Opponents of Keystone Pipeline Add Economic Arrows to Their Quiver

The economic impact of the Keystone XL Pipeline is in dispute, but it's unlikely President Obama will wade into that argument. (PR NEWSWIRE)

As President Obama considers the climate impact of the Keystone XL pipeline, some of the project's most vocal opponents are putting a renewed focus on its economic effects.

The pipeline, which would carry heavy crude from Canada's tar sands to U.S. refineries on the Gulf Coast, is still pending approval by the State Department, and Obama said this summer he will only issue a permit if the project does not exacerbate climate change.

Environmentalists believe it will, but they also question arguments by project proponents that the pipeline will be good for American consumers.

"Here's the truth: Keystone oil will travel through America, not to America," said investor and environmentalist Tom Steyer, narrating an ad running on national networks recently. The 90-second spot, backed by Steyer's NextGen Climate Action group, is part of a $1 million ad series opposing the pipeline.

Steyer opposes Keystone on environmental grounds, but his first pitch against it barely mentions climate change. His argument — that the pipeline hailed as a linchpin of North American energy independence will instead be used to ship oil overseas — is not a new one. The Sierra Club, 350.org, and other green groups have long held that Keystone will be an export pipeline, a point disputed by its advocates.

"The economic argument [for Keystone] is crumbling," said Sierra Club spokesman Eddie Scher. "The idea that the United States is dying for this oil from Canada doesn't hold up.... After [Obama] rejects this pipeline, he's going to have his choice on reasons why he did."

A State Department analysis this spring said that less than half of refined products from the Gulf Coast — Keystone's planned endpoint — enter the U.S. market. Although the Canadian-piped oil would not fall under U.S. restrictions on its own crude exports, the report said the capacity of Gulf refineries makes it unlikely the crude would be exported in great volume. Once it is refined, however, it will be subject to the same market forces that now see nearly 3 million barrels of U.S. oil shipped overseas daily.

Danielle Droitsch, director of the Natural Resources Defense Council's Canada Project, blamed million-dollar ad campaigns from Keystone's backers for the perception that the pipeline will be an economic boon. "We absolutely feel that those economic arguments are important parts of the conversation," she said.

"The president's climate test for Keystone ... did put us in the position of needing to defend that, needing to explain why Keystone will worsen climate change, and we can do that," Droitsch said. But, she added, "I firmly believe that the Obama administration is not just looking at the climate issue.... [The economic argument is] still important, because the American public is focused on whether the pipeline is for U.S. energy security."

TransCanada, the company proposing to build the pipeline, maintains that Keystone XL will create 20,000 manufacturing and construction jobs. The White House has downplayed TransCanada's jobs estimate, but nixing Keystone on the grounds that it might be an oil exporter would contradict the goals set by his export initiative.