Just four days into his presidency, Donald Trump reversed an Obama-administration decision that needed reversing: President Trump cleared the way for the construction of the Keystone XL oil pipeline. It is good for America in several important ways.
The Keystone XL is a 1,179-mile pipeline that will connect the oil sands in Alberta, Canada to a key distribution point in Steele City, Nebraska. There it will connect with an existing pipeline system that delivers the crude oil to refineries along the Gulf Coast. It is estimated that Keystone will deliver 850,000 barrels daily. Currently, the oil extracted from the Canadian tar sands takes a much longer, most costly route east to Winnipeg and then south to Nebraska.
President Trump’s reversal of the Obama opposition is good for job creation, good for relations with Canada, and good for America’s energy independence from Arab oil. The more efficient, lower cost Keystone should also reduce oil prices, putting greater pressure on Russia, whose economy is overly-dependent on keeping energy prices high. That alone, should have convinced Mr. Obama to sign the Congressionally passed legislation supporting Keystone. Instead, Mr. Obama vetoed what was clearly in America’s interests.
Mr. Obama’s opposition to Keystone – which he dithered over for seven years – was based on speculative environmental theories that tar sand extraction caused more pollution and global warming than other forms of oil production. Importantly, Canadian Prime Minister Justin Trudeau didn’t agree with Mr. Obama’s economic-environmental calculus, and was a strong supporter of Keystone. And Mr. Trudeau is one of the most liberal and environmentally conscious Western leaders.
One immediate benefit of Keystone is the creation of 42,000 jobs. That is not an estimate by the pipeline’s operator TransCanada; it is the projection from Mr. Obama’s own State Department. The 36-inch diameter pipeline is expected to take one to two years to build, and to cost $8 billion.
Candidate Trump promised to focus on job creation and that precisely what this project does. But significantly, these are jobs created not by government spending but by private investment. That is win-win.
We also like the fact that one of Mr. Trump’s first actions improves relations with our northern neighbor, our second largest trading partner after the EU as a group. That the pipeline will improve distribution efficiencies and lower oil prices also has other foreign policy implications: it puts pressure on both the Saudis and the Russians. Less dependence on Saudi oil – what used to be referred to as energy independence – is good for America. And downward price pressure on energy costs reduces Russia’s leverage, given its over-reliance on energy to fuel its economy. In short, Mr. Trump’s decisive action on Keystone is good for America.