Environmentalists have high hopes that plunging oil prices may help hasten the death of the long-wrangled $8 billion Keystone XL pipeline project.
However, Republican proponents of the contested 1,179-mile pipeline's completion remain firm in their determination that Canadian tar sands will flow through the pipeline to the Gulf Coast, despite economics or the opposition of environmentalists and the Obama administration.
Jane Kleeb, of the anti-pipeline group Bold Nebraska, told
Politico, "Oil prices going low gives the president a landing place to reject the pipeline because Canada needs cheap and big infrastructure.
"When oil prices are high, producing the expensive and high-carbon tar sands makes sense. But now that oil is low, the only way tar sands will continue to expand is if Canada gets big pipelines."
Sandy Fielden, of RBN Energy, told
The Los Angeles Times, "The economics of this project are becoming increasingly borderline."
Republicans, who have announced since their November electoral sweep of both the House and the Senate that the Keystone pipeline completion is a major cornerstone of their plans for the future, are not backing down just because prices are dropping at the nation's gas pumps.
Sen. Jim Inhofe, R-Oklahoma, a pipeline supporter, told the Times, "Oil prices and prices at the pump should have no bearing on support for an approval of the Keystone XL pipeline," he said.
Keystone made more sense, its opponents argue, when oil was selling for near to $100 per barrel, but the drop in oil price to $58 per barrel last week and the stated intention of Saudi oil producers to not cut production mean the economics of pipeline oil, at least in the near future, remain in doubt, Politico said.
Canadian oil still can travel to the U.S. by rail and truck, but those forms of transportation increase the cost.
A recent State Department study found that when oil is selling for $65-$75 per barrel, it is a "potential danger zone" for oil production in western Canada — the point where transportation costs driven higher by failing to build the pipeline could "have a substantial impact" on the industry's growth, Politico reported.
Anthony Swift, attorney for the Natural Resources Defense Council, told Politico, "Plummeting global oil prices have highlighted the fact that tar sands only work in a world of expensive crude and without cheap pipeline infrastructure, many carbon-intensive tar sands projects simply will not be built."
Robert Bryce of the Manhattan Institute told the Times, "I'm for cheap, abundant, reliable energy, period. This is not ideological. This is about what the economics say. The project is clearly very challenged now."
However, he predicted that the struggle is far from over.
"The symbolism has outstripped the reality," he told the Times. "Both sides have decided we are going to fight over this, regardless of the big picture now emerging with oil prices."
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