In a letter to the State Department penned this week, the EPA urged a reconsideration of Keystone’s climate effects based on the plunging global price of oil. The WSJ reports:
Cynthia Giles, EPA’s assistant administrator for enforcement and compliance assurance, said in the letter that building the pipeline at a time of lower oil prices could prompt production of more oil from Canada’s oil sands deposits. The letter said the 2014 environmental assessment had concluded that sustained oil prices of $65 to $75 a barrel would cause the pipeline to “change the economics of oil sands development and result in increased oil sands production, and the accompanying greenhouse gas emissions, over what would otherwise occur.”
In recent reports, the State Department found that the controversial project would have a negligible effect on global greenhouse gas emissions because despite the particularly dirty nature of Albertan oil sands production, that crude would be coming out of the ground with or without the international pipeline. That’s of particular importance for the President, who in a 2013 speech said he would approve Keystone “only if this project does not significantly exacerbate the problem of carbon pollution.” At the time that looked like a precursor to approval, but the EPA is saying that bargain crude prices have changed that calculus.It’s true that lower prices threaten high-cost producers, and extracting crude from Canada’s oil sands is neither cheap nor easy. The EPA apparently believes that Keystone’s alternatives—transporting oil by truck and rail, as is being done now—threaten operators’ margins enough that actually building a more efficient bit of transportation infrastructure like the Keystone pipeline would boost production, and therefore emissions.That’s a highly speculative claim, complicated by a number of factors. First, firms have already invested massive amounts of time and energy (no pun intended) in Canada’s oil sands, and these investments mean the crude will continue to flow, even with $50 per barrel crude. Second, Keystone isn’t the only pipeline option for these producers—projects connecting Albertan oil with both of Canada’s coasts are already being discussed.In the end, there’s only one fact that the Obama Administration ought to concern itself with when considering this project: that oil is coming out of the ground one way or another. Whether it finds its way to refineries through Keystone or some other project, now or in a stronger oil market, no amount of green hand-wringing will change the simple fact that there’s good reason to tap that resource. Don’t expect the White House to see things that way, though. Based on his history, this EPA letter gave President Obama yet another reason to kick the Keystone can down the road.