Why would an American president oppose something that would improve Americans’ lives?
Speaking from Burma November 14, President Obama explained why he is inclined to veto the Keystone-pipeline bill: “My government believes that we should judge this pipeline based on whether or not it accelerates climate change or whether it helps the American people with their energy costs and their gas prices,” he said. “And I have to constantly push back against this idea that somehow the Keystone pipeline is either this massive jobs bill for the United States, or is somehow lowering gas prices.”
The president’s comments were truly remarkable. The Keystone pipeline is a real, and huge, infrastructure project that would pay for itself, without taxpayer funding. Furthermore, its purpose is to allow oil from Canada and North Dakota to reach the world market more economically. Therefore it would facilitate U.S. economic growth in several ways:
1. It would help the development of oil production in North Dakota directly. This would produce jobs and income in North Dakota, increase tax revenue, and improve America’s balance of payments and energy security.
2. It would help the development of Canadian oil production directly, and therefore increase income in Canada. The Canadian economy is really a subset of the North American economy, as there is direct division of labor on the production of many goods across the border, and the vast majority of Canadian imports are bought from the United States. Canadian oil also helps improve American energy security, as it is not vulnerable to being cut off by the vagaries of radical Muslim politics or even world war.
3. Helping oil from Canada and North Dakota reach the world market serves to lower the global price of oil. The U.S. produces 7 million barrels of oil per day at present, but uses 18 million barrels per day. We are thus the largest net importer of oil in the world, and anything that serves to lower the price of oil benefits the United States. Thus, as a general rule we should want oil production from every country in the world to find an easy path to the world market. If Tajikistan needs assistance getting its oil to the market, we should see what we can do to help out.