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Aileen Martinez
Mr. Hawkins
American Government - Period 5
10 December 2015
How will the Keystone Pipeline affect the U.S. economy and why is it important?
The Keystone oil pipeline is a system that carries large amounts of petroleum per day
from oil sands in Canada to refineries on the Gulf Coast. What many people do not know is that
the Keystone Pipeline is already put in place, but it has yet to be expanded. This expansion is
known as the Keystone XL Pipeline. What runs through the existing pipeline is oil from sand
fields in Alberta, Canada, to states in the Midwest, and down to the Gulf Coast. The Keystone
XL Pipeline would have two sections of expansions. A southern leg of the pipeline would
connect from where the current pipeline ends, in Oklahoma, to the Gulf Coast of Texas where oil
refineries are found. The pipelines second section would be from Alberta, Canada to Kansas,
passing through Bakken Shale region of eastern Montana and western North Dakota; places
where oil extraction is booming. The pipeline would then take some of this crude oil for
transport, passing 16 counties. The company in charge for this project is a Canadian company
called TransCanada.
According to Energy East Pipeline, TransCanada is a Canadian company with more than
60 years of experience in building pipelines that are safe and reliable. TransCanada operates one
of North Americas largest crude oil transportation networks, which is the Keystone Pipeline that
exists today. TransCanada proposed the existing pipeline in 2005; however, TransCanada has
been trying to obtain a permit to build the new pipeline for over five years. TransCanada needs to
obtain a Presidential Permit, from the United States President, in this case because the northern

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section of the pipeline would cross international borders. To top that off, they need a Presidential
Permit for every 50 feet of pipe.
Before the current Keystone pipeline was put in place, in the early 2000s, crude oil prices
were rising, so companies began showing their interest towards Albertas tar sands. As an
increase in production began, companies needed to find a way of shipping this crude oil to
refineries that turned this oil into gasoline. So, in 2005 TransCanada proposed the Keystone
Pipeline which would ship different types of crude oil from Alberta, Canada to refineries in
Illinois and Texas. This system included a smaller pipeline from Alberta to Illinois, and another
section from Oklahoma to Texas. However, there was a fourth and final phase that had to be
done; the Keystone XL Pipeline. In 2008, TransCanada applied for a presidential permit to allow
this expansion to be made. Little did they know that this only would create major controversies.
In 2011, environmentalists, including Bill McKibben, caught onto what TransCanada wanted to
do. These environmentalists took note on how the extraction of crude oil was worse for global
warming because of the amount of energy it took to extract. The Senate had recently rejected a
major climate bill and now, Republicans had taken the House. The prospects for climate action
in Congress seemed bleak. But Obama had final say over Keystone XL(VOX). This was
extremely significant for America because if this expansion was passed by the President, it could
seriously hurt our planet, even if it was good for the economy.
The original Keystone Pipeline project cost approximately $5.2 billion to complete; but,
the proposed expansion of this pipeline- Keystone XL- costs $8 billion to complete. This is an
extremely high cost that has a massive potential on the economy. The overall economic impact
that the pipeline would have on the U.S. economy would be an approximate $20 billion. Thus,
the pipeline will take a long time to complete even with the inclusion of many different sources

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in the U.S. The pipeline will create jobs for thousands of people around the U.S. However, these
are either only temporary jobs, or permanent jobs given to the people. The jobs that will be
provided are for those who are pipefitters, welders, electricians, heavy equipment operators; but,
there are also jobs for many more that are not familiar with those fields.
Now you may be wondering how this process works. Well, to start off, crude oil is a
fossil fuel, known as petroleum, made out of hydrocarbons, organic compounds, and small
amounts of metal. Crude oil ranges from light and heavy to sweet and sour depending on the
density and sulfur it contains. In case you did not know, crude oil is used for gasoline (50%),
diesel fuel heating oil (40%), and 10% for Residual fuel oil. According to the University of
Delaware Sea Grant, While refining begins as simple distillation (by heating and separating),
refiners must use more sophisticated additional processes and equipment in order to produce the
mix of products that the market demands. This is important because the process of extracting
crude oil comes with additional processes to satisfy the consumers demands.
The Keystone pipeline extracts a variety of crude types, such as: conventional crude oil,
diluted bitumen and synthetic crudes. According to the TransCanada website, Found in
Albertas oil sands, among other places, bitumen is a raw material that must be either upgraded
to a synthetic specification similar to West Texas light crude to become a synthetic crude oil or
blended with light petroleum products, such as diesel, to become diluted bitumen. This shows
that when bitumen is extracted, the material undergoes many obstacles so that the finished
product is either crude oil, or diluted bitumen. Diluted bitumen, physically and chemically,
cannot be distinguished from other heavy crude oils. There are two ways to extract bitumen,
The first, called surface mining, involves using large trucks and shovels to collect oil trapped
in the sand. The second, called in-situ production, involves injecting steam into the ground that

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heats up the bitumen, combines it with water and pushes it to the surface where it can be
separated from the water(TransCanada). This is important because many may argue that this
hurts our environment, while others say it doesnt. The expansion of the existing pipeline raises
concerns for Americans around the U.S. This is a huge controversy that TransCanada is facing,
as well as the U.S.
In Canada, the proposed 1,179 kilometer pipeline sparked debates between Canadian
politicians. On the Conservatives side, Conservative Stephen Harper made his decision clear.
Harper called the U.S. approval of this expansion a no brainer. The Conservative government
has wanted the expansion of this pipeline to be passed by the U.S. so that Canada no longer has
to rely on insecure countries like Venezuela. However, the NDP (Net Domestic Product) leader,
Tom Mulcair, opposes the pipeline, saying the project represents the export of 40,000 jobs to
the U.S. Rather, Mulcair has said he would like to see the bitumen moved within Canada to keep
those jobs in the country and take care of Canadas energy security(CTV News). Analyses
were made by the U.S. State Department that shows the exact amount of jobs the KXL will
create in two years. The pipeline would provide 42,100 jobs, but only 35 permanent and
temporary jobs will remain after the KXL is put in place. This shows that the NDP of Canada is
looking for what is best for their people/ country. He wants the jobs to be for Canadians rather
than for U.S. citizens. The Liberals have decided to vote yes on this proposal of the new pipeline
because, it is in the public interest(CTV News). This is important because it shows how all
of these leaders stand on different sides of the pipeline expansion whether it is the environment,
jobs, or public interest.
Here in the U.S., we have our own political problems to face because of the proposed
expansion of this pipeline. Earlier this year, Hilary Clinton was asked if she would sign a bill in

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favor of the pipeline, if she was to be elected president. Clinton responded saying, Well, as you
know, I was the secretary of state who started that processI was the one who put into place the
investigation. I have now passed it off, as is obvious because I am no longer there, to Secretary
Kerry. This is President Obama's decision, and I am not going to second-guess him, because I
was in a position to set this in motion, and I do not think that would be the right thing to do. So I
want to wait to see what he and Secretary Kerry decideIf it's undecided when I become
president, I will answer your question(Lachman). This is important because it clearly shows that
Clinton did not state whether she is for or against the expansion of the KXL to be put in place;
but, it is also not her position to answer that question because the State Department is still
working on it. This comment bothered many environmentalists because of her neutral answer on
this pipeline. They believe that she should not have been making comments on the foreign policy
issues brought up while she was in president Obamas cabinet.
Also, earlier this year, the United States hosted a major televised debate between
candidates who were to serve as the next head of government. In this debate, Canadian leaders
mentioned topics that involved the U.S. and were significant to U.S. politics. The Canadian
leaders spoke mainly about the proposed expansion of the Keystone Pipeline, which would
increase oil production in Canada. However, environmentalists in the U.S. oppose this expansion
and hoped the Obama administration would reject the permit application allowing the Keystone
XL to cross our borders. The Green Party opposed every pipeline that has ever been proposed
because theyre risky schemes. But, Republican candidates think the complete opposite of
environmentalists; they have touted it as a potential source of jobs and a way to wean
America off oil from hostile foreign nations(Pan). This is very significant because one side of

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the government is against this for environmental reasons, while the other side is in it for the jobs
and oil this pipeline expansion will bring.
The expansion of this pipeline has its pros and cons. According to the TransCanada
website, The 8 billion dollar project will create 9,000 well-paying construction jobs for
American men and woman. The process of building the KXL through Nebraska, South Dakota,
and Montana is expected to create millions of hours of labor all around the U.S. which would
help American families qualify for health insurance and retirement benefits. Every inch of this
pipeline would be built by experts and well-trained workforces around the U.S. The taxes
TransCanada would pay goes to helping communities afford the improvements of roads, bridges,
schools, and local programs. It is estimated that the Keystone XL Pipeline will add
approximately more than $100 million in additional revenues in its first year of completion. They
would pay the extra money they made to the states and counties in which their pipeline lies on.
In the past three years, the existing Keystone pipeline has paid approximately $130 million in
property taxes. According to the STI website, the Keystone XL will lower crude oil costs and,
would be a boom to the US economy in terms of the amount of money it will save the
country on annual crude oil cost. Because the pipeline will help stabilize prices, it is estimated
that the United States could save as much as $9.1 billion in crude oil costs, per year. This is
significant to our economy because crude oil costs will lower, once built, rather than keep rising.
However, there are many reasons why the KXL is also bad for the U.S. One of the
reasons why is because building the pipeline and opening up tar sands will environmentally hurt
us. Tar sands are deposits of sand impregnated, or soaked, with bitumen. Burning the recoverable
tar sands oil will increase the earths temperature by a minimum of 2 degree Celsius. Many
people say that the KXL will, in fact, create unemployment. Since this project affects the

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environment and weather, many middle and lower-income Americans will suffer the most.
According to Brendan Smith, author of the article 5 Reasons why the Keystone Pipeline is bad
for the Economy, building the sustainable economy, not the Keystone pipeline, will create far
more jobs. The extraction of tar sands in Alberta, Canada is the worlds dirtiest form of fuel
because it emits 3 to 4 times more greenhouse gases than producing conventional crude oil. The
gases that would be released into the atmosphere could cause great damages to wildlife and
humans too. These people and animals would have a higher risk of obtaining rare and unknown
cancers.
But, the Keystone XL Pipeline is very significant despite its negative effects. If this
expansion is approved, the pipeline would carry those 830,000 barrels of tar-sands oil to
refineries in the Gulf Coast that will turn this oil into reusable gas. And, it would provide, a
desperately needed boost to the Canadian energy industry. If Obama says no, the Canadians (and
their American backers) will encounter possibly insuperable difficulties in exporting their heavy
crude oil, discouraging further investment and putting the industry's future in doubt(Mother
Jones). This is important because Canada wants to get this oil transported to the coasts of the
U.S. to transport it out to sea, but without this system put in place, then it will become a harder
task for the Canadian company to achieve that goal of shipping the tar-sands oil out to the ocean
and to other countries. Supporters of the pipeline said that if this procedure is done, it would also
reduce the United States reliance on other countries around the world for oil. According to CNN
Money, It's true that the 830,000 barrels a day the pipeline is slated to carry would probably
replace some of the 2 million barrels a day of heavy oil currently imported to the Gulf Coast.
This is important because to refineries, it is easiest, and cheaper, to transport oil through
pipelines than by ship. And, it would replace 2 million barrels a day of most of the crude oil that

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has already been (is) shipped to the U.S. So, they prefer that the additional Canadian barrels
replace higher costs barrels coming from Mexico, Venezuela, and Saudi Arabia. But, critics claim
that the pipeline expansion would only transport oil to other parts of the world and none to
America. American refineries produce more gasoline and diesel fuel than the country needs, and
then they export the rest to other countries. The number of exported barrels has only been rising
throughout the years, so whether the Keystone XL is built or not, it would continue to grow. So,
once the pipeline is built and the oil refined, it will be impossible to tell where the new oil went.
This is significant because if this pipeline expansion is put in place, America would obtain more
oil to export out of the country since we are already producing more than we need.
Recently, Democratic presidential candidate Bernie Sanders gave a speech indicating that
Obama should reject the Keystone XL. In his speech, Sanders said that president Barack Obama
should reject the KXL before he makes any other international climate negotiations in Paris.
Rejecting this pipeline could send a message to world leaders about how the U.S. is committed to
attack climate change. Bernie Sanders said that he would hope very much that President
Obama would stand up as soon as possible and say the Keystone pipeline is a no-brainer, you do
not extract and transport some of the dirtiest fuel on earth,(Fuel Fix). This is important because
Sanders is sending a message out to the people on how bad this proposed pipeline really is. If
rejected by the president, we could set an example for leaders around the world to start making
things better for the planet. President Barack Obama does intend on deciding the fate of the
Keystone XL pipeline before he leaves office. Early November, president Obama announced that
the State Department made a decision that the Keystone XL would not serve the national interest
of the U.S. and president Obama agreed. President Obama said that America is a global leader
for taking action on climate change and if he were to allow the pipeline expansion, he would

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undermine that leadership. To support his decision, he also said that some crude oil needs to be
left underground to keep our climate from getting warmer. To confirm all of the theories that
many people said about the Keystone XL, president Obama said, the pipeline would not
make a meaningful long-term contribution to the U.S. economy, nor would it increase U.S.
energy security or help to lower gas prices, which have already declined dramatically over the
last year (Scientific American). This is important because for years, people have developed
theories indicating what the Keystone XL would do to our economy; but, finally, president
Obama confirmed the reality behind their theories.
In conclusion, this project seemed like it would not do the economy good, as well as the
environment. Transporting oil to the United States would make it easier for Canada because they
would face less political, environmental and social domestic opposition. But, other alternatives
are that Canada can expand crude-by-rail deliveries; however, that would be expensive. Canada
wants the easy way out here, but they do not realize that it hurts U.S. citizens and the planet
itself. This concept is debatable and can be talked about for hours because it is either good for
one country, or bad for everyone as a whole. Throughout my entire project, I learned that there
are many different reasons and theories people said about the pipeline expansion. I learned a lot
throughout this entire project, and I feel good with the decision president Obama made. I believe
people are too caught up in money, and simply surviving, that they do not appreciate the world
we live in enough. Yes, maybe this would have helped our nation a very small percentage, but it
would hurt us more because we live in a world that has been beaten up continuously by mankind.
So, the final decision the president made was a very great one; and, hopefully, other world
leaders learn from this decision.

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Works Cited
Daly, Matthew. "Presidential Contenders Differ Sharply on Climate." Abc News. N.p., 27
Nov. 2015. Web. 8 Dec. 2015.
Davenport, Coral. "Keystone Pipeline Pros, Cons and Steps to a Final Decision." The
New York Times. The New York Times, 18 Nov. 2014. Web. 08 Dec. 2015.
Dlouhy, Jennifer A. "Sanders: Obama Should Reject Keystone XL before Paris Climate
Talks." Fuel Fix. N.p., 4 Nov. 2015. Web. 8 Dec. 2015.
Eilperin, Juliet. "Obama Will Decide on Keystone Pipeline before He Leaves Office."
Washington Post. N.p., 3 Nov. 2015. Web. 08 Dec. 2015.
Klare, Michael. "The Strategic Importance of Keystone XL." Mother Jones. N.p., 11
Feb. 2013. Web. 08 Dec. 2015.
Lachman, Samantha. "Hillary Clinton Cops Out On Keystone Question For Second Time
In 2 Days." Huffington Post. N.p., 28 July 2015. Web. 8 Dec. 2015.
Pan, Yujia. "Two Reasons Americans Should Care About Canada's Election Debate."
Huffington Post. N.p., 7 Aug. 2015. Web. 8 Dec. 2015.
Plumer, Brad. "9 Questions about the Keystone XL Pipeline Debate You Were Too
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Rickard, Graham. Oil. New York: Thomson Learning, 1993. TransCanada. Web. 8 Dec.
2015.
Spears, John. "Why Is Keystone so Important to Supporters and Opponents? Toronto
Star." Thestar.com. The Star, 31 Jan. 2014. Web. 08 Dec. 2015.

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Smith, Brendan. "5 Reasons Why the Keystone Pipeline Is Bad for the Economy." Labor
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Volcovici, Valerie. "U.S. Will Not Pause Keystone Review; Obama Expected to Reject."
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"What Is Crude Oil, and What Is It Used For?" What Is Crude Oil, and What Is It Used
For? University of Delaware, 8 Dec. 2015. Web. 08 Dec. 2015.
"Where Keystone's Oil Will Go." Cnn Money. N.p., n.d. Web. 8 Dec. 2015.
Magill, Bobby. "Obama Rejects Keystone XL Pipeline." Scientific American. N.p., 6 Nov. 2015.
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Zilio, Michelle. "Pipeline Politics: Where Do the Major Parties Stand on the Proposed
Projects?" Ctv News. N.p., 15 Sept. 2015. Web. 8 Dec. 2015.