Both Houses of Congress took up a bill Tuesday to mandate construction of the Keystone XL pipeline. The bill would have preempted the permitting process in current law for trans-border pipelines. The House easily passed the bill. In the Senate, it failed to receive the 60 votes required to advance.
Fifty nine Senators voted for the pipeline including Colorado’s Michael Bennett whereas outgoing Senator Udall voted no. In the House, Colorado’s in-coming senator, Cory Gardner, voted for the bill. This means both Colorado’s senators will be Keystone supporters next time the bill comes us. Only two of Colorado’s seven Representatives voted no—Diane DeGette and Jared Polis.
Republican leaders in both Houses vowed to bring Keystone up again once the newly elected Congress convenes. Given the Republican majorities and Democratic defectors, like Senator Bennett, the bill will pass and go to President Obama, who will likely veto it. If he does, Republicans will spend the next two years passing the bill over and over like they did with Obamacare, voting to repeal it 54 times.
Even though Colorado’s Congressional delegation is solidly behind the project, there are questions about how Keystone benefits Colorado. There are some concerns that it could actually hurt the states fracking industry.
Despite the political rhetoric about Keystone as a job creator, the truth is that it will create at most, 29,000 temporary jobs during the construction phase according to the State Department’s official review—fewer than the 42,000 Republicans claim. After the pipeline is finished, it will add only 35 jobs. Mitch McConnell calls that “stunning”. It is less than a new Starbucks.
.None of these jobs will be in Colorado. These construction jobs will be spread out from the tar fields in Canada to Oklahoma. The southern leg from Oklahoma to New Orleans was approved by the president in 2012 because it carries oil from American fracking fields in the Midwest to refineries in the Gulf. The Northern leg will carry Canadian oil to the pipeline in Oklahoma and on to the Gulf.
The northern leg of Keystone, the one in contention, will carry mostly Canadian tar sand oil to the Gulf to be refined and exported on the world market. Canadians have no intention of selling that oil in the United States to lower American gas inventories and lower gas prices because they get more money on the world market. Twice, Republicans and oil-soaked Democrats killed an amendment by Senator Markey to require all the oil to be sold in the United States as a condition of approval. This proves their intent is to export the oil despite Republican rhetoric.
How does that impact Colorado? It could lower the global price of oil. Fracking was first tried in Colorado in the late 1970s; however, low oil prices and the higher cost of production and transportation rendered it too costly. During the Bush years, oil prices increased, in large part because of the Iraq War, and at prices over $100 a barrel, fracking in places like Colorado became profitable thus creating the boom. Today, prices are hovering at just over $75 a barrel. Most experts say fracking in Colorado and many areas is not cost-effective if oil falls to $60.
Flooding the world market with Canadian oil will put downward pressure on oil prices, which could chill the Colorado fracking boom. It would make Canadian oil less costly, and to the extent that some of the fracking oil in North Dakota makes it into the pipe, it would lower the production cost of that oil making it less costly than Colorado oil.
Another consequence of lower oil prices is that it makes solar and wind more costly than gas for generating electricity. Over 10,000 jobs in Colorado are directly tied to the wind and solar industry. Those jobs depend on building more wind and solar farms. Colorado benefits from incenting solar and wind. That is not accomplished by flooding the world market by dirtier and cheaper fossil fuels.
Keystone will make it more difficult for the United States and China to meet their commitments under the climate agreement signed last week. Cheap oil makes it easier for other nations to delay the inevitable—converting to renewable energy. That is bad for all people on the planet including Coloradans.
Hopefully, Colorado’s Congressional delegation will think twice about Keystone and vote for their own state’s self-interest, not the self-interest of Canada and big oil.
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