Obama Rejects Keystone XL Pipeline Project....

After seven years, environmentalists were finally victorious when, on Friday, when US President Barack Obama rejected the proposal for the Keystone XL oil pipeline from Canada.

According to President Obama, “The pipeline would not make a meaningful long-term contribution to our economy.” At a recent press conference, President Obama had this to say on the matter: the project would not reduce gasoline prices, and the shipping of crude oil from Canada would not be successful in increasing US energy security.

The project would have had a major impact on developing the province of Alberta’s oil sands. Now, however, denying TransCanada Corp‘s over 800,000 barrels a day project will make this very difficult to accomplish. The acceptance of the proposal also would have strengthened the position of the United States at the global climate talks which will take place on November 30 in Paris. The main aim of the participating countries at these talks is to reach an agreement to slow down global warming.

Prior to President Obama reaching a final decision, US Secretary of State John Kerry also expressed his disapproval of the proposal. He stated that the approval of the pipeline would be detrimental to US interests. Furthermore, he stated that the approval of the project would undermine the US’s ability to lead the world in addressing and dealing with the issue of climate change.

Had the Keystone XL project been approved, it would have successfully connected already existing pipelines in the United States and Canada. With this link, crude oil would have been brought from North Dakota and Alberta to refineries located in Illinois. Eventually, the project would have reached to the coast of the Gulf of Mexico.

In 2008, the TransCanada Corp began its efforts to seek the presidential permit required for the cross-border project. This immediately instigated a wave of environmental activism to fight climate change. In fact, fighting the Keystone project became a test to determine the ability of environmental activists to obstruct attempts to extract fossil fuel in Canada’s oil-rich areas.

According to Bill McKibben, who is the co-founder of the 350.org environmental group, this signifies a major victory. In fact, Keystone can now be considered symbolic of the effort to slow down the global output of oil. According to McKibben, the US president’s decision sets a historical precedent that is likely to shock those in the fossil fuel industry.

According to TransCanada as well as other oil companies, the approval of the pipeline project would have not only made North America’s energy security stronger, but it would also have helped to relieve an abundance of oil, as well as create thousands of construction jobs.

Since 2008, however, the US has been undergoing a boom in domestic oil drilling. This, in turn, has increased oil production 80 percent. It has also contributed to a decrease in US oil prices. Prices have gone down to approximately $44from over $100 a barrel.

Canadian Prime Minister Justin Trudeau, who has been supportive of Keystone, expressed his regret over the US president’s decision. However, he also stated that Canada-US relations are stronger than any one given project. Similarly, TransCanada Chief Executive Russ Girlinge expressed disappointment that “misplaced symbolism” won over science and merit, and stated that the company would look over ideas to potentially file a new application for another similar project.

According to reporters, a senior official of the US State Department stated that the possibility of TransCanada seeking a positive decision, perhaps under another administration, will remain open. The company would, of course, have to reapply.

On Monday, the Obama administration was asked by TransCanada to halt the review of the proposal. It was seen by many as an attempt at putting off a decision until a new US administration took over in 2017. On Friday, TransCanada’s shares prices fell to $42.90(5.2 percent) on the Toronto stock exchange.

While most US Republican presidential candidates are in favor of the pipeline proposal, all of the Democratic candidates oppose it. In fact, Friday’s decision was a significant setback for Republicans who, in January, had made Keystone a top priority for the new Congress. They had passed a bill that would have enabled Congress to make a decision regarding the pipeline. Obama’s veto negated the legislation.

According to Republican Senator John Hoeven, who is from oil-producing North Dakota, TransCanada will soon be able to challenge Obama’s decision according to international trade agreements such as the World Trade Organization or NAFTA.

In the meantime, the rejection of the proposal will have a detrimental effect on any corporation looking into energy infrastructure projects. According to Hoeven, it also leaves the US at the risk of not having the pipeline network it requires.