No More Keystone Capers
President Trump is making short work of campaign promises, and on Tuesday he signed executive orders reviving the Keystone XL and Dakota Access pipelines. The resurrection is good news for the economy, but one question is whether he’ll sink the projects with his protectionist impulses.
Mr. Trump signed an executive order inviting TransCanada to apply again for a permit for the Keystone XL pipeline, which the Obama Administration rejected to indulge the anti-carbon obsessions of Democratic campaign donors. Another Trump directive aims to expedite the Dakota Access pipeline, which is 90% finished but was halted by President Obama amid protests. A federal judge ruled that the government had met its legal obligations, but the Obama Administration suspended work anyway.
Such carve outs for progressive constituencies are one reason voters rejected Democrats in November, and the pipelines promise broader prosperity. Keystone is predicted to spin off 20,000 construction and manufacturing jobs, many of them to be filled by union workers, and add $3 billion to GDP. The pipeline could move 830,000 barrels a day along the route from Alberta to Nebraska; up to 100,000 would come from North Dakota, where a glut of crude has to travel by rail to reach refineries built to process it. The efficiencies will ripple across the oil and gas industry.
The Keystone order directs the State Department to make a recommendation within 60 days for a prompt approval, though environmental groups will file lawsuits in every eligible jurisdiction. The objections are specious: President Obama’s State Department concluded on several occasions that Keystone would have no meaningful effect on climate or emissions. Moving oil by pipeline emits less carbon and is safer than trains.
As for Dakota Access, you may have noticed the months-long media rally around Standing Rock Sioux protests. The tribe claims the pipeline will harm its land and water, but this is fake news: Dakota Access does not run beneath the reservation. The route, which was altered 140 times in North Dakota to protect cultural resources, cuts along private land where other pipelines run. The tribe lost in federal court but has vowed to fight President Trump’s order.
One danger here is President Trump’s campaign promise to “renegotiate some of the terms” that included bromides about how “we’ll build our own pipes, like we used to in the old days.” He floated royalty payments during the campaign, and a separate order on Tuesday directed the Commerce Department to develop a plan to use U.S. steel and iron in all new pipelines. TransCanada has said in past months that it’s “fully committed” to Keystone XL, but the company may not be eager for another politician to direct its investment decisions.
White House Press Secretary Sean Spicer said Mr. Trump is looking to ensure taxpayers the best possible deal. Reminder: Taxpayers pay nothing. The State Department estimated that when Keystone is finished and pumping oil, local governments will collect more than $55 million a year in property taxes. About 70% of the resulting refined products from Keystone would stay in the U.S., which will push down gas prices as another benefit, according to a study from IHS. That already sounds like a good deal.
Meanwhile on the livefeed for “The Resistance,” Senate Democrats are proposing a trillion dollars in direct federal spending on public works—and no doubt hoping to persuade President Trump to go along and divide the GOP. But Republicans in Congress should not agree to a dollar of new such spending without more streamlining in permitting.
Private investment projects like Keystone and Dakota Access are the superior route to creating jobs and boosting incomes, which President Trump has long said is his first priority. Mr. Trump’s best move would be to ditch his floated Keystone conditions and enjoy taking credit for the resulting economic growth. He could even attend the next ground-breaking ceremony.