As anticipated, the Senate passed the legislation forcing the administration to approve the Keystone XL pipeline. 53 Republicans and 9 Democrats joined together to pass it. The President has threatened to veto it. It’s unlikely that either the House or Senate will be able to find the votes necessary to override that veto. And so… Keystone will likely remain an unsolved problem.
At this point, I’m sure most of you all know the backstory. Years ago, an application was filed to connect oil fields in Canada to American refineries in the Gulf. What should have been a relatively straightforward review turned into half a decade of dithering. Traditionally, because the pipeline spanned an international border, the President had the foreign policy discretion to approve it or reject it. Neither decision came, however. Over time, the goal posts seemed to keep moving. “We need an environmental impact study”. The study was completed and the impact determined to be minimal. “We need the border states to approve it.” They talked it over and then did. “We need further review.” It’s unclear what else there is to review… the economic benefits of energy independence?
Watching this all unfold from up north, the Canadian government became increasingly frustrated. Their oil needed to get to market. The pipeline wasn’t determining whether or not they would drill – just where the oil would go once they did. The energy-hungry Chinese were naturally anxious to get it and the Canadians considered for a while building a pipeline to the west coast and putting the crude on ships bound for China. That wasn’t ideal for anybody (certainly not America) and as an alternative, they looked at shipping the oil to the east coast and putting in on ships to bring it around to the Gulf that way. The governments and companies involved have looked at transporting the crude on trains – also not an ideal or efficient solution.
What’s frustrating to a lot of us is that the Administration’s argument against Keystone just doesn’t make much sense. It goes something like, “if we don’t approve the pipeline, then the oil just won’t be drilled and then we’ll be more inclined to look at alternative energy sources.” That’s nonsense and any objective observer can see that.
First off, they are going to drill the oil. That’s a given. Second, even if we diverted as much taxpayer money as the President wants into renewable energy, it will still be a very long time indeed before our cars stop needing gasoline. It will be a long time before we stop needing oil to make things like plastic and other derivative products. For the foreseeable future, American consumers need fuel. They don’t want to need fuel, but they do need fuel. There’s no choice in the matter. So from a public policy perspective, an important choice is what we are willing to do to try to reduce the cost of that fuel for American families.
In large part because of the boom in oil and gas production here in North America, global oil prices have plummeted. So far, according to AAA, consumers have saved $14 billion this year at the pump and that number could be closer to $75 billion next year if prices hold steady. For an economy still struggling and for families where wage growth remains stagnant, saving $75 billion in unavoidable costs is no small bonus. And if the cost savings weren’t enough, we also have the thousands of jobs that oil and gas production has created in states like North Dakota and elsewhere. Unemployment in those states, even when the rest of the country was still in the grips of the recession, was well below the national average. It has, in fact, been one of the only bright spots in our economy.
So how, even at this late stage, seeing the dramatic improvement for consumers, can the opposition still be there to increasing our own domestic production and independence? This development has strengthened American consumers and it has put additional pressure on countries like Iran and Russia and Venezuela. Very few things in life are all good or all bad and to be sure, there have been some negative impacts of the fall in oil prices. Many small banks that have made loans to American production companies have been pinched and we’re starting to see new exploration slow somewhat which will mean some job growth will slow as well. But on the whole, I really have a hard time moving around Central Florida and seeing how cheaper gasoline is bad for our community.
Keystone has been delayed for so long that the companies have largely problem-solved their way around it. In many respects, this issue has become a proxy vote for whether or not you think American-made fuel is a positive or a negative. The President is going to have to explain to the American people – the vast majority of whom have to drive as part of their daily lives – why he remains opposed. He’s going to need to explain why these low costs, which have happened in spite of his best efforts, are bad for American consumers. And he’s going to have to do better than, “cars should run on windmills.”
Congressman Rich Nugent represents The Villages in the U.S. House of Representatives.