By Kevin Duan
Just recently on January 9, 2015, the House of Representatives voted to pass a measure approving the further construction of the Keystone XL Pipeline for the 10th time. The vote was 266-153, with approximately two-dozen Democrats and nearly all Republicans voting to pass the measure. Now the legislature rests upon the vote of the Senate, which is also likely to approve this bill and thus sending it to the desk of President Obama. The White House, however, has already stated that Obama will veto this legislature.
Yet even with all this political controversy, many Americans don’t know what the Keystone XL Pipeline is, and how the approval or rejection of the bill will affect their lives. The Keystone XL Pipeline is an oil pipeline system that begins with Canada and ends in the United States. The purpose of this system is so that the U.S. will have a source of oil and thus become less dependent upon foreign imports. Three phases of this operation are already in action, while the fourth is still awaiting U.S. government approval. The approved phases are as following. Phase I: the pipeline oil from Hardesty, Alberta to Steele City, Nebraska (a distance of 2,147 miles). Phase II: known as the Keystone-Cushing extension, the pipeline will be extended from Steele City to storage and distribution facilities in Cushing, Oklahoma. Phase III: known as the Gulf Coast Extension, the pipeline will be extended 487 miles from Cushing to Port Arthur, Texas. And Phase IV (the phase awaiting approval): the pipeline would run through Baker, Montana where American light crude oil would be added to the Keystone’s current flow of synthetic crude oil and diluted bitumen.
With all this being said however, what’s the big deal? Why won’t Congress just approve the deal and stop all the debate? Opponents of the pipeline state that the pipeline would put a potential risk to the environment in the case that oil is leaked thus spoiling the landscape, as well as contaminating ground water for humans and animals. Adding to the potential problems to the environment, opponents state that this oil is “dirty” oil, a type of oil that produces more greenhouse gasses when burned. Supporters argue that the company that wants this pipeline, TransCanada, has already promised much more sophisticated security measures. Adding to this is the fact that there will be rail shipments of oil which TransCanada claims will be more risky than the pipeline itself would be. However moving on from the topic of ecological issues, there comes the topic of job creation. Supporters say that the pipeline will create approximately 42,100 more jobs. This number would not only include the people working on the pipeline, but also those in restaurants, hotels, and supply houses. Yet opponents state that those “jobs” created are only temporary. According to them, only about 50 permanent jobs may be created. Yet the true purpose of the pipeline is for the purpose of oil. Roughly 830,000 barrels will be brought through the Keystone XL Pipeline a day if completed, and this will decrease the dependence of overseas oil.
Where do I stand on this issue? Yes, I do believe that there are many potential jobs that can be created, and I do trust in TransCanada’s ability to regulate safety measures. There are however, significant counterarguments regarding the environment, and in the current economic situation, one thing that the United States does not want to do is produce even more oil. Back in June of 2014, oil was trading at $112 per barrel. Now in January of 2015, oil prices have halved and now trade at $52 per barrel. What has caused this major decrease in the value of oil? The price of oil is largely driven by supply and demand. Starting in the 2000’s the price of oil was steadily increasing as China’s economy started growing at unforeseen rates. This increase in the price of oil tempted the US and Canada to go after harder to attain oil such as that in shale formations. The production of this oil thus led to a dramatic increase in supply. By the year 2014 the excess supply, as well as a decrease in demand from Europe and Asia led to the price crash. This price crash has now begun to upend the world economy. A clear example of the negative effects of decreasing oil prices can be seen in how the stock market has reacted. January has been a rough month already for the market, with the S&P 500 dipping below 2,000 points. With this surplus of oil, one thing the US economy, and even the world economy, doesn’t need right now is more oil. Plus, with the addition of more oil into the system, the United States’ demand for oil will decrease even more, furthering the concern over the present price crash.
However the issues with the Keystone XL Pipeline don’t only preside with the current economic issues of oil. The major issue falls under the fact that oil is a nonrenewable resource and thus measures must be taken to switch to a more reliable source of energy. Many companies right now are finding alternatives to transportation and energy in general. Elon Musk and his company Tesla are a major example of this new innovation. Tesla has doubled on its solar power and is working on forms of transportation, such as electric cars and the hyperloop, that will hopefully overtake petroleum one day. Musk and his company are not the only ones working to replace oil, biofuels also seem ready to penetrate the transportation industry within the next 5-10 years. Ethanol can be produced from corn, sugar, and fibrous plants. Currently, 10 percent ethanol is blended with gasoline to make e10. However, with limited vehicle modifications costing between $50 and $150 per vehicle, new vehicles can be produced to run on as much as 85 percent ethanol (e85) as well as 100 percent gasoline. These “flexfuel” vehicles are currently being produced by U.S. automakers; General Motors, for example, estimates that more than two million of its flex-fuel vehicles are on the road in the United States today.
The Keystone XL Pipeline has stirred much controversy over the last few weeks on whether or not this bill is really the best thing for the US economy. Yet after looking at the current economic situation, the US should not be focused on the production of more oil to add to the already large surplus. Adding on to this fact, when economists look at the long-term picture, oil is not in a position to dominate for all eternity. The days that the US depends on oil are numbered as many companies are steadily developing new sources of energy that will soon enter the transportation industry. These fuels will be cleaner, and will be able to last longer than petroleum.