The U.S. is “Missing an Enormous Opportunity” for Energy Security

New Jersey Governor Chris Christie lit up Twitter this morning with his strong endorsement of Keystone XL and the energy security benefits the pipeline would bring.  As Governor Christie put it,

“We are missing an enormous opportunity when we delay development of the Keystone XL pipeline.

“Not only is Keystone a major job creator, delays in its approval sends an unfortunate signal on multiple fronts. Approving Keystone would actually drive down the price of oil and help consumers in all North American countries. It should be done today.”

What Governor Christie is highlighting is the fact that, even as unrest ensues in oil exporting countries, thanks to the North American energy boom, families have been shielded from major price shocks that typically accompany that unrest – and have paid less at the pump.

As the New York Times reported just before families hit the road for Labor Day, many Americans found themselves able to afford more road trips this year due to lower gas prices. The Times explains the reason for this:

“The new source of American energy means more supply has been added to global markets — almost the exact amount that has been taken off the market at times because of unrest in the Middle East and Africa over the last five years.”

The article also quoted Tom Kloza, who said  “We can thank Texas, North Dakota and Canada” for these lower gas prices. This is something that news outlets have been tracking for months, as severe disruptions break out in other parts of the world.  As energy expert Daniel Yergin said in a recent op ed, several million barrels of oil are now missing from the oil market due to sanctions on Iranian oil and unrest in Libya, South Sudan, Nigeria and Yemen, but North American energy development “has been crucial in compensating for the missing barrels.”  He continues,

“Without it, the world would be looking at higher oil prices, there would be talk of a possible new oil crisis, and no doubt Americans would once again start seeing images of those gas lines and angry motorists from 1973.”

While we have the American shale boom to thank, we can also thank imports of Canadian oil sands for this increased energy security. Canada is our largest supplier of imported oil, making up 28 percent of our imports. As a recent report by IHS CERA notes, “Canadian oil sands have moved from the fringe to become a key pillar of global oil supply. This growth has made oil sands the single largest source of U.S. oil imports.” That supply is set to grow.  As the International Energy Agency (IEA) found last year, North American oil production – particularly oil sands – is sending “shock waves” through global markets, dramatically reducing imports from OPEC.  According to IEA, oil sands supply will grow by 3.9 million barrels per day from 2012 to 2018.

That’s where Keystone XL comes in.  As IHS CERA also pointed out, one of the reasons Keystone XL will have “no material impact” on greenhouse gas emissions is because heavy crude oil will be refined at U.S. Gulf Coast refineries regardless of Keystone XL. But if the pipeline isn’t built, much of that crude might be imported from Venezuela instead of Canada. As the report states, Venezuela will likely be “the number one beneficiary of a negative decision” on Keystone XL. So the question comes down to whether we want Americans to reap the benefits or unstable countries like Venezuela?

It’s for all these reasons that national security advisors have called on President Obama to approve Keystone XL.  As former Obama National Security Advisor General Jim Jones rightly put it, if we want to “make Putin’s day” we should reject Keystone XL. Another former Obama National Security Advisor Tom Donilon said that he “probably would” advise approval of Keystone XL to strengthen our national security. Former Secretary of State George P. Shultz said that he supports Keystone XL on energy security grounds because, “That’s oil that doesn’t go through the straits of Hormuz,” he said.

What’s more is that an overwhelming majority of Americans support Keystone XL and understand that we are “missing an enormous opportunity” by delaying it. For the sake of our economy and national security, let’s hope we won’t be missing that opportunity too much longer.

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