Does Obama's Keystone XL Decision Still Matter?

Oil is flowing in the United States, thanks to booming shale oil fracking in Texas and North Dakota, and to the railroads that can transport it to refineries in the absence of connecting pipelines.  What's more, existing pipelines are being enlarged to transport the Canadian crude, as we noted here on August 12: "Pipeline builder Enbridge, Inc., has been working on a project for a slightly smaller pipeline that would carry 660,000 barrels of crude from the Alberta tar sands to the Gulf by 2015."

It turns out that President Obama's decision to delay a decision on TransCanada Corp's Keystone XL pipeline, designed to transport 830,000 barrels of heavy crude oil a day, has, in effect, been a decision in itself. "Keystone XL has been back-burnered for so long that any relevant parties have been able to make plans as though the project never even existed in the first place," according to one analyst, writes Ben Lefebvre in The Wall Street Journal (subscription) on September 5.

Valero Energy Corp., which "had signed to receive oil from Keystone XL when the project was first announced" now "says it no longer considers the pipeline critical to its business" as it has expanded rail terminals at many of its refineries, including Benecia, Calif.

Even when pipelines are not delayed, refineries are opting for delivery by rail (known as crude-by-rail or CBR). After refineries last June rejected the 'Freedom Pipeline' to transport West Texas oil to California refineries (also based on a Wall Street Journal article written by Ben Lefebvre), opting for CBR, we asked, "Will the Alternatives Have Greater Environmental Impacts?". Similarly, Upton asks, "Is this is a good development for the environmental community, or a bad one?" in regards to the potential irrelevance of the Keystone XL pipeline.

Upton's writes that the answer is not clear. "Opposition to the pipeline has helped stall it to the point where the domestic oil industry is giving up hope on it ever being built, and that could reduce the amount of tar-sands oil that get mined from Alberta."  But, he notes with some dismay, that Alberta crude has still managed to find its way to the U.S., plus all the new fracking in the U.S. points to "scores of new battles to fight in the war against fossil-fuel domination and climate change."