Keystone XL’s organizing principle

January 19, 2012

In October 2011, National Journal surveyed energy experts about whether Obama was likely to approve the Keystone XL pipeline, which would carry Canadian tar-sands oil through the U.S. to the Gulf of Mexico. Ninety-one percent of the “energy and environment insiders” believed he would.

On Wednesday, Obama proved them wrong.

How could the experts have gotten it so wrong? The answer is twofold: Grassroots environmentalists were stronger, and congressional Republicans dumber, than anyone predicted.

Back in August of 2011, when author and activist Bill McKibben staged the first anti-Keystone rallies around the White House, political observers scoffed. These were, after all, the same environmentalists who had been rendered irrelevant by their cap-and-trade defeat and the stress of economic recession. No way they could stop a fossil fuel infrastructure project with big money behind it.

But McKibben kept at it. The movement he seeded grew, forging strategic partnerships with Nebraska farmers, social-justice groups and unions. Activists staged more rallies, hounded the president everywhere he went and uncovered serious questions about the relationship between the tar-sands industry and the State Department. As the crowds grew, big-money Democratic donors started weighing in on the issue. In November, under intense pressure, Obama announced that the final determination would be delayed until after the election. It was an unexpected display of muscle from the green grass roots.

Still, most observers assumed that Obama was just buying time (and the support of his environmental base) and would approve the pipeline in the spring. That’s where the dumb Republicans came in.

The GOP thought it had Obama in a trap — approve the pipeline and anger environmentalists, deny it and anger construction unions — and that the president had seemingly slipped out of that trap by delaying the decision. Infuriated, Republicans threatened to attach a rider to December’s payroll tax bill forcing Obama to make a decision within six months.

At that point, the administration made it clear that if Congress rushed it into a decision without adequate environmental review, it would reject the pipeline. Nonetheless, the GOP attached the rider to the bill. So yesterday, true to his word, Obama rejected the pipeline.

In other words, Republicans killed their own pet project. Maybe they thought they could bully Obama into submission, in which case they disastrously miscalculated. Or maybe they cared more about an election-year talking point than the pipeline itself. Either way, rank-and-file Republicans who genuinely wanted to see the pipeline built have every reason to be angry with their congressional leadership, which has again opted for tantrums over tangible policy victories.

The pipeline has not been killed for good, of course. Obama made it clear yesterday that he still believes in oil and gas development. TransCanada, the company behind the project, will reapply for a permit next year, so the battle may repeat itself then.

But for now, the fight is about who controls the message heading into November. On this, the experts are similarly unanimous: The GOP has the administration right where it wants it, stuck with yet another maddening choice of “jobs versus environment,” a dichotomy it’s happy to bring up through November.

But the experts have been wrong before (just a few paragraphs ago, in fact). The Keystone XL victory (along with the stunning reversal of momentum behind the Stop Online Piracy Act) shows that organizing still matters. Organizing brings money and intensity, which are the coin of the realm in politics. If the Keystone coalition is capable of a victory on policy, there’s no reason continued organizing can’t win a victory on messaging.

For the coalition winning that victory will mean going directly after its enemy’s purported strength: jobs. In a press conference denouncing Obama’s decision yesterday, Speaker of the House John Boehner claimed that canceling the pipeline would destroy tens of thousands of jobs. But the only independent study done on the matter, from the Cornell Global Labor Institute, found that the pipeline would create between 500 and 1,400 jobs, almost all temporary construction jobs. The State Department, meanwhile, estimates it would create 5,000 to 6,000 jobs.

By way of contrast, just a few months ago the GOP rallied to vote down the president’s American Jobs Act, which, according to a Moody’s Analytics estimate, would have created 1.9 million jobs. That a short-term pipeline project has become the heart of the GOP jobs program is a kind of reductio ad absurdum of the conservative economic agenda.

The pipeline also wouldn’t have served the (somewhat illusory) goal of “energy independence.” Americans will have no special claim on the oil piped through it. As recent reports have shown, the vast bulk of that oil will be exported to petro-hungry areas like Europe and Latin America. TransCanada officials have admitted in congressional testimony that opening Canada’s oil to export will boost its value and thus increase its price for Americans. More likely, any change in the price of oil or gasoline will be a faint signal lost amid natural fluctuations.

There are, of course, ways to create American jobs and strengthen American energy security. Most of them are under attack by the very same Republicans lamenting the loss of Keystone XL. For instance, the GOP has vowed to block extension of the Production Tax Credit that supports wind power developers. According to a study commissioned by the American Wind Energy Association, that could lead to the loss of 37,000 jobs — good, permanent jobs. The Department of Energy’s loan guarantee program for renewables has, according to DOE, created 60,000 direct jobs in the wind and solar industries. The GOP is trying to kill it too. (Both AWEA and DOE have reason to trumpet their economic benefits, of course, but their numbers are generally taken seriously by investors.)

Supporters of clean energy can win the messaging battle if they can focus the conversation on what kind of jobs Americans want, which is to say, what kind of country Americans want. Do we want ephemeral jobs building oil infrastructure that overwhelmingly benefits those who happen to be sitting on top of the oil? Or do we want high-skill jobs in manufacturing, engineering, design, and a dozen other trades, in industries that will dominate the 21st century, with profits that stay in U.S. communities? Do we want to continue cooking the planet, or do we want to lead the way toward solutions?

Winning that messaging battle won’t be about cleverness — it will be about volume and repetition. Greens can never match the money behind fossil fuels, but as the Keystone XL fight has shown, they can out-organize and outmaneuver their opponents when they put their bodies and sweat into it. As long as they ignore the “experts,” they’ll be fine.

David Roberts writes about energy and energy politics for

PHOTO: U.S. House Speaker John Boehner (R-OH) stands near a map of current oil pipelines in the U.S. during the GOP news conference about the Keystone XL pipeline decision on Capitol Hill in Washington January 18, 2012. Boehner said on Wednesday Republicans in Congress will continue to fight for the Keystone XL crude oil pipeline that the Obama administration rejected. REUTERS/Yuri Gripas


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[…] Keystone XL's organizing principle Obama made it clear yesterday that he still believes in oil and gas development. TransCanada, the company behind the project, will reapply for a permit next year, so the battle may repeat itself then. But for now, the fight is about who controls the … Read more on Reuters Blogs (blog) […]

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Very thoughtful piece.

Hard to believe, isn’t it, that an independent analysis would suggest that the Corporation’s jobs claims were exaggerated. And, well, since Representative Boehner is using jobs claims multiples higher than the Corporations …

The Keystone XL opponents weren’t constrained to public demonstrations. After all, Freedom of Information Act requests ended up bringing sunshine to information that suggests illegal lobbying activity, questionable involvement in the pipeline company in overseeing “Government” public hearings, that the State Department had put little resources into its oversight & review, etc …

Posted by A_Siegel | Report as abusive

Hard to believe that the simple economic fact that adding the pipeline will raise the price of gasoline. Right now the value of the tar sands products is low, because it is difficult to access and only has one potential consumer (Asia, via the Canadian Pacific coast, the same as Alaskan crude). While the pipeline will reduce transportation costs and bring more oil online (not enough to drop wholesale oil prices…not that the pipeline operators are interested in lowering wholesale oil prices. They can always reduce pipeline use if it is ‘uneconomical’), the refined products are now available at the Gulf Coast ports, with a wide number of users. These consumers will bid against themselves for the refined products, bidding up prices.

Oil companies do not exist to save us money or have interest in low oil prices, but somehow the ‘drill baby drill’ faction thinks that higher production results in lower prices. We currently generate more electricity than at any point in our history, but the price per KwH continues to rise. As with any commodity, the number of bidders controls the price, not the production of the commodity. Bumper crops of corn are now selling for record prices, because there are more consumers (Asia, biofuels, etc) to make up for the increase in supply. But potential damage to the Ogallala aquifer from a pipeline ‘mishap’ would quickly make the BP Gulf spill the 2nd worst oil disaster.

Posted by Mike_s1 | Report as abusive

Interesting article. The Republicans botched this bad. Job creation was the wrong way to go about arguing it. Buying oil from a friendly nation and cheaper gas are the key selling points. Sad to see that a vocal minority was able to postpone the pipeline, unless you prefer your oil to be of the Arabic or Venezuelan variety. Besides, it will just go to China anyways where emissions standards are less stringent and will create even more pollution.

As for the statement above suggesting that supply has little impact on the price of a fungible commodity…I don’t know what to say. But let me give you a prime example of why that is utter nonsense and several reasons why your evidence leading to that conclusion is wrong.

Natural gas is currently cheaper than it was 10 years ago despite the fact that demand has steadily increased (aside from 2008). This is due to increased production, lack of means to export it and storage being nearly at capacity before winter. AKA a huge over supply. Not a lack of bidders. In fact bidders have increased as it is now cheaper than coal.

Electricity is, in fact, not rising. Most of our incremental power supply is generated by natural gas (it’s hard to turn down a coal boiler and impossible to turn down a nuclear reactor)and price has therefore followed it lower. It declined about 25% in Q4 of 2011 and even before that it was well below 2009 levels.

Corn is not selling at record prices. It’s down to 6.00/bu from 8.00/bu earlier in the year. The recent decrease was due to evidence that South America will not experience adverse weather as previously suspected (increased supply). The US also announced ethanol subsidies would end which has hurt small ethanol producers ( slightly decreased demand). The larger ones are still producing as much as they can.

These facts would suggest that increased supply would in fact lower price…so would any econ 101 textbook. If you’re going to dispute the fundamental effects of supply and demand, please use accurate information.

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@CapitalismSays: Your analysis is astute, but it misses the point because you’re not fully taking into consideration the existing situation.

The reason the price of fuel would go up for Americans if the pipeline was completed is because an already existing pipeline carrying that oil has a terminus in Cushing, OK–a location from which export is difficult. This currently causes a regional reduction in oil prices according to the same effects of price and demand that you’re suggesting should cause the price of oil to go down if Keystone XL was completed.

If a pipeline all the way to the coast were completed, that situation would change. It would be more profitable for the parties selling the oil to ship the oil outside the US than to sell it at Cushing, which would reduce or eliminate the regional surplus and similarly affect the price benefit consumers within the region currently enjoy. Thus some Americans would pay more for fuel. In the absence of a reason to believe there would be an offsetting effect somewhere else in the country, it’s fair to say that (in the aggregate) Americans would pay more.

It’s probably also worth mentioning since you bring up the price of corn that many of the farmers who produce that corn (wheat and rice, too) are within the region that benefits from the existing reduced fuel cost. The price impact that has on the food you eat and the ethanol component of the fuel you buy is probably small, but unlikely to be zero.

Posted by glotd | Report as abusive


Your textbook Economics get punted when OPEC decides to cut supply (i.e. artificially restrict) in the face of an increase in the supply of oil from Canada to keep prices high (as they have demonstrated numerous times in the past).

Like Mike said, oil companies have no interest in reducing the price of oil – whether it be Canadian oil firms, ExxonMobil in the U.S., or an OPEC oil sovereignty.

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