Fraser Forum

Keystone pipeline veto: What’s it mean for North American economic integration?

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Earlier this year, President Obama vetoed the bill passed by Congress authorizing the construction of the Keystone XL pipeline. The veto was not a surprise, as the President had signaled his intentions well before the bill was passed. Many political observers interpreted the veto as a reflection of the strong influence that environmentalist groups have on the president and the Democrat Party through their financial support, as well as their “single-issue” voting focus that can mean success or failure for specific Democrat office-seekers.

The obvious strong influence of the environmental lobby on the policy positions of Democrat office-holders poses a huge hurdle for future North American energy integration through initiatives such as cross-border pipelines. Recent developments also signal the potential for the Keystone pipeline proposal—and other energy development and transportation projects—to be prominent issues in the upcoming 2016 presidential election.

While Republicans are mostly on record as favouring the construction of Keystone, the American voting public is not as unequivocal. Public opinion polls carried out in 2014 and 2015 show that a majority of Americans support the construction of the pipeline if the decision is posed as a simple “yes or “no.”

However, when respondents are asked if further review of the pipeline is in the national interest, a majority of respondents say that pipeline construction should be delayed until a review determines that construction is in the national interest. The problem for Canada is that U.S. politicians of both parties are increasingly equating American national interest with the creation of domestic jobs and the reduction of greenhouse gas emissions. In this respect, a relatively small number of temporary construction jobs created by the Keystone pipeline are unlikely to be a strong selling point to U.S. politicians and voters who are becoming increasingly “protectionist” as the economic recovery in the U.S. remains weak.

The argument that importing more Canadian oil will help make the U.S. energy-independent has also been invoked by supporters of Keystone. This claim was undermined by President Obama who suggests that the pipeline will have no economic benefit for Americans because the Canadian crude oil transported through the pipeline would “simply” be exported to other countries. While this assertion has been challenged by several studies, it highlights the emphasis U.S. politicians place on job-creation as the justification for public policy decisions. In this context, improved economic efficiency through closer North American economic integration is seemingly an irrelevant factor in the political decision-making process.

The rhetoric surrounding the Keystone pipeline debate underscores the need for Canadian politicians to once again make the case to U.S. government officials and opinion leaders that closer North American economic integration increases the standard of living of Americans, and that increased economic activity and jobs in Canada do not come at the expense of jobs in the United States.

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