The Keystone XL pipeline has been one of the most consistently interesting stories of the past five years. The political and economic repercussions of its implementation or its stagnation are vast, reaching even beyond the socioeconomics of the United States and Canada, where the pipeline is physically located.
If you have been confused by all of the spin, here is the lowdown on the Keystone XL Pipeline and exactly what it means for the economy of the United States.
The Physical Basics: The Keystone Pipeline is a pipeline that would be used specifically to carry oil between Canada and Nebraska to be used within the borders of the United States. The amount of oil that this pipeline can move is incredible. Many industry experts estimate it to be as high as 830,000 barrels per day.
Without a doubt, the surrounding communities would see a rise in employment throughout the Canadian and American regions of the pipeline. Not only would people within the oil industry be vitalized, but also satellite industries such as transportation fleets, supplies and maintenance crews. Supporters point to the rise of employment following the oil boom in North Dakota where even the rank and file fast food workers that are around oil rich areas make $15 per hour.
The Political Basics: If the US were able to receive such a large amount of oil from a friendly neighbor, the country would be much less dependent on oil from the Middle East, which has traditionally been under the control of people who are neutral or unfriendly towards the United States.
There are many environmental organizations who are against the pipeline because of the alleged inability of politicians to commit to the safety of the environment that is surrounding the pipeline. These groups say that proper measures have not been made for pipeline maintenance that will shield the environment from any possible spills. They also believe that moving 830,000 barrels worth of fossil fuel through North America per day will cause global warming.
The Economic Basics: The United States would play a much greater role in the regulation of the price of American oil if the Keystone pipeline were to become a reality. The local economies and communities around the pipeline would be helped because of the rise in employment. Overall, Americans would pay less at the pump because they would be receiving oil from a domestic source. There would be no currency conversion or transportation taxes required in the price of gas anymore.
The Controversy: The Keystone pipeline first caught the eye of environmentalists after it had been greenlighted by Congress by the overwhelming margin in 2011. Bill McKibben was the writer who led the charge against the pipeline because of all of the extra energy that would have allegedly been required to extract all of the oil. He gained the support of NASA scientists and other politicians who had ties with the green community.
The time was not right in politics to chance any further environmental disasters. Exxon had just been caught trying to cover up a huge spill, but public backlash forced the company to pay for all the damages that it had caused. It also put a huge black mark over the entire oil industry. On top of that, the Senate had just put down a huge climate bill.
There were many documentaries put out against fracking, including a huge documentary by Michael Moore. This further turned public opinion against the Keystone pipeline.
Personal battles between conservatives in Congress and Pres. Obama also played a large role in the turnaround that stopped the pipeline from coming to fruition. Some Republicans who were initially against the pipeline actually turned a complete 180° once they found out that Obama was in the pocket of green special interest groups.
However as reviewed by the State Department, the Keystone pipeline would support over 42,000 jobs over its construction period and almost double that once it began production. Overall, the pipeline would contribute more than $3 billion to the economy and could benefit pipeline service companies like Inline Services.
This would come to around 0.02% of the entire US GDP.
Tarik Pierce is the founder of InvestorTrip.com and regularly contributes articles to this website.
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