Calling Penalties on Feds for Energy Delays

Feb 1, 2013

If the federal government were a team playing in the Super Bowl, the referees would be throwing delay of game penalties left and right. On moving oil and coal, their actions are more about slowing things down than removing unnecessary  obstacles.

First, an anonymous federal official told Reuters that we’ll have to wait until at least June before there’s a decision on the construction of the Keystone XL pipeline:

"We're talking the beginning of summer at the earliest," said the source, who did not want to be identified due to the sensitive nature of the TransCanada Corp project, which has been pending for more than four and a half years. "It's not weeks until the final decision. It's months."

A series of steps still have to be taken by the State Department, where the decision will be made because the 830,000 barrels per day crude oil pipeline crosses the national border. The pipeline will link Alberta's oil sands and North Dakota's Bakken shale fields to refineries and ports in Texas.

Let me remind you that, the State Department is working on environmental review number four. Does anyone really think it’ll be any different from the one released in 2011 that found that Keystone XL would have “no significant impacts” along its route? Last year, the administration claimed the problem was with the route through Nebraska. That’s been fixed, and Nebraska’s governor recommended that the federal government approve the pipeline.

After rejecting the pipeline last year, President Obama said his administration would expedite the southern part of the project (Now under construction). He should expedite the review for the rest of the project and approve it to get the oil flowing from Canada and create more jobs (20,000 in total are expected).

Keystone XL’s slow walk deserves one penalty flag. The federal government deserves another for potentially delaying coal exports. Right now, changes in global demand have coal producers looking at exporting to international customers:

"When you look at demand growth around the world, and try to match that with supply, they don't match up, so there is clearly a gap," said John Eaves, CEO of St. Louis-based Arch Coal.

"We have identified 300 GW of new plants coming online in the next few years, requiring 900 million tons of additional supply, which will essentially replicate the whole US production in the next few years," Eaves said. "So there are tremendous opportunities in the global market, with growth in Southeast Asia, some in Latin America and Eastern Europe."

However, as the Heritage Foundation’s Nicolas Loris writes, expanding the scope of environmental reviews of coal export terminals could quash this opportunity:

At a public hearing last April for one of the terminal projects in Oregon, the Environmental Protection Agency recommended that the corps consider the environmental impacts of where the coal is burned in foreign markets such as China, Japan, and South Korea. The corps rightly limited the scope of the review but kept the door open for a more comprehensive review. Governor John Kitzhaber (D–OR) is also pushing for a local, national, and global environmental assessment.

We’d lose out on new jobs, the construction of new export terminals, and millions of dollars in new taxes.

Is the administration taking energy seriously? We have a wealth of resources underneath our feet, yet federal policy appears to be finding excuses to not use it. 

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