Latest Anti-Keystone Argument: Pipeline Would Cut Global Oil Prices

A new study published in the journal Nature Climate Change finds that the Keystone XL pipeline, if approved, would cut global oil prices. For many on the left, that’s the bad news.

The official U.S. State Department estimate of carbon released by production of Canadian tar sands in connection with the Keystone XL pipeline was between a million and 27 million tons per year. The new estimate published Sunday says the actual amount of carbon would vary between nothing and 110 million tons per year, potentially four times higher.

In an email to Climate Central one of the authors of the new estimate explained, “The
most important difference between our analysis and the State
Department’s is that we consider the price effects of adding oil supply
(in this case, Canadian oil sands) to global markets
.” The nature of these price effects is clarified in the published study. “We find that for every barrel of increased production, global oil
consumption would increase 0.6 barrels owing to the incremental decrease
in global oil prices,” it reads. In other words, the source of the problem with Keystone is that it would drive global oil prices downward.

President Obama announced last year that, “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.” Now that the potential effects are seen to be greater than previously thought, this could be used as an excuse to kill the pipeline.

On the other hand, arguing that the problem with Keystone XL is that it would lower global oil prices could be a tough sell to many Americans. Former Energy Secretary Steven Chu once suggested that raising U.S. gasoline prices to european levels ($9 a gallon) would be a good idea since it would help spur greater fuel efficiency. That comment continued to haunt the administration for years. President Obama himself once suggested that under his proposed cap and trade plan “electric rates would necessarily skyrocket.” That comment has also remained in hot rotation among his critics.

On the other hand, Obama is past caring about future elections at this point and criticism on one more issue won’t make or break his current streak of bad polling. There’s also some indication he sees this issue as part of the legacy phase of his Presidency. Last December, he brought John Podesta over from the Center for American Progress to serve as his adviser, “overseeing climate change and energy policy.” There is no reason to think Podesta–who opposes the pipeline–is counseling President Obama on ways to approve it.