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Canceling Keystone XL May Have Been Biden’s Biggest Blunder

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By Robert Rapier - Mar 08, 2022, 1:00 PM CST                                                                                                                                                       

  • Canceling the Keystone XL pipeline was about sending a message for U.S. President Joe Biden.
  • Now that the global supply of energy is being called into question, however, many are doubting how much value that message had. 

People often admit to me that the Keystone XL itself wasn’t that important. Stopping it was more about what Keystone XL represented. This is a good point. I am going to argue the opposite. The arguments I am going to make here aren’t specific to Keystone XL but are rather about what it represented — a strategic insurance policy with negligible downside. 

First, I don’t believe Keystone XL would make a material difference when it comes to global carbon emissions. I have actually quantified this (source). Using the Supplementary Environmental Impact Statement (SEIS) for the Keystone XL Pipeline from the US State Department, I calculated that in the worst case, a completed Keystone XL could increase annual global carbon emissions by 0.07% by 2030.

In an alternate scenario where the oil finds its way to market via alternate pipelines, the carbon emission difference was 0.007%. We can’t even measure carbon emissions to that level of accuracy, so this is effectively zero. 

It Was Also a Political Mistake

That leads me to the final reason this was a big mistake. The average person isn’t going to do a deep dive into the reasons that gasoline prices have spiked. They are going to see that spike, and look for an easy scapegoat.

 Even though canceling Keystone XL has no bearing on the current gasoline price spike, for many people, it seems like basic common sense that it must have had an impact.When I am discussing gasoline prices with people, inevitably someone will blame the cancellation of Keystone XL. 

Many environmentalists will acknowledge that, and say this is just fine with them. Higher gasoline prices should lead to more conservation. That’s true, but it also leads to losing elections, and the loss of the ability to pursue your agenda.Ultimately, canceling Keystone XL was about sending a message. 

 When you weigh the actual impact versus the political impact that many got from the message, it was just the wrong decision to cancel it.  Finally, this entire analysis doesn’t even consider the $15 billion TC Energy is seeking in damages from the U.S. government for the cancellation of the project under the terms of the North American Free Trade Agreement.

If they are awarded damages, then the decision changed what would have been a positive for the economy into a significant net negative.

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