Last week TransCanada suspended its application to extend the Keystone XL pipeline across the U. S. border. Its CEO in a recent conference call said the company “needed time to work through the Nebraska review.” In January I wrote a blog that questioned whether TransCanada would persists with its U. S. pipeline extension plans or revert to an alternate strategy (reference “Keystone or Philosopher’s Stone”). At that time I indicated that the judicial process in Nebraska—and potentially in South Dakota as well—were the main obstacles confronting TransCanada and not the Obama Administration. The company had already cleared its main hurdles with the Administration: rerouting the pipeline to the outskirts of the mid-West aquafer and mitigating leakage concerns pursuant to winning approval of the Final Environmental Impact Statement (EIS) in 2011. The EIS found “no significant impacts” from the pipeline.

Though approval of the Keystone pipeline appeared to fair better with the Administration than with the States, TransCanada still faced further obstacles before they could open new markets and satisfy demand for its heavy crude. That demand existed in Europe where supply had been mitigated by the Iran oil embargo and the steep pricing of the Russian supply network. The American Gulf Coast seemed the perfect venue for exporting oil to Europe. But refineries there were already operating at capacity. The company wanted Congress to pass a bill that would allow crude oil exports to Europe. Congress quickly obliged. But after years of dealing with American environmental concerns, lobbying Congress, and litigating in State courts, TransCanada decided to develop a backup plan—that is, an alternate route for their pipeline. First, it explored extending a pipeline to Canada’s Western coast where crude could be exported to China. Then, more recently, the company refocused its ambitions on the European market. Perhaps it reassessed the recent resurgence of Europe compared to the slowing Chinese economy. Ironically, its proposal for a Quebec pipeline alternative was turned down for environmental reasons. Not to be denied, the company proposed an all-Canadian Energy East pipeline to serve a prospective European market. The newly elected and more liberal Canadian government has indicated it will work with TransCanada, provided the company passes “a robust environmental review.” So the company was actually further along in the environmental review process with its American venture than its latest Canadian alternative. So its request to suspend its application for the Keystone XL pipeline was a surprise and, predictably, a reprise of fevered political debate.

In that same blog just referenced, I tried to debunk some of the politicized arguments pro and con on the proposed extension of this pipeline. Since Canadian crude would be produced and priced in response to world demand, only its production, not its means of transportation, was relevant to world pollution. Further, since its export was aimed primarily at Europe, it had no relevance to the U. S. economy or energy use. From an American perspective, what needed to be weighed was the obvious benefit of a safer means of transporting oil against the need to seize land from individual property owners by means of eminent domain. Nobody would prefer dealing with the enormous explosions of rail cars carrying Canadian crude to the prospect of repairing a leaky pipeline. On the other hand, the fair exercise of eminent domain is a civil rights issue emanating from natural law, the very foundation of our legal system. This legal matter was still in the courts when TransCanada suspended its application, allegedly in order “to work through the Nebraska review.” Its action might be expected to depoliticize the underlying issue. But it did not.

Several days after TransCanada asked the Administration for a suspension of its application, our President announced his concurrence with the State Department’s rejection of TransCanada’s application. Does anybody think the timing of this decision was not political? As I pointed out in my previous blog, the Administration’s approval would have no effect unless the effected States approved the pipeline extension. However, the Administration could have rejected the pipeline at any time, effectively killing the project. Since it did not, one could have presumed it would favor its deployment once the proposed pipeline passed the approval process in the States and in the EPA. After the EPA concluded the pipeline presented no significant environmental hazard, the only serious hurdle for TransCanada seemed to be the “Nebraska review” in civil court. But what and who should we believe about these recent announcements from TransCanada and our President? For the last seven years, TransCanada has pushed its case for constructing this pipeline, arguing that the pipeline would increase U. S. jobs and decrease American energy prices. It published “Facts and Myths” on the Web to debunk arguments to the contrary, while paradoxically pursuing alternative strategies to service non-North American markets and slyly ignoring the fact that base oil prices are fixed in the world market (and only rarely tweaked by local taxing authorities). Meanwhile, the President maintained a “wait and see” strategy while intimating his likely approval to the previous, more conservative Canadian Prime Minister and stonewalling the progressives and environmentalists within his own Party. Is it possible that his recent, and apparently precipitous, decision to reject TransCanada’s application was based on politics? TransCanada’s request for a suspension of Keystone might be the result of weighing the feasibility of its alternative, specifically, Energy East. Or it could also be a strategy to wait out this Administration, presuming more favorable consideration of its application by a new Administration. The current President, on the other hand, might be reacting to this political strategy; or he might be aligning with the consensus opinion of the Democratic presidential nominees who oppose Keystone. At any rate, I would agree with the President that the Keystone XL pipeline represented “an overinflated role in our political discourse.” Regrettably, the President has become part of this political inflation.

The environmentalists who opposed the XL pipeline never really made an effective case against it. For their real concern was always about Canada’s oil sand extraction of heavy crude oil. This extraction process damages the environment and produces a highly pollutant grade of oil. But eliminating a safer means of transporting Canadian crude has little effect on its production. TransCanada will produce its crude oil and find a way to export it to any market that will pay for it—by rail a/o pipeline, and then by ship. The market force here is simply demand and the opportunity for profit. Both developing and developed economies continue to increase demand for energy. Environmentalists are not in a position to stop capitalism; but they can advocate for alternative clean energy sources, promote development of those sources, educate the public about climate change, and spur demand for cleaner energy.

I understand the environmentalists’ tactic to thwart a company like TransCanada from reaching its intended market. But that tactic is not an effective strategy. For it encourages the opposition to change the debate to extraneous issues like jobs, regulations, gas prices, the demand for foreign imports, and the President’s politics. These issues garner headlines and spur the media megaphone, completely obliterating the underlying issue. The debate over the pipeline is really just a proxy debate that sidelines the real debate about climate change and the need to replace a carbon based energy platform. Let’s have that debate instead of the politics of diversion.