The Key to Keystone, and Other Mysteries

Like John I have been following the controversy over the Keystone pipeline from Canada with great interest, as it shows the desperation of the greens to oppose fossil fuels from any source for any reason. Even from an environmental point of view opposition to the pipeline makes little sense. I understand that the greens don’t like oil from Canadian tar sands, which are resource-intensive to extract. If Canada doesn’t sell their oil to us, they will likely sell it to China, where the transit logistics will give it an even higher carbon footprint than shipping it to the U.S. But my favorite criticism is that the pipeline “is not needed,” as though private energy companies were like high-speed rail and just like spending large amounts of capital for no good reason. The absurd Koch twist shows that the left will say anything to further their objective.
The Obama Administration’s contortions over the approval of the pipeline are fun to watch. It is pretty clear from Hillary Clinton’s body language that the Obama Administration really doesn’t want to tank a high priority project of our leading trading partner (and leading source of foreign oil, incidentally) just to curry favor with the rabidly insatiable greens, but just as clearly it fears crossing the green lobby, which has thus far largely held its fire over the fact that on most environmental matters Obama represents more continuity with the Bush Administration than change. On climate policy, for example, I participated as a witness yesterday in a hearing of the House Foreign Affairs Subcommittee on Investigations and Oversight, on the subject of the UN climate negotiations. (I was a critic: I’ll post my testimony later.) What was notable was that the Obama Administration’s witness, State Department climate negotiator Todd Stern, noted that they had dusted off and renamed a Bush Administration initiative (the Asia Pacific Partnership) as the best international forum for climate diplomacy. Back when the Bush Administration started an end-run around the UN, environmentalists and UN-groupies screamed. About Obama doing the same–silence.
One of the big differences that remains between Bush and Obama is Obama’s hostility to domestic energy production, as John also pointed out here. I’ll only add that yesterday over on RealClearMarkets I offered a column with two bits of original reporting that exposes the charade of Obama’s recent announcement that he wants more domestic drilling. Among other things, I recently got to see a proprietary research report by a leading economic consultancy on the investment of political risk for oil and gas in the United States. Here’s the key paragraph

It is almost as if the United States deliberately wanted to be more dependent on foreign oil. Consider that while the World Economic Forum rates the U.S. 4th in its ranking of the world’s most competitive economies, it would rank far down the list if the WEF were to look at the competitiveness of the oil and gas industry in isolation. A proprietary ranking of political and investment risk for oil and gas by IHS’s Petroleum Economics and Policy Solutions unit places the U.S. 44th, below several African nations such as Angola, which is ranked 18th. As an IHS analyst observes, in the U.S. “there is the constant threat of adverse contract or fiscal regime changes at both the state and federal levels of government. None of these threats or business risks is present in Angola.”

My prediction, by the way, is that the Obama Administration is desperately trying to postpone the Keystone Pipelines decision until after the election next year, after which (assuming they are re-elected) it will quietly approve the pipeline late on a Friday afternoon.
UPDATE: My complete opening statement to the House Foreign Affairs Committee hearing yesterday is now online.


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