At OSFC, we have always appreciated the creative stunts Keystone XL opponents have had to muster to make their case against a single pipeline that would increase our access to a stable, affordable and secure supply of oil. This week, a coalition of anti-Keystone XL groups including Bold Nebraska, 350.org, and the Sierra Club released a “memo” that actually embraces lower oil prices from the North American energy boom as their latest reason for President Obama to reject the pipeline.
However, in doing so, anti-Keystone XL activists have been forced to acknowledge the obvious: lower oil prices have been a result of the North American energy boom – and Canadian oil sands have played a large role in that growth. As Daniel Yergin explains in a recent Wall Street Journal op-ed about why oil prices have dropped, “The demand for oil—by China and other emerging economies—is no longer the dominant factor. Instead, the surge in U.S. oil production, bolstered by additional new supply from Canada, is decisive.”
As Yergin rightly states, oil sands are already playing a leading role in increased energy security here in the United States. 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 is why former National Security Advisors General Jim Jones and Tom Donilon along with former Secretary of State George P. Shultz support the construction of the pipeline.
So why have opponents been cheering North America’s energy boom, which is in large part thanks to oil sands growth?
It all has to do with one scenario in the economic analysis of the most recent State Department report, which suggests that low oil prices could make it harder for oil sands to get to market if the Keystone XL pipeline is rejected. Yet as Keven Book, an analyst for ClearView Energy Partners LLC, said recently,
“Long-term projects care about long-term prices, and the oil price has only been low for a low period of time,” said Book. “I suppose we would all love to live in a world where the price of oil didn’t go up again.”
Remember, the State Department report finds that, with or without the Keystone XL pipeline, oil sands will make it to market. That means Keystone XL would have a negligible impact on greenhouse emissions and thus passes President Obama’s climate test.
The crux of Keystone XL opponents’ ten page “memo” comes down to this one claim:
“In short, even the State Department’s FSEIS finds significant climate impact under a scenario that reflects the current market conditions. Of course, it is always possible that oil prices will go back up again. But the assumption that OPEC led by Saudi Arabia will always adjust production to keep prices high is clearly a thing of the past. Therefore it looks significantly less likely that long term oil prices will stay high enough to support expanded tar sands production than it did earlier this year.”
In other words, thanks to the strength of North American energy production, opponents are highlighting that the United States is no longer as dependent on the whims of OPEC when it comes to oil prices.
Wait a minute, that’s our argument, not theirs!
Ironically, Keystone XL opponents are now racing to embrace the very State Department report that they spent years trying to discredit. They are also cheering oil sands development in an effort to stop oil sands development. Makes sense.
What anti-fossil fuel activists don’t understand is the public is looking to Washington to help increase access to North American energy resources, not limit them. That’s why the latest poll found that 7 in 10 voters (68 percent) favor building Keystone XL. And that’s why Congress will move quickly to approve the pipeline at the start of the next Congress.