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Don’t let cheap oil kill Keystone

Our energy security is tied to the Keystone XL Pipeline.

Our energy security is tied to the Keystone XL Pipeline. OPEC??s attempt to squeeze North American oil production out of the market doesn??t change that. And if we forgo Keystone now based on the short-term market decline, we will lose thousands of jobs, and more importantly, we will undermine our long-term energy independence and security.  In other words, we would give our competitors exactly what they want.

The price of oil hit a new recent low on Friday, $58 per barrel.  With the advent of cheap oil and cheap gasoline for consumers, it is easy to forget about the Keystone XL pipeline.  In such an atmosphere, liberal outcries against Keystone may reverberate more strongly as we turn a blind eye to our natural energy potential.  But falling oil prices and increased oversupply by OPEC states should not obscure our vision of long-term energy security.

A recent article published by Politico presents the Keystone dilemma without providing a clear answer to the issue.  Well, it??s as simple as ever: the project is a no-brainer and should be approved immediately.

The main argument of the opposition to Keystone is this: the pipeline will cause environmental harm, specifically worsening global warming.  But Hillary Clinton??s State Department did the most exhaustive Environmental Impact Statement analysis in history and concluded the pipeline would reduce greenhouse gas emissions.

The decline in global prices may undermine the economics of some Canadian production.  But let??s put this in perspective.  Our northern neighbor will continue to produce oil since it??s a major long-term investment, and, thus, it will need to be shipped to market.  If not by pipe, then by rail and tanker.  These modes of transportation will produce more pollution and CO2 emissions as well as being more expensive.

Even if some Canadian production goes offline, we have to ask: for how long?  Most market observers predict a sharp recovery in global crude prices by 2016, based on both market fundamentals and the political reality that current prices are putting enormous fiscal strain on the national budgets of many major producing countries.

Freezing investment in pipeline infrastructure now will leave us vulnerable to sharply rising prices in coming years.

One of the ways we can make sure oil production does not decline is to go ahead with the construction of the pipeline.  A founder of an anti-Keystone group conceded this on the matter: ??now that oil is low, the only way tar sands will continue to expand is if Canada gets big pipelines.?

And let us not forget why prices are indeed low. Our natural energy production has been booming and our competitors are scared that development of unconventional resources will undermine their dominance of world markets.  They are attempting to undermine North American production to protect their position and regain the power to raise prices in the future.  The way to keep our nation energy independent, and your price at the pump low, is to unlock and support our energy production long-term.

Keeping Keystone at the forefront of the political agenda will make it more difficult for the president to veto the project.  And, in this time of increased consumer confidence precipitated largely by our oil boom, it is easy to forget about our long-term economic future.  But by keeping the ball rolling and the pressure on for pro-energy policies including approving the pipeline, we can prevent impending price spikes from derailing our vibrant economic recovery.  Let??s keep Keystone at the forefront of our policy agenda and keep America strong!

 Peter Podkopaev is a researcher at American Commitment.

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