North America Heading for Energy Independence; Keystone XL Serves China

Last updated on 2014.03.02

The State Department's report to Congress on its decision to deny TransCanada its permit for the Keystone XL tar sands pipeline makes clear that nixing this pipeline now "is unlikely to have a substantial impact on U.S. employment, economic activity, trade, energy security, or foreign policy over the longer term."

One reason Keystone XL doesn't amount to a hill of beans for America's national energy security may be found in a new analysis from British Petroleum that projects North America will enjoy an energy surplus by 2030. Compared to peak consumption in 2005, the U.S. will use just under 5% less energy, and North America will use 20% less oil.

We don't need Keystone XL to reduce our dependence on oil from the sheiks or Hugo Chavez or whatever other bogeyman the Republicans care to wave in effigy at us. (We do need fracking and other dangerous business, but hey! one problem at a time....)

So who does need Keystone XL? China:

China, on the other hand, is likely to become much more dependent on imports as demand growth outpaces domestic supply. [BP chief economist Christof] Ruehl said that by 2030 it would have to import 80 per cent of its oil, 42 per cent of its gas, and considerable amounts of coal.

That could have huge implications for the global geopolitical balance. China will become just as concerned as the US now is about ensuring the steady, unrestricted flow of oil exports from the Middle East. "The whole discussion about energy security will shift eastwards," Mr Ruehl said in an interview [Guy Chazan, "U.S. on Path to Energy Self-Sufficiency," Financial Times, 2012.01.18].

As it stands, the U.S. has a lock on the Great White North's black gold, gobbling up 97% of Canada's oil exports. That oil provides the U.S. with energy security and price stability. Keystone XL would drain that security and stability to the benefit of China, our major competitor.

Now let's play Civilization for a moment. Why would any patriotic American who wants to win the game and rule the world fight for a project that weakens our position and strengthens the biggest economic and military opponent on the board?

President Obama was right to reject Keystone XL, for more reasons than he's willing to state. If Congressional Republicans insist on overturning the Executive Branch's authority over such foreign policy decisions, they will be serving China's national interest, not America's.

Related: If Republicans in Congress really want to create jobs, they should revisit cap and trade. A cap-and-trade policy on greenhouse gases in Massachusetts has created 3,800 jobs and $500 million in economic activity since 2008.