Reports are that President Joe Biden will cancel the Keystone XL pipeline permit as one of his first executive orders on day one of his presidency.
The Keystone Pipeline System is a private enterprise energy project owned by Canada’s TC Energy Corporation. Plans were to shunt oil from Western Canada to U.S. refineries in southwest Texas. Estimates are that, if completed, the pipeline could carry more crude oil than some OPEC members produce.
One of former President Obama’s first executive orders was to cancel the cross-border permit for the pipeline. Construction plans remained on hold until former President Donald Trump reversed Obama’s decision.
Construction on the pipeline is underway in Canada and is heading across the border into the United States. During his 2020 campaign, Joe Biden promised that he would rescind the permits granted by the Trump Administration. Biden is expected to keep that promise, lubricated by the fact that the pathway of the pipeline is through a cluster of western states that he did not win.
Complicating the situation is that less than two weeks after construction of the pipeline got underway in April 2020, a U.S. District judge canceled a key pipeline permit. He ruled that the U.S. Army Corps of Engineers ignored the impact of the pipeline on endangered species.
Proponents of the project argue that the pipeline provides safer transportation of oil to refineries as well as construction and maintenance jobs to the tune of about $1 billion. Opponents argue that current low oil prices have cut oil production in Canada and North Dakota. They point to industry leader BP’s assessment that world oil demand has probably already peaked.
Nevertheless, smart money is that the demand for oil will come roaring back. The pipeline provides a reciprocal benefit of lowering the expense of transporting the oil from the ground to the refinery. Goldman Sachs supports that with the prediction that oil demand will rebound and grow to $102.5 million in 2022 as the world economy rebounds.
TC Energy Corporation is scrambling. They have announced some changes to win Biden’s support. That includes spending $1.7 billion on renewable energy sources—solar, wind, and battery power—to run the system. They have pledged to hire a union workforce, and to expunge green-house gas emissions from their operations by 2030.
Canadian leaders are worried as well. Alberta Premier Jason Kenney in a lengthy Twitter statement argued that canceling the pipeline would “kill jobs on both sides of the border, weaken the critically important Canada-U.S. relationship, and undermine U.S. national security by making the United States more dependent on OPEC oil imports in the future.”
In the meantime, Biden plans to rejoin the Paris climate accords that President Trump claimed was a U.S. job killer. Likewise, Iran, Iraq, and Libya—oil-producing OPEC members, have yet to ratify the agreement. Besides, there is ample evidence that many pact signatories are not living up to their commitments in a pact that sets no limits on emissions for individual countries. The pact also has absolutely no enforcement mechanisms.
