Economist Warns Biden’s Keystone XL Pipeline Shutdown Could Have Unintended Consequences

Economists Warn Of Consequences Of Pipeline Shutdown, From Lost Jobs To Increase Of Price Of Fuel & Petroleum Derivatives To Heavier Environmental Toll.

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Photo: President Joe Biden stands during a performance of the national anthem, during a virtual Presidential Inaugural Prayer Service in the State Dinning Room of the White House, Thursday, Jan. 21, 2021, in Washington. 

Photo Credit: Alex Brandon / AP

Published January 25, 2021

The Center Square [By Scott McClallen]-

President Joe Biden revoked the Keystone XL pipeline’s federal permit, a move that an economist says could have far-reaching and hidden unintended consequences.

The revocation suspended the 1,200-mile pipeline project, which, if finished, was projected to carry approximately 800,000-barrels of oil per day through Canada and the United States.

Keystone XL President Richard Prior said more than 1,000 jobs, mostly unionized, will be eliminated.

“We will begin a safe and orderly shut-down of construction at our U.S. pump station sites and we will conclude the Canadian pipeline scope in the coming weeks,” Prior said in a statement.

Gary Wolfram, an economics and public policy professor at Hillsdale College, said that the cancellation will increase prices of fuel and petroleum derivatives.

“The halting of the Keystone pipeline is going to increase the cost of natural gas and oil … that will result in less output,” Wolfram said in a phone interview. “So the question is, what’s the opportunity cost of stopping the pipeline?”

Oil doesn’t just fuel cars, Wolfram said. Petrochemical products range from generating heat, electricity, inputs in plastics, synthetic materials and asphalt, personal protective equipment, COVID-19 vaccine vials, and even timed-release capsules in aspirin.

Blocking the pipeline will increase prices for all of the above, Wolfram warned.

Wolfram said blocking the pipeline won’t necessarily stop oil transportation — it’ll just be shifted to more costly and less efficient methods, like by rail or truck, that could lead to higher emission output relative to using the Keystone pipeline.

Assume transportation of the same amount of oil.

X-Files Style - The Truth Is Not Out There

For example, an 84-car train will carry 60,000 barrels of oil, Wolfram said. So it would take 1,000 train cars to haul the same amount of oil that the pipeline would deliver in one day.

A 2013 Manhattan Institute report found that pipeline transportation of oil is safer than road or rail.

Additionally, TC Energy had already pledged to eliminate all greenhouse gas emissions by 2030.

But Minnesota lawmakers DFL Reps. Jamie Becker-Finn, of Roseville and Heather Keeler of Moorhead, and at least 14 other DFL members called the announcement “great news” for the environment, indigenous people, and landowners along the route.

“Like Keystone, Line 3 and Dakota Access would endanger our valuable water resources, cause irrevocable harm to our climate, and have been pushed forward despite opposition from impacted tribal communities,” the lawmakers said in a statement.

“As a state and nation, we must strive for a green energy future and make decisive steps to address the harm to our environment perpetuated by the fossil fuel industry.”

Teamsters General President Jim Hoffa said the order will affect 8,000 union jobs and members’ retirement and health benefits, and they “strongly oppose” the decision.

“This executive order doesn’t just affect U.S. Teamsters; it hurts our Canadian brothers and sisters as well who work on this project,” Hoffa said in a statement. “It will reduce good-paying union jobs that allow workers to provide a middle-class standard of living to their families. America needs access to various forms of energy that can keep its economy running in the years ahead. This decision will hurt that effort.”

Thomas Pyle, the president of the American Energy Alliance, said in a statement the move further divided the nation.

“My mother taught me to judge people by their actions, not their words…. President Biden read a nice speech calling for unity then immediately signed a flurry of executive actions that thumbed his nose at half of the country and squarely took aim at affordable energy, the families that benefit from it, and the American workers who produce it.”

“The Keystone pipeline is nearly completely built and an important link for North America’s economic security. The decision today to rescind the permit makes it crystal clear that Mr. Biden stands with the extreme green lobby and not average Americans.”

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About the Author:

Scott McClallen, The Center Square Staff Reporter

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on and Previously, he worked as a financial analyst at Pepsi.

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