Blogs & Comment

The Keystone XL can't quite deliver energy security

But that's OK

The U.S. debate on the Keystone XL is shifting once again. On the one hand, opponents of the pipeline will likely return to their cri de coeur: the project should be nixed because it will enable the development of a particularly dirty kind of fossil fuel. For a while, the green contingent in the U.S. seemed to have swayed away from that and toward other issues—such as the risk of spills or the question of whether exporting gasoline refined from Canadian bitumen would erase any economic gain for the U.S. gain from the pipeline. Possibly, that was because the State Department had so categorically asserted in its latest report that blocking the Keystone would not choke the oilsands. Late yesterday afternoon, however, the Environmental Protection Agency formally asked the State to reassess that very finding, something that will give new momentum to Keystone opponents’ original argument.

On the other side of the debate, supporters of the pipeline have reloaded their rhetorical arsenal as well. Here the focus has been moving away from fabulous claims that the pipeline would be an engine of job creation—another statement debunked by the State Department report—and toward energy security. Keystone is in the U.S. national interest because it belongs to the “North American energy market,” Alberta Premier Alison Redford was at pains to explain during her last trip to Washington. There is no such thing as U.S. energy security and independence, Bank of Canada Governor Mark Carney has since said at least a couple of times (without ever explicitly referencing Keystone), there is a North American energy security. Canadian Natural Resources Minister Joe Oliver is working that line in New York City as we speak.

It seems to be working. A recent poll conducted by Nanos Research found that not only do 74% of Americans support the pipeline—and that’s more than the 68% of Canadians who said the same—but that a majority of those in favour back it because they want their country to secure stable energy supplies.

The energy security talking point, though, goes as far as the tale of the plentiful pipeline jobs: not very far. Don’t get me wrong, there definitely is such a thing as a North American energy market—in part, it was one of the many integrations spurred by the North American Free Trade Agreement. “U.S. and Canadian companies have become integrated in the development, production, transportation, and marketing of petroleum and natural gas,” reads a recent report for Congress on the Canada-U.S. energy relationship. Joint Canada-U.S. ventures in the industry are common. U.S. equipment manufacturers have already rushed to supply Canadian oilsand companies, and a pipeline map of North America looks like a kid’s giant crayon doodle, with lines running across borders in all directions. The Keystone XL would be just another link.

For all of Canada’s oilsand and the U.S.’s newfound shale oil bonanza, though, North America won’t quite be safe from the whims of petro-dictators. The price of oil, at the end of the day, will still be set on international markets. Sure, come an oil shock, both Canada and the U.S. would find themselves at the receiving end of the net transfer of wealth from oil importing to oil exporting countries that always occurs when prices jump suddenly. That would make up for some of the pain at the pump on both sides of the border, and that’s why further developing the North American energy market is a very good thing.

Keystone, though, is no insurance against a coup in Saudi Arabia.