will ultimately be negligible.

The biggest beneficiaries if the pipeline were to go through? According to Kelly, "One of the most compelling arguments for building the Keystone XL pipeline is that it will increase the profits of oil producers."
 And the pipeline’s majority owner, TransCanada.

Oil producers that will benefit from passage of the pipeline include ExxonMobil (XOM) , Chevron (CVX) , Royal Dutch Shell ($RDS), ConocoPhilips (COP) , Total S.A. (TOT) , Marathon Oil ($MRO), as well as Russian and Chinese firms such as Rosneft ($ROSN), SinoPec ($SHI), and PetroChina ($PTR).

And, notably, the extractor of the tar sands oil in question, Canada’s largest “heavy oil” producer, Canadian Natural Resources Ltd. (CNQ) .

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