With Latest Comments on Keystone XL, Obama Favouring Environment Over Economy

07/31/2013 03:42 EDT | Updated 09/30/2013 05:12 EDT

Keystone watchers are in something of a swivet over comments made by U.S. President Barack Obama in a recent interview with The New York Times. Mr. Obama once again rained on the Keystone XL parade, disparaging the pipeline on employment and environmental grounds.

Here are the key quotes by Mr. Obama:

  • ...Republicans have said that this would be a big jobs generator. There is no evidence that that's true. And my hope would be that any reporter who is looking at the facts would take the time to confirm that the most realistic estimates are this might create maybe 2,000 jobs during the construction of the pipeline -- which might take a year or two -- and then after that we're talking about somewhere between 50 and 100 jobs in a economy of 150 million working people.
  • So what we also know is, is that that oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States. In fact, it might actually cause some gas prices in the Midwest to go up where currently they can't ship some of that oil to world markets.
  • Now, having said that, there is a potential benefit for us integrating further with a reliable ally to the north our energy supplies (sic.). But I meant what I said; I'm going to evaluate this based on whether or not this is going to significantly contribute to carbon in our atmosphere. And there is no doubt that Canada at the source in those tar sands could potentially be doing more to mitigate carbon release.
  • But all of that will go into the mix in terms of John Kerry's decision or recommendation on this issue.

There's some truth to Mr. Obama's thoughts. Jobs for the Keystone XL pipeline will be "temporary" jobs, just as all infrastructure jobs are temporary. Once you build a road, the road-builders move on to other projects. Once you've built a bridge, the bridge-builders move on to other projects. All construction is, essentially, temporary work. What's surprising is that Mr. Obama would disparage such work when it's being proposed by the private sector, when such "temporary" work has constituted the core of pretty much every economic stimulus program he's proposed over the last five years. Put up wind turbines? Temporary work. Put up solar panels? Temporary work. Insulate homes? Re-pave highways? Install "smart" meters? All temporary work.

And it's true, to the extent that there's a glut of oil in the Midwest keeping gas prices low, relieving the glut might lead to some higher prices. Of course, the economic reasoning isn't exactly stellar here either: what the President is arguing here is that it's okay to keep gas prices artificially low in Oklahoma, while preventing people in the Gulf of Texas from receiving oil that would create jobs and profits in the Gulf. You'd think that if glut creation was Mr. Obama's ideal way of keeping gas prices down, he wouldn't have slowed oil production on federally controlled lands.

What's most interesting about Mr. Obama's recent comments, however, is his re-affirmation of what could be seen as an insurmountable hurdle to Keystone XL approval.

Back in June, the President gave a speech on climate change, in which he proposed this test for Keystone XL (emphasis mine):

Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation's interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline's impact on our climate will be absolutely critical to determining whether this project is allowed to go forward.

At the time, some analysts thought the President's statement left plenty of room for approval. Brad Plumer, at the Washington PostWonkblog, felt that the President had left himself "wiggle room" to approve the pipeline. And over at the Financial Post, Claudia Cattaneo also went for the "wiggle room" theory. I was more pessimistic, actually agreeing (somewhat) with Joe Romm's interpretation at Climate Progress (an exceedingly rare event) that the President's language suggested an insurmountable hurdle. Even if Canada improved the efficiency of bitumen production so that its greenhouse gas intensity was identical to that of conventional oil, it is still the case that the simple act of developing the oil sands will add net carbon to the atmosphere: more carbon than Canada can capture in any offsetting way. To environmentalists like Romm, anything that helps get the bitumen out of the ground will flunk Mr. Obama's litmus test.

And his mention of "John Kerry's decision or recommendation" is also reason for a pessimistic interpretation of the most recent comments. As I wrote in a Fraser Institute Alert recently, John Kerry is a very strong believer in catastrophic climate change:

In August 2012, Kerry told the US Senate that he believed climate change to be "of as significant a level of importance" as Syria's or Iran's nuclear ambition, as it "affects ecosystems on which the oceans and the land depend."

By repeating what now seems to be the official litmus test for Keystone XL approval, and by emphasizing that the decision is in the hands of John Kerry, who has repeatedly expressed alarmist sentiments regarding climate change, President Obama has cast further doubt on Keystone XL approval.