The basics of the Keystone XL project are fairly straightforward. The pipeline would ultimately deliver over 800,000 barrels per day of Canadian crude to refineries in Texas and the Gulf Coast. That’s about 10 percent of daily US consumption, which is not an insignificant amount. Construction of the pipeline would add several thousand jobs directly, in terms of those actually involved in construction. More importantly, it would result in creation of over one hundred thousand jobs indirectly throughout the multi-billion dollar supply chain.
Most importantly, the jobs and wealth created would not require a penny of public sector spending. Government doesn’t have to subsidize Keystone XL in any way, which is all a friend of free markets should need to know. Keystone XL makes sense because it pays for itself. If it didn’t, there is no way that the private sector would line up to fund the project.
Objections to the project range from the bizarre to the absurd. Some opponents claim that the Canadian crude that Keystone XL will deliver is far more expensive to process than other sources of crude. But, if that were the case, why on earth would private sector investors line up to throw money at such a project? Others claim that because this crude carries more contaminants that some other crudes, it will therefore cause more pollution. That objection is equally silly since US refineries are subject to the same emissions limits at all times, no matter what sort of raw material they start with.
The House version of the bill contains another provision that is sure to upset environmentalists: a directive that would force the EPA to stop implementation of rules targeting industrial boilers. The Boiler MACT rules are a classic example of regulatory overreach, hugely expensive with very little environmental benefit in return. Killing Boiler MACT would be a boon to American’s beleaguered manufacturing sector and would provide some certainty to businesses that are trying to plan future capital investments.
Both the pipeline and the boiler rules are but a piece of the larger budget issue, but it is interesting to find that both have found a place at the negotiating table. It may be a sign that Congress is starting to come to its senses about energy and environmental policy. That would be good news indeed.
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