Why Oil Sands Crude is Still Good for the United States

Michael Whatley
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Posted: Nov 12, 2011 12:01 AM

During a recent interview, President Obama said: "We need to encourage domestic natural gas and oil production. We need to make sure that we have energy security and aren't just relying on Middle East sources."

Yet despite these clear statements, the Keystone XL pipeline -- which will deliver more than 700,000 barrels of Canadian and U.S. crude oil to refineries along the Gulf Coast -- remains tangled in bureaucratic red tape inside the Obama administration.

Is it possible to credibly promote North American energy security while refusing to issue a necessary permit for Keystone XL, a permit that has been on the President's desk since the day he took office? It wouldn't appear so.

The U.S. Department of Energy, for example, found that the addition of Keystone XL, combined with other common-sense efficiency measures, would "essentially eliminate Middle East crude imports" over the long term. That seems like a good first step toward ending our dependence on OPEC and making sure we have the "energy security" that the President supports.

Moreover, President Obama's own Secretary of Energy, Nobel-laureate Dr. Steven Chu, has pointed out that having Canada as a partner when it comes to oil imports is "much more comforting than having other countries supply our oil." It should also be noted that 250,000 barrels per day of the oil flowing through Keystone XL will actually come from U.S. sources in Montana, the Dakotas, and Oklahoma.

Of course, the most significant benefit of Keystone XL will be what we all believe is the country's overall top priority: creating jobs. The pipeline is projected to create 20,000 new construction and manufacturing jobs, and the indirect economic stimulus from this $7 billion investment in the American economy is expected to create an additional 118,000 jobs nationwide. These jobs will provide family-sustaining wages, health care coverage, and retirement security, all at a time when the national economy still struggles to grow.

And while so many states are suffering from budget shortfalls, Keystone XL would provide a significant new revenue stream without the need for new taxes, generating more than $5 billion in tax revenues for the states through which the pipeline travels.

It was only a few years ago when the State Department concluded that "the addition of crude oil pipeline capacity between Canada and the United States will advance a number of strategic interests of the United States." Among those strategic interests were "increasing the diversity" of available oil supplies in a time of "considerable political tension in other major oil producing countries and regions," as well sending a "positive economic signal, in a difficult economic period, about the future reliability and availability" of U.S. energy imports. The State Department also noted that Canada is a "stable and reliable ally and trading partner" of the United States.

Those statements are particularly relevant to the Keystone XL discussion today: they were made by the Obama Administration in August of 2009 when it issued a Presidential Permit for the "Alberta Clipper" pipeline, which is today transporting oil from Alberta, Canada, to U.S. markets.

The Obama administration's recent announcement to delay any decision on Keystone XL until 2013 thus begs a very serious question: What's different between 2009 and today, other than an upcoming Presidential election?

The answer could be simple geography: the major market for oil flowing through the Alberta Clipper - and thus the area receiving some of the largest economic benefits - is Chicago, Illinois.

Whatley is executive vice president of Consumer Energy Alliance.