Sunday, January 29, 2012

Why are we not going ahead with the Keystone XL Pipeline Project?


The proposed Keystone XL pipeline project has been rejected by the Obama administration, even though its own State Department judged it environmen­tally safe. The proposed Keystone pipeline would move the proven crude oil reserves of Alberta, Canada — the third-largest such reserves in the world — to U.S. refineries on the Gulf Coast.
There is nothing extraordinary about this project. It is no different than the 360,000 miles of pipeline that crisscross the United States. In fact, it merely extends an existing pipeline.

By one estimate, more than 20,000 U.S. construction and service jobs would be created if the president had given the go—ahead. Many of these jobs would have been good-paying manufacturing jobs, building pipe, earth movers and other construction equipment. With our high unemployment, passing up these jobs is almost criminal.

But this is also about our economic contest with China, whose economy is the world’s second largest and is still growing rapidly. Building Keystone, along with developing our own abundant energy and gas reserves, would strengthen us in an increasingly competitive global economy. U.S. manufacturing is seeing an uptick in business. In fact, because of the boom in U.S. natural gas production lower energy prices are making U.S. based manufacturing more competitive against China and other nations.

With its growing energy appetite, China is aggressively locking up energy resources in North America. The Chinese energy companies, PetroChina, Sinopec and Cnooc all have invested heavily in Canada’s oil patch, totaling some $10 billion. Earlier this month, PetroChina took complete ownership of a Canadian oil-sands prospect, the first for a Chinese company.

In November, Canadian Prime Minister Stephen Hager met with Chinese President Hu Jintao and stressed his country’s interest in supplying Asian energy markets. He will make a high-profile trip to China next month.

If we snub our neighbor to the north, which badly wants Keystone approved, a Canadian pipeline to the Pacific Ocean will be built, to fuel China.

The Keystone decision came the same week a National Science Board study made news reporting that the United States is rapidly losing high-technology jobs to Asia, many to China, as U.S. companies shift their research and development. One major CEO said his company is expanding its overseas research "in preparation for a world where the West is no longer the dominant manufacturing power." Decisions like Keystone move that day closer.

China is a challenge in many ways. Congressman Ed Royce held a congressional hearing last year on its theft of American intellectual property. State policy in Beijing is to bully U.S. firms wanting market access in China to give up their crown jewels: cutting-edge technology in the important fields of energy, transportation, telecommunication and computing. This is a determined campaign to surpass us in becoming the preeminent world power, plain and simple.

The Obama Administration makes much of its "Pivot to Asia" – the reorienting U.S. foreign policy focus and resources to the Far East. That is all well and good. The Pacific region is tremendously important to the U.S., especially California. But it would sure be nice if we pivoted from a position of strength.

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