KeystoneXL Falters and Fake Deadlines Prevail
In a bumbling ďitís off, itís on, itís off againĒ fashion, yesterday saw the Obama Administration kill not only the proposed TransCanada (TSX:TRP) (NYSE:TRP) Keystone XL Pipeline, but 20,000 potential jobs as well (according to Republican critics).
In a bumbling ďitís off, itís on, itís off againĒ fashion, yesterday saw the Obama Administration kill not only the proposed TransCanada (TSX:TRP) (NYSE:TRP) Keystone XL Pipeline, but 20,000 potential jobs as well (according to Republican critics). And rather than give legitimate reasoning about the logistics of the project, the White House hid behind an arbitrary deadline for its decision, not unlike the timing threats used last year with the debt ceiling debate.
The news began with an early morning leak that allegedly emanated from inside Bloomberg.com, and escalated into a full-blown public relations fiasco ending with a stake through the heart of the project, at least for the time being. The fact that TransCanada will have another opportunity to re-apply for permission to green light the project saw shares in the company taking a 747% jump in volume to 6,357,524 traded over the previous dayís 851,210, while absorbing relatively minimal damage to the share price.
From a political standpoint, the decision will certainly resonate into the debate realm. Already the Republicans are using the decision against President Obamaís legitimacy for re-election, especially with a depressed job market and a potential 20,000 jobs going the wayside.
In an effort to distance himself from the decision, President Obama shifted the blame onto the Republicans for pushing a deadline onto his State department. He stated, "The rushed and arbitrary deadline insisted on by congressional Republicans prevented a full assessment of the pipeline's impact. This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the state department from gathering the information necessary to approve the project and protect the American people."
What troubles me with this statement is that yet again Obama shows a spineless nature, pinning blame on a calendar instead of on sound judgment. Last August we saw another arbitrary deadline make its way into the public discourse, through the talks about the debt ceiling, making the issue seem like both political parties were taking the economy hostage.
Interestingly enough, a complaint about not having enough time was used, even though the full duration of the arbitrary time limit wasnít even close to fruition. More than a month before the February 21 deadline arrived, the white flag of ineptitude was raised.
This isnít a new topic. This project was proposed in 2008, thus itís not like the State department hasnít had time to review the process. Obama was given a gift when they had delayed the final decision until 2013, but was forced to show his hand early when Congress headed him off at the pass. Alas, he was not going to be allowed to delay this into a second-term. Instead, he would be on the hook to make a decision sooner than later.
Itís quite unbelievable how long this process is taking, to be honest. Routes can be drawn and redrawn. Stipulations can be added, amended and enforced in order to pass the buck onto TransCanada to adhere to the wishes of the Nebraskan landowners who are up in arms.
What needs to be dismissed is the perceived consensus of the Nebraskan landowners. From my time as a land agent, when signing pipeline right-of-ways and resolving damages from previous construction, it was obvious that there is never a true consensus among landowners. Itís just that the loudest ones tend to get the most attention. While Farmer A may be opposed to a project, sometimes itís only a matter of traveling across the range road to Farmer B who is happy to help with the project (so long as their son or daughter can be hired on the construction crew, or some other favour). Where the trouble comes in is when Farmer C, who has no real business in the project sticks their nose in and causes an uproar in order to gain favour of their own.
In this case, the Natural Resources Defence Council in Washington is Farmer C. Instead of hearing quotes from those who live in the area, the media gets soundbites from people like Susan Casey-Lefkowitz, a campaigner for Farmer C, who has already issued threats against the next round of plans to come from TransCanada. "If they do reapply, TransCanada will face the same valid public concerns and fierce opposition as the first time," says Casey-Lefkowitz (to the Guardian). "If they do reapply, TransCanada will face the same valid public concerns and fierce opposition as the first time."
But, if weíre to go from Obamaís statement, it wasnít the efforts of the environmental activists that won this victory for Farmer C. It was Congress, and their arbitrary timeline. Funny how decisions that pose far more severe repercussions to the American populace as a whole, such as the NDAA or SOPA required less time and consideration than that of a pipeline before they were haphazardly supported. Too bad logic, facts and the economy werenít the deciding factors considered. Instead, political timing won the day, and 20,000 potential job seekers lost.
G. Joel Chury is a veteran investment columnist for Resource World Magazine and the Editor in Chief of VantageWire.com. His knowledge of both the mining and oil and gas sectors along with his ability to sift through TSX.V data and press releases makes him one of the best up-and-coming newsletter writers on the web.
With a diverse background that includes investor relations writing and consulting for publicly-held companies and previous field work as a surface land agent for oil and gas companies, Mr. Chury seamlessly translates technical results geared towards engineers and geologists into a more readable language thatís palatable for investors on the go. As well, Mr. Chury is an avowed silver bug, always willing to join the debate on where the precious metals market is heading.
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May 26th, 2020
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