Just read another great post over at Conservatives on Fire provoking discussion on capitalism working despite a stacked deck against it. The subject was energy which got me thinking about what is really going on with the Obama Keystone pipeline. He punted on the decision to get it delayed until after the 2012 elections. Consensus is that this is to appeal to his climate change base. However, he’s doing this at the expense of big labor which supports it for the jobs. Why? Isn’t this a zero sum game?

Here’s what we know for sure. The reason for the pipeline is that the U.S. midwest refineries can’t handle the proposed capacity requirements. The EPA certainly isn’t going to allow the necessary expansion of those refineries, so getting the oil to the Gulf Coast refineries is the next best choice. There are lots of ancillary arguments being bandied about which have nothing to do with what is really going on here. Potential pipeline breaks. Re-routing the pipeline for a ‘safer’ route. Canadien oil companies taking advantage of us by utilizing our refineries for tar sands oil that is targeted for foreign markets and won’t reduce the U.S. foreign oil dependency. Etc., etc.

Even the jobs argument is not the end all. To be sure, thousands of jobs would be created temporarily to construct the pipeline thus the interest of the unions. But the pipeline itself is not even necessary. The U.S. State Dept. conducted a study which determined that rail and truck could easily handle the 700,000 proposed barrels per day the pipeline was going to transport to the Gulf Coast. No question that lots of jobs would be created through those industries long-term.

This all comes back to the climate change crowd and their influence on Obama. They hate fossil fuels and particularly the extra ‘dirty’ tar sands version. It doesn’t matter that the mining process isn’t on U.S. soil, the fact that our transportation system and refineries are involved in the process used to put more fossil fuels on the market is reason enough.

This isn’t really a jobs issue at all. Jobs will be created, however, sans pipeline they won’t be construction jobs, they’ll be transportation jobs. Transportation unions have taken a public stance of no support for the pipeline, but you bet that they’ll gladly take the additional workload if the pipeline never happens.

So , we have the climate change crowd against it. Transportation unions against it. Construction unions for it. The U.S. oil industry for it. Obama against it. Republicans and pro-capitalists for it. Can we simply follow standard protocol here? Usually, you just follow the money to get your answer. However, in this case, both the climate change crowd and big labor spend millions on getting democrats re-elected so there is no clear choice here. You can also point to multiple examples in which Obama has repaid his campaign contribution debts to both camps over the last 3 years. So, what to make of it all?

I would say that by punting on the decision for now, he isn’t siding with either group. He’s waiting until after getting re-elected to make the call when he won’t be beholden to everyone anymore. At that point, he can act purely on ideology and not worry about appeasing all of his voter blocks. To me, that would be the ‘greenies’. He sees labor as a tool to get union dues monies into the democratic coffers.

To those on the right who see this as yet another major setback, maybe not so fast. As Jim at CoF pointed out, capitalism still finds a way despite huge odds against it. If the pipeline project dies, alternative transportation will step in and take over. Now, what will the EPA and DOT conjure up to put up roadblocks for rail and trucking to get the tar sands oil to the Gulf Coast? Stay tuned!


4 thoughts on “Obama blocks Keystone pipeline – did climate change or big labor win?

  1. Excellent analysis. I hadn’t really thought about the dynamics of the differing lefty goals. But since he can’t make both happy, then it makes sense that he’s hedging his bets b/c he knows he can. Both labor and the greens won’t be abandoning him for the GOP, now, will they?

    And I bet you are right. Green ideology beats out the workers. He definitely seems committed to his ideology, at the expense of everything else.


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