Why Keystone Failed

As of January 2015 the Keystone Pipeline project is all but dead.

Via the threat of veto by president Obama, the controversial project has lost the momentum necessary for approval. While the bill has passed the house and will be debated on the senate floor, Mitch McConnell – Republican senate majority leader – does not have enough support from Democrats to get the measure passed and overturn a presidential veto.

This dramatic shift in the potential approval of the project is due to the significant political and economic changes that happened after the midterm elections.

Since the midterm elections president Obama announced a climate deal with China (a significant step by the international community to address the effects of climate change), gas prices have plunged, the job creation the pipeline would offer have proved to be far less than advertised, and environmental activists have gained momentum.

 In terms of economic promises of the Republican argument has largely fallen apart. The millions of jobs promised by – now ousted Democratic senator – Mary Landrieu proved to be roughly 10,000. Those jobs were only short term and after the project was completed Keystone would only require 35 long-term employees across roughly 10 states.

While the job creation element of the project still had some strong rhetorical selling points – great for stump speeches on the floor of the house and campaign trail – the Republican message was undercut by the sudden drop in oil prices.

Regardless of the pipeline’s construction Canada is going to drill in the tar sands for oil, but in both scenarios (the construction or failure of Keystone) the U.S. would see no significant change in oil prices because the U.S. is not getting the oil for free. The oil would go through the pipeline and then be sold on the international market where the U.S. would have the opportunity to buy oil for U.S. consumption.

Lastly, environmental activists have won key victories over the fracking industry and been successful in demonstrating the potential irreversible harms fracking can have. With counties in Texas, Colorado, Pennsylvania and California banning the practice there has been momentum that was capitalized when Governor Andrew Cuomo outlawed the practice in December 2014 in the state of New York.

While the decision to wait on legislation until after the midterms did not help any Democrats win reelection or unseat incumbent Republicans the timing of the veto threat has offered a victory for Democrats. By killing the bill the Democrats have foiled a tangible policy of the Republican agenda for their control of the congress.

How long will Keystone remain relevant? It all depends on external economic and political pressures that could change political opinions on the costs and benefits of construction. But unless there is a dramatic change the pipeline will fail.

The next phase is to see what amendments are added to the Keystone bill and see whether any of those have the potential to stand alone and win bipartisan support.






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