Cancellation Of Keystone XL Comes Back To Haunt America

The Wall Street Journal carried a report on Tuesday detailing meetings between officials of the U.S. and Canadian governments focused on finding ways to increase Canada’s exports of crude oil into the United States as gasoline and diesel prices continue to rise. To no one’s surprise, the Journal quotes sources as saying that “deliberations are in early stages and that no clear-cut solutions have emerged.”

Of course, it’s all water under the bridge at this point, but a brand new, safe, environmentally sensitive pipeline built with union labor and with a capacity to import 830,000 barrels of heavy Canadian oil per day down to U.S. refineries tooled to refine diesel from such grades of crude might have been useful to have online right about now. But, of course, the cancellation of TC Energy’s multi-billion dollar investment in exactly such a pipeline – the northern extension of the Keystone XL system – became one of President Biden’s first acts in office on January 20, 2021.

Thus, those involved in the discussion are left to choose among an array of bad and impractical options: Bring more oil in by trains or trucks, both of which are more polluting and less safe than pipelines, or trying to figure out how to bring more in on other, older lines already operating at or near full capacity.

The White House told the Journal’s reporters that “While the U.S. continues to engage with a variety of producing countries to address the current supply imbalance we are seeing, the Keystone XL pipeline would have done little to nothing in addressing that supply,” but that is not an honest statement. As Kevin Birn, an analyst with S&P Global Commodity Insights, points out, “There’s not a limitation in terms of [Canadian] resource potential. There’s a limitation of capacity.”

Obviously, any added pipeline capacity, not just from Keystone XL, would be extremely useful in this situation. It is absurd to argue otherwise.

While it is true that Keystone XL would likely still not be completed and in-service today had Biden not ended the project by executive fiat, it is important to think back and remember how this critical piece of infrastructure that would create as many as 10,000 high-paying jobs was held up by climate activists and bureaucrats in the Obama and Trump administrations for a decade before Biden ascended to the presidency. If the federal government employed a permitting process that was rational and based on facts and reality, this pipeline would have been placed in service years ago.

But the reality is that the generating factors of energy-related issues that are impeding America’s economy today have been in place for many years: A set of federal statutes that are overly vague and open to bureaucratic and judicial interpretation and abuse, combined with agenda-driven political appointees who believe their duty is to impede the production of abundant and affordable energy that the public demands.

If President Biden and his advisors truly want to improve the ability for Canada to import more oil into the U.S., how about invoking the Defense Production Act as a means of expediting the build-out of the remainder of the Keystone XL system? Maybe even provide some subsidy dollars to make up for a portion of the huge losses TC Energy incurred when its’ cross-border permit was cancelled without cause.

But that’s just dreaming of what might happen in a reasonable world. Instead, we see the same federal government whose policies and bureaucracies created the energy-related issues facing the country today now scrambling to find other solutions, and not having much luck. Nobody could have seen that coming, right?

We should all wish these government Keystone Cops the best of luck, but history strongly advises us not be overly optimistic about their capacity to land on a useful result.