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Trump plays trump on Keystone XL pipeline

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Today, on President Trump’s second full weekday in office, he once again showed that what he talked about on the campaign trail was not idle chit-chat. According to news reports, Mr. Trump signed five Executive Orders today involving environmental matters, including actions intended to allow Keystone XL to be resubmitted and for the Army Corps of Engineers to grant an easement in the case of the Dakota Access pipeline down in the States. At the time of writing, the official text of the Executive Orders was not available. In this post, I won’t get into the issue of “how” this works, since that’s unclear and speculative.

But from what the various Washington “sources” are talking about in the press, not to mention Mr. Trump’s own qualifications, it’s far from clear that, in the case of Keystone XL, things will move nearly as quickly as Mr. Trump’s pen. He may have given a “breath of hope” to the project, but it’s a very small bit of air. Multiple barriers remain.

Show me the money

Mr. Trump has stated that the United States wants to “renegotiate the deal,” undoubtedly seeking some additional benefits for American citizens from the pipeline itself. As my colleague Taylor Jackson and I wrote previously, this would unnecessarily complicate a process that Mr. Trump seeks to streamline. As we wrote, there’s already a lot of proposed benefits to Americans from this project:

…the relationship between Canada and the U.S. on energy already provides an excellent “deal” for Americans by giving refiners and consumer’s access to the third largest oil reserves in the world. They also come from a secure developed country with some of the world’s best human rights and environmental protections.

Mr. Trump also seems to have overlooked the State Department conclusion that Keystone XL would result in “substantial” increases in property tax revenues for counties with facilities related to the pipeline. So, greater access to abundant and secure supplies of oil, and revenues for counties along the pipeline. Sounds like a pretty good deal for Americans. But the deal is even better when safety is considered.

Legal phones are ringing

Legal challenges to Keystone XL are as predictable as Mr. Trump is unpredictable. Various interest groups are as certain to challenge an approved Keystone XL at local, state and federal courts. While Mr. Trump gets to appoint a lot of judges, legal challenges could hold up the project for many more years.

And then, there’s steel

In the newest wrinkle on Keystone XL, Mr. Trump has said that not only would the pipeline be built with U.S. labour, it would be built with U.S. steel (presumably on the U.S. portion only). To the extent that U.S. steel is more expensive to manufacture and fabricate than other sources of steel, this would add another cost inflation for the project, the economics of which must already be questionable with oil prices as low as they are, and predicted to go even lower. And U.S. steel isn’t cheap.

Time will tell whether the completed Keystone XL pipeline can surmount all the hurtles ahead.


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