Opponents of the Keystone XL pipeline demonstrate on the Dodge Street pedestrian bridge during rush … [+]
ASSOCIATED PRESS
TC Energy’s decision to abandon the $9 billion Keystone XL pipeline project is the latest example of the Biden administration’s effort to stop the American energy boom with policies that are putting the country’s energy and economic security at risk.
Benchmark U.S. crude prices are already trading over $70 a barrel and retail gasoline prices are averaging more than $3 a gallon at the pump. And the situation will only get worse as the economy continues to improve in the coming months.
Goldman Sachs expects crude prices to reach $80 a barrel this summer as vaccination rollouts boost global economic activity. And the International Energy Agency (IEA) said in its monthly report that OPEC-plus oil producers would need to boost output to meet demand set to recover to pre-pandemic levels by the end of 2022.
What does that mean in practice? It means more power over the oil market is shifting towards Saudi Arabia and Russia, the leaders of OPEC-plus group.
The IEA is pleading with the cartel to ramp up crude supply by 1.4 million barrels a day above its current plan for the period from July 2021 to March 2022 to sufficiently meet demand and avoid a price blowout.
America in the past was there to fill such supply gaps, particularly shale producers that served as the global oil market’s “swing” producer. But domestic producers now find themselves handcuffed by Biden administration policies that are punishing fossil fuel companies as the White House promotes its unrealistic climate goals.
ROCK HILL, SC – AUGUST 29: Democratic presidential candidate and former US Vice President Joe Biden … [+]
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In addition to canceling Keystone XL, these include the suspension of oil drilling leases in the Arctic National Wildlife Refuge (ANWR), pausing new oil and natural gas leases on U.S. federal lands, and proposing red line discriminatory tax hikes on energy companies — singling them out from every other sector of the economy for higher taxes.
These policies directly affect investor sentiment in the oil and gas industry by demonizing it at a time when more supply and infrastructure is needed to ensure energy continues to be affordable for American consumers as they resume their lives after the pandemic.
The 1,670 mile Keystone pipeline would have moved more than 800,000 barrels a day of crude oil from Alberta’s oil sands to refineries in the U.S. Midcontinent, Oklahoma and Texas. The project would have created up 11,000 jobs and $2 billion in wages by some estimates.
The demise of Keystone effectively means that the Biden administration will not allow any new oil and gas pipelines to go forward in the future. If projects are under construction or already approved, it does not look like the administration will halt them. For instance, the administration has not waded into a fight over Enbridge’s Line 5 in Michigan, which is still operating despite a state-ordered shutdown. Biden has also balked at shuttering the Dakota Access Pipeline that is currently in operation without federal authorization.
But the industry can forget about any new pipelines. TC Energy did everything it could to ensure all relevant parties were satisfied with its Keystone XL proposal and it still wasn’t good enough for Biden. This included meaningful opportunities for indigenous populations along the pipeline’s path, as well as a commitment for net-zero emissions throughout the project’s lifetime. What more could the company have offered?
The absence of any mention of pipelines in the administration’s $2 trillion infrastructure plan speaks volumes about its intentions, which appear to be throwing billions of dollars at the clean energy transition — a decades-long movement — to meet its wildly ambitious emissions targets.
In the meantime, Biden is shifting American energy security, which was built up to unprecedented levels over the past decade through the shale boom, to Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin. The administration is foregoing thousands of high-paying jobs in an established industry that has also given Washington a stronger hand in foreign affairs.
It’s no wonder that Republican senators last week introduced a bill, led by U.S. Sen. Jim Risch (R-Idaho), that would require Biden’s Department of Labor to report to Congress on the number of job losses directly or indirectly linked to Keystone’s cancellation.
Because Keystone looks like it will be just the tip of the iceberg when it comes to missed opportunities for this administration in energy — and voters should know what they are missing.
