When Congress forced the Obama administration to stop dithering on its decision to support the Keystone XL Pipeline, it revealed a White House's determined to cleave to ideology in the face of all common sense.
The Pipeline extension would bring the output of messy Canadian oil sands mining south to the U.S. for refining, distribution, and consumption. While many argue that the economics of oil sands production are questionable -- requiring a great deal of energy input for each barrel extracted -- the fact that the U.S. would benefit from increased supplies and jobs is unarguable. The genuine distaste U.S. environmentalists hold for the extraction method fails to recognize the simple fact that the oil sands are not in the U.S. and America no longer has the geopolitical clout to force its will upon the world. The Canadians have clearly decided they are going to mine the stuff whether we like it or not. If we work with them to build a pipeline that renders us essentially the only customer we will have significant leverage with the producers in mitigating that damage.
However, if we do not support this project, my friends in Ottawa tell me that Canada will build a still longer pipeline to their West Coast and ship the oil to a voracious China. This vastly increases the energy consumption of the project, puts the oil on a longer pipeline, with no U.S. design input, and finally add a trans-Pacific journey fraught with possibilities of disaster. Total carbon emissions and total oil spill risk will go up many times if we don't participate! On top of that we will be driving our closest alley into a tighter bond with our most aggressive economic competitor and a growing military adversary.
Last, but certainly not least is the simple fact that U.S. oil demand is relatively inelastic. Lack of this particular supply will not reduce consumption, but simply result in continued imports from elsewhere and that will primarily involve additional long sea trips for oil, much of it from disagreeable states in the Middle East or Venezuela.
No matter how strong an opponent you are of oil sands production, please seize a moment of clarity and look at the whole picture of oil from being shipped from our closest neighbor across the Pacific Ocean to a hostile competitor while we import a similar amount of oil from a hostile supplier across the Atlantic Ocean. That's a lose/lose future and it is exactly where this administration's best intentions are leading us and voters will see that for America there is no benefit in being smugger than smart. Score one for Romney.
Greg Autry teaches Macro Economics at the Merage School of Business, UC Irvine and is the co-author, with Peter Navarro, of Death by China. He serves as board member and Senior Economist with the American Jobs Alliance and holds a MBA from UCI and is completing a Management PhD in the area of public policy and economics. More info can be found at www.deathbychina.com.