Why the Keystone XL Will Be Built in the End      

Dr. Kent Moors

The map (and all of the power that goes with it) is being recast right before our eyes.

Not long ago, powerful armies decided who held the upper hand in global politics. Today, the shape of the world is dominated by energy.

In fact, last Thursday, two events thousands of miles apart once again demonstrated how central energy has become in the world of geopolitics.

Both have the potential to change the energy landscape while fundamentally altering the leverage associated with it… and each involves a contentious cross-border pipeline.

One would combine a country in shambles with another under duress.

The other is closer to home and would strengthen a superpower making a big comeback in oil…

The Keystone XL: A Matter of American Energy Security

The superpower, of course, is the United States, and the pipeline is the ever-controversial Keystone XL.

On Jan. 29, the Senate passed a bill to force the approval of the Keystone XL, the last of a five-stage pipeline system built to move crude from Canada to the United States and on to Cushing, Okla., the primary pipeline interconnector to the Gulf Coast refineries.

But since the project crosses an international border, the Senate doesn't have the final say. The Keystone XL requires an appraisal by the U.S. Department of State (DOS) and approval by both Congress and the president.

So far, the biggest hurdle has been the environmental concerns.

Most of them have been dealt with in a preliminary DOS finding (the full report has yet to be released) and with the recent verdict by Nebraska that the pipeline poses no environmental threat.

Nonetheless, the Keystone XL has become the quintessential political hot potato.

As it stands, the House of Representatives has already approved the pipeline, although its version differs a bit from the Senate's. That will require a conference committee to iron out a common version that will then be voted up or down, with no amendments allowed in either chamber. That much seems assured.

However, President Obama has indicated he will veto the measure. And neither the initial House nor Senate approval vote amounted to the two-thirds needed to override a presidential veto. Unless more Democrats decide to defect, the threatened veto will be sustained.

Yet, even with all of this political wrangling, it's now certain the pipeline will be built. After all, the serious objections have never materialized into substantive roadblocks, and the weightiest complaint was removed when the intended route was altered to keep it from crossing a major aquifer in Nebraska.

So, it's no longer a matter of if it will be built, but when.

Here's why.

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Dr. Kent Moors

About the Author

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Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.

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