Rejection of Keystone Pipeline a Win-Win Strategy for Obama, Lose-Lose for U.S.

Published November 18, 2015

Co-authored by: Nancy Thorner and Ed Ingold

As predicted, President Barack Obama on Friday, November 6, 2015, rejected the proposed Keystone XL oil pipeline from Canada in a victory for environmentalists who campaigned against the project for more than seven years.  His reasons include protection of the environment, no “lasting” economic benefits for the U.S., and the current low price of petroleum.

The supposed danger to the environment is based on the mining of oil sands in Canada, not with the pipeline itself. In fact, oil sands mining will continue unabated, but the oil will be transported by truck and rail at 30 times the environmental risk of a pipelineAccording to the governor of South Dakota, Dennis Daugaard, rejection of the Keystone Pipeline by Obama mean that rail capacity needed to carry petroleum will not leave enough to carry farm produce and grain.

The so-called “temporary” economic benefits consist of employing 20,000 U.S. workers for two to five years building the pipeline, at PRIVATE expense. To Obama, “lasting” benefits only accrue when employing far fewer workers to build roads and bridges at PUBLIC expense.

According to Obama, we don’t need Canadian oil.  Even if we had access to Keystone pipeline oil, the oil gasoline prices wouldn’t be reduced [not overnight anyway]. Besides, gasoline is now priced at record low levels [but still higher than when Obama took office].

Low petroleum prices are deceiving.  Modern extraction techniques, including “fracking” (hydraulic fracturing), still need prices over $60/bbl to be profitable. Prices are low because Saudi Arabia, in what is a Saudi Price War on US Oil, is producing crude oil at the same or higher rate as in the past in order to keep prices below the economic break point for U.S. production. The result: our producers are being driven out of business. Petroleum production is down, and thousands of workers have been laid off. It is also the same strategyRockefeller (Standard Oil) used in the early 1900s to drive his competitors out of business. Rockefeller was then able to charge as much as he wished without restraint. (This, in turn, led to Teddy Roosevelt’s creation of anti-trust legislation, and the start of the Progressive political movement.)

Legacy building guides Obama

As one who deserves a C- as a student of history (and the Constitution), President Obama does not recognize the strategic value of petroleum in world politics. Countries don’t go to war over principles, they fight for natural resources, manufacturing capability, and other strategic assets (e.g., warm water ports). Western Europe depends on Russia for oil and natural gas supplies, whether from Russia directly, or from the Middle East. Without the ability to provide an alternate source of energy, the U.S. cannot count on Europe to back us if Russia were to attack the Baltic States or were Iran to attack Saudi Arabia (almost a certainty in the foreseeable future).

One thing Obama does understand, and only too well, is that in approving Keystone he would undercut his global leadership on Climate Change when nations come together at the end of this month for COP21. 

France will chair and host the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21/CMP11) from November 30 to December 11, 2015. The conference is crucial because the expected outcome is a new international agreement on climate change, applicable to all, to keep global warming below 2°C. This temperature variation has been adopted, in spite of the fact that the same climate experts admit the 2 degree rise will occur regardless of the proposed CO2 cutbacks. The real issue:  transferring billions of dollars to corrupt, “developing” nations, while at the same time crippling the economies of those nations expected to pay up.

Legacy is all important to Obama.  Consequences matter little to Obama, as long as his political agenda is being fulfilled in accordance to what he views as appropriate in his assumed role of an imperialist president.

Obama, in accusing others about politicizing the pipeline, remarked that its importance had become “overinflated” and was being used as campaign fodder by both parties.  However, Obama is using the pipeline as a symbol for his global climate change legacy?  Approving the pipeline would have been out-of-step with Obama’s climate message. 

It matters not to Obama that as this nation has lead the world in reducing emissions. His legacy assured, it will be up to succeeding presidents to deal with the problems he has created. Rejection of the Pipeline is part of a win-win strategy for Obama and a lose-lose strategy for the rest of nation.

[Originally published at Illinois Review]