Politics Definitely Play a Role in the Keystone XL Battle

Keystone XL demonstration

At least to an outside observer, there’s a thread spun from steel running through the American legal system: whatever is most convenient for business, meaning big business, is probably what’s going to be decided at the end of the day. While it’s impossible to say that the outcomes of legal disputes are actually determined in upholstered, smoke filled rooms well outside the public eye, the end result looks pretty similar.

Keystone XL map

Object Lessons in how the World Works

The doctrine of “substantial equivalence” is implicitly accepted by nearly everyone in the United States, and a source of amused bewilderment to almost everybody else. Essentially, the Food and Drug Administration simply declared that genetically modified crops would be treated in exactly the same way as natural hybrid species. This certainly benefited the biotech and industrial farming industries, but the decision was taken without any supporting evidence whatsoever, and in fact flies in the face of what was known at the time as well as more recent research.

There’s also an unbelievable amount of legal chicanery involved not only in how laws are made, but in how they’re applied. Someone who commits financial fraud may end up ruining thousands of people’s financial security and retirement, yet receive a lighter prison sentence than a common mugger. This only serves to encourage more of the same, and in some cases banks have literally forged evidence and lied in court in order to defraud their own customers. The most they can expect, individually or as a corporate entity, is a slap on the wrist or a fine their clients end up footing the bill for.

Something similar can be seen in the fields of intellectual property, trade agreements and many more: the entities who can afford the most lawyers and lobbyists are listened to very carefully.

Government’s Special Relationship with Petroleum Extractors

While “oilmen” (as they sometimes call themselves) love nothing more than complaining about government interference, the truth is that this profitable, strategic industry enjoys a very comfortable relationship with regulators.

As one example, everybody reading this will remember the name Deepwater Horizon. Quite possibly, none of us would if the government hadn’t signed off on eliminating a planned safety mechanism that would have prevented the entire disaster. Although initially sued for unlimited liability, British Petroleum was allowed to pay a single settlement instead of facing the music for every individual party harmed by their negligence. The settlement amount was even tax-deductible. Although the dollar amount seems large, many independent businesses and private citizens will never recoup the losses that have been inflicted on them.

People over pipelines

Divergent Views and Priorities

While in office, Barack Obama refused to grant approval for the Keystone XL project, pointing out that the EPA advised against it and little to no actual economic benefit was expected to result from its construction. Trump, by contrast, made Keystone part of his election platform, basically claiming the exact opposite. In fact, he’s recently stated that even a federal court can’t overrule him on the matter, citing national security and foreign policy.

On the ground, though, landowners are unenthusiastic about being issued with eminent domain orders forcing them to allow construction on their properties. Environmental groups have also voiced concern: parts of the proposed route run through ecologically sensitive areas, and pipeline spills do happen.

While many of the current president’s ultimate goals remain a little opaque, we can be sure that saving squirrels isn’t one of them. He now finds himself in a difficult position in at least one sense, though: his habit of shuffling off politically sensitive yet economically irrelevant issues to state governments will make it difficult for him to circumvent the approval process on that level, and the pipeline needs to cross a number of different jurisdictions.

oil pipes

The Economics of Canadian Oil

Nobody rational is going to dispute that petroleum is essential to almost every industry you can name. Gasoline is not the only way in which it’s used: the food we eat is fertilized with petro-products, just as the clothes we wear are dyed with them if not made totally from the black, gooey stuff. Even the Honeywell Wi-Fi or the LG monitor you’re reading this on would be impossible to make without oil derivatives, from the plastics that encase the components, to the resins that make up the circuit boards, to the adhesives that keep the whole thing from falling apart.

So, nobody who lives a modern lifestyle can be described as “anti-oil”; it’s just not an option. What we can be against, though, is the construction of a pipeline that connects a high-cost extraction area to an overserved market, especially when an existing pipeline and rail network are already in place.

Sunk by Dollars and Cents

Against the backdrop of all this legal and political wrangling, one bright spot for the environmentally concerned is that the Keystone XL project might be scrapped anyway, due not to activism but economics. $7 billion represents a pretty substantial investment, and the developer now seems unsure whether there’s a real need for a 830,000 barrels/day pipeline in the first place. Low oil prices may be good for Corporate America as a whole, but they also mean that profits are sometimes not guaranteed.

Comments are closed.