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Impact of the Keystone XL Pipeline

On January 20, 2021, right after assuming office, President Joe Biden fulfilled his electoral promise to quash the Keystone XL Pipeline, putting an end to a controversial oil pipeline extension project proposed in 2008 by the Canadian oil company, TC Energy Corporation (formerly known as TransCanada Corporation) and the US oil and gas company, ConocoPhillips. The Keystone XL Pipeline is a project envisioned to extend the existing oil pipeline connecting Alberta, Canada, to Texas on the US Gulf Coast. The 1200-plus mile extension sought to connect Alberta to Nebraska in hopes of bringing 830,000 barrels of crude oil per day from the oil sands of Canada to the refineries of the US Gulf Coast. What seemed to be in the best interests of both Canada and the US no longer looked viable. Below are the economic and political implications of this decision plus the brief history of the pipeline and the environmental concerns surrounding it.

Economic Impact of the Cancellation

US and Canadian economies face job losses due to cancellation. While the US has found crude oil alternatives overtime, Canada suffers more—Alberta’s investment of C$1.5 billion in the pipeline is at stake. At the end of January 2021, TC Energy Corp. announced a cut of over a thousand jobs in the following weeks. Mary Moran, CEO and President of the Calgary Economic Development, is considering strategies to diversify the economy given that the oil and gas sector, historically an economic driver, can no longer be relied on.

Political Aspects of the Pipeline

There is mounting pressure on Prime Minister Justin Trudeau to fight back against Biden’s decision to cancel the pipeline from Alberta’s Premier Jason Kenney, who called the cancellation “an insult” to Canada and a “gut punch”. There is a lot of opposition in the US government to this decision as well. Political stances have wavered on the pipeline. Obama’s administration shelved the project in 2015 and Trump’s government brought it back in 2017. Now, Biden has cancelled it once again. Obama was concerned about the environmental impact and felt that from an economic perspective, the pipeline’s promise wasn’t beyond a few thousand jobs. Trump’s government, on the other hand, touted the creation of jobs from the pipeline ranging in the tens of thousands.

Environmental Concerns

A report by National Geographic reveals that oil extraction will result in stripping away stretches of boreal forest in Canada causing wildlife loss. Oil extraction itself is considered an energy-rich process that results in high carbon emissions (comparable to emissions from 300,000 passenger vehicles, according to a report by the US State Department) and causes the pollution of water sources such as rivers and seas. Studies have revealed that tar sands oil is more toxic and destructive than conventional crude oil and could eat right through the pipelines carrying it. This had been the case in 2010 with more than a dozen spills with a cumulative impact in million gallons. Most recently in 2019, pipeline operations had to be halted because of a 383,000-gallon spill. In 2020, it was discovered that the anti-corrosion coating on the pipelines to be used in construction had deteriorated after being out for too long in open air. Supporters of the pipeline feel that the alternative method of transportation of tar sands oil, oil-by-rail, is even more destructive, making a case for oil extraction in Canada to continue.

While the pipeline’s future looks dismal, it is for the movers and shakers of the world to decide on the priorities in any such projects that straddle economic, political and environmental aspects. As it is, the effects to climate change brought about by negligence to environmental issues in the past are bringing about unpleasant natural occurrences all over the world.

Arslan Ahmed | Staff Writer

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