by Gordon Pape
Powerful U.S. congressman attempts to block approval of Keystone XL pipeline to Texas.
One of the most powerful members of the U.S. House of Representatives has launched a campaign against a proposed new pipeline to carry oil sands production to Texas. But his real objective appears to be to put pressure on the Canadian government to adopt tougher policies on greenhouse gas emissions or face an American boycott that could halt any further oil sands development in its tracks.
Henry Waxman, chairman of the House Energy and Commerce Committee, wrote lengthy letters on July 2 to Secretary of State Hilary Clinton and Elizabeth Orlando, the State Department's Keystone XL project manager, in which he vehemently opposes approval of TransCanada Corporation's application to move ahead with the construction of the Keystone XL pipeline.
A careful reading of the letters suggests that the congressman's ultimate objective goes far beyond delaying the TransCanada bid. He states that by approving the project at this time "the State Department would be giving up leverage to encourage Canada to adopt policies to reduce greenhouse gas emissions and implement technologies to reduce emissions from tar sands production". In blunt terms that translates to 'let's hold the oil sands hostage to force our will on Ottawa'.
Mr. Waxman, a Democrat who represents one of the richest areas of Los Angeles (his district includes Beverly Hills and Malibu) is a force to be reckoned with in Washington. Don't be fooled by his diminutive size (he is five feet five inches tall) or his used-car salesman appearance. He has been in the House since 1974, is always a vocal presence in committee hearings, and has been described as Congress's most aggressive muckraker.
Moreover, he is not an isolated voice in the wilderness. His position is consistent with two key policies of the Obama Administration: a greener economy and energy self-reliance.
Congressman Waxman does his homework. His letters are heavily annotated with references that range from The Globe and Mail and Environment Canada to President Obama himself. The letter to Ms. Orlando runs to 10 pages and contains 43 footnotes!
On the surface, Mr. Waxman appears to be requesting nothing more than a more detailed environmental impact study before proceeding. But his tone goes well beyond that. Unless the Canadian government accedes to his views, he seems ready to put the brakes on future oil sands development by curtailing Canadian access to its key export market.
In his letter to the Secretary of State, he describes the Keystone XL project as "a multi-billion dollar investment to expand our reliance on the dirtiest source of transportation fuel currently available" and says that approval "would be a step in the wrong direction" in terms of America's clean energy policy.
Consistently referring to the oil sands as the "tar sands" (which has a more emotional connotation for environmentalists) he says that the goal of importing three million barrels a day "would have a major adverse impact on the carbon intensity of U.S. transportation fuel" and would "erase roughly two-thirds of the global warming pollution reductions that the Administration's historic motor vehicle standards would achieve in 2020."
The congressman's real political objective is made clear in his letter to Ms. Orlando. In it, he dismisses the State Department's position that Canada's greenhouse gas emissions are not Washington's concern except in the context of international treaties.
"This position ignores the realities of the situation," he writes. "Rapidly growing tar sands development is making it increasingly difficult for Canada to address its greenhouse gas emissions either through domestic regulation or international commitments...There is little basis for assuming that this problem will be effectively addressed while the United States supports increased production by further expanding market access for tar sands fuel."
Mr. Waxman contends that blocking Keystone XL will put Canada in a very difficult position. He discounts the argument that we will simply find other buyers, such as China, contending that First Nations peoples will not allow construction of a pipeline from Alberta's oil sands to a Pacific coast port.
"First Nations in British Columbia and a majority of the residents of British Columbia also strongly oppose opening the coast of British Columbia to oil tanker traffic," he contends. "Such opposition is likely to produce substantial delay, at a minimum, and may well block the pipeline altogether.
"Moreover, it is widely recognized that the pace and extent of tar sands development is affected by the price of oil and the costs of extracting, transporting, and upgrading tar sands bitumen. In the absence of the Keystone XL pipeline, there are no currently available alternatives for moving this large additional quantity of production to market, and at a minimum any such alternatives would be expected to have higher costs."
The bottom line: if we shut the Canadians out, we'll force them to toe the line and give in to our demands.
Nowhere in his letters does the congressman explain how the three million barrels a day from the oil sands will be replaced. Nor does he make any reference to the Gulf of Mexico disaster which is causing environmental havoc and negatively affecting the lives of millions of people, although he is a leading proponent of a draft bill that targets "high risk wells" and would overhaul the way the U.S. government regulates new drilling projects.
His insistence that the First Nations would block a Pacific pipeline seems rather disingenuous. Recent history suggests that with proper environmental safeguards and appropriate compensation, agreements can be reached.
But the fact remains that this congressman from the smog capital of North America has a lot of clout in Washington and the Administration has been placed in a difficult position by his very public, very strident stance. If the State Department caves in and rejects or delays Keystone, it will be seen as a major victory for the environmental lobby and an embarrassment for Ottawa. For investors, it would be bad news for shareholders of TransCanada Corp. and oil sands companies.
In one swift move, Mr. Waxman has elevated the oil sands debate to a new level. It is one thing for the city of Bellingham, Washington to ban oil sands products from its municipal fleet. It's quite another for the chairman of a powerful House committee to declare war on one of Canada's most valuable resources.
Before this escalates any further, let's go back and review some basic facts.
1. The United States needs oil.
2. It will be many years, if ever, before domestic production and/or alternative fuels meet American needs.
3. Canada has one of the largest long-life oil deposits in the world and is a stable and secure source of supply.
4. Other countries including China and India are spending billions of dollars in oil sands investments, obviously with the expectation of eventually importing significant amounts of production.
5. If the U.S. reduces or shuts off the flow of Canadian oil, both countries will suffer. Almost inevitably, China and India will be among the beneficiaries.
6. The oil sands present real environmental challenges but as a sovereign nation it is Canada's responsibility to deal with them without foreign interference.
The State Department is expected to make a final decision on Keystone XL this fall.
The full text of Mr. Waxman's letters can be found at http://energycommerce.house.gov/documents/20100706/State.070210.Clinton.Keystone.XL.pdf and http://energycommerce.house.gov/documents/20100706/State.070210.Orlando.Keystone.XL.pdf.
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