TransCanada Keystone Pipeline filed an application in 2008 for a Presidential Permit with the Department of State to build and operate the Keystone XL Project.
The proposed Keystone XL Project would consist of a 1,700-mile crude oil pipeline and related facilities that would be used largely to transport Western Canadian Sedimentary Basin crude oil from an oil supply hub in Alberta, Canada to delivery points in Oklahoma and Texas. The project would also be capable of transporting U.S. crude from places like North Dakota and Montana to those delivery points. The project could transport up to 830,000 barrels per day and is estimated to cost $7 billion. If permitted, it would begin operation in 2013, with the actual date dependant on the necessary permits, approvals, and authorizations. The project has generated significant debate in the United States regarding the extraction and use of oil from Alberta's tar sands, which generally results in greater environmental issues and greenhouse gas emissions than conventional reservoir extraction. Pipelines are also fairly vulnerable to spills. But, supporters argue it will create 100,000 jobs and strengthen US energy independence from sources in unstable and unfriendly regions of the world.
Since the application was filed, the project has followed a confused bureaucratic path. Favoured by national Republicans and Pennsylvania Democrats as well as Labor Unions, it has been opposed by the Obama administration which held up approval of the project through the fall of 2011. As of December of 2011, Congressional Republicans were looking to attach a bill approving the project to an extension of the Payroll Tax cut. On the 18th January 2012 the state department denied the Keystone XL pipeline a permit saying it had not had time to review the plans but at the same time the TransCanada is allowed to resubmit the proposal with route changes.
 U.S. Department of State, ‘Keystone XL Pipeline Project: Project Updates’, http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf?Open
 Battistoni, Alyssa, ‘Pipeline installed on Capitol Hill’, Salon.com, 19 December 2011, http://www.salon.com/2011/12/19/pipeline_installed_on_capitol_hill/singleton/
 BBC News, ‘US rejects Keystone XL Canada oil sands pipeline’, 18 January 2012, http://www.bbc.co.uk/news/world-us-canada-16621398
Currently, the United States imports nearly two-thirds of its Petroleum, with the leading suppliers including nations such as Nigeria, Venezuela and Saudi Arabia.
Due to political instability and the difficult US relations with these nations, US supplies cannot be considered secure, and with the results of research into alternative sources of energy being decades away from fruition the United States needs alternative sources of oil today.
One option is Canada, which is individually already the United States’ single largest energy supplier. Canada’s known reserves total 179 billion barrels, placing it third behind Saudi Arabia, but some estimates have put its total at as high as 2 trillion barrels.
The XL Pipeline project would help bring this oil overland into the United States. On the Canadian end, the increased market access would lead to rapid development, which in turn would increase Canadian capacity to the level to which it could reach a much greater portion of US demand.
Furthermore, the United States enjoys close relations and an open border with Canada, meaning that this oil will likely arrive without the strings attached that come from buying from Venezuela or the Middle East. In the case of the latter the Pipeline would allow the US to disengage from the region to a degree.
Even if hypothetically Canadian relations were to turn frosty, the existence of the pipeline would nevertheless ensure that the US would remain the only viable market.
 U.S. Energy Information Administration, ‘U.S. Imports by Country of Origin’, http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m.htm
 Canadian Association of Petroleum Producers, ‘Alberta’s Oil and Natural Gas Industry’, http://www.capp.ca/getdoc.aspx?DocId=111607&DT=NTV
The XL Pipeline, upon its completion would simply be replacing one source of Oil dependency with another. And what Canada makes up for in political friendliness, could be undone by the fact that US oil would be coming from a much smaller number of sources.
Furthermore, resolving US supply problems will not solve the global energy shortage that will arrive as Oil deposits shrink and Chinese demand rises. Oil will remain a source of political instability.
The only true path to energy independence is to find alternative renewable sources that do not leave the United States and the rest of the world dependent on resources that are limited both in amount and in their geographical locations. The XL Pipeline might even undermine these efforts as it will create a false sense of security.
The XL Pipeline project has the potential to create a large number of jobs, both in its construction, and in refining and processing at its terminal points within the United States.
Keystone Pipelines has produced a report which indicates that the Pipeline should create 118,000 jobs, with as many as 250,000 in total after spinoffs have been counted.
Labor Unions have accepted this line and are aggressively lobbying for the Pipeline, even though it means siding with Republicans and against their own party. Furthermore, Politicians ranging from Jon Huntsman to Bob Casey have embraced the job-creating potential of the Project.
 The Perryman Group, ‘The Impact of Developing the Keystone XL Pipeline Project on Business Activity in the US’ June 2010, http://www.perrymangroup.com/reports/TransCanada.pdf
 Fox, Liam, ‘Unions Back Keystone XL Pipeline Threatens Clash with Occupy Movement’, News Junkie Post, 3 December 2011, http://newsjunkiepost.com/2011/12/03/unions-back-keystone-xl-pipeline-th...
 Kessler, Glenn, ‘Keystone pipeline jobs claims: a bipartisan fumble’, Washington Post, 14 December 2011, http://www.washingtonpost.com/blogs/fact-checker/post/keystone-pipeline-...
To say the job numbers are questionable is an understatement. The Department of State issued a report in August putting the estimated number at between 5-6000.
Furthermore, Trans-Canada, one of the major shareholders has backed off larger estimates in public, floating figures in the 20-25,000 range. TransCanada's initial estimate of 20,000 — which it said includes 13,000 direct construction jobs and 7,000 jobs among supply manufacturers — is far more conservative.
Why the discrepancy? The Washington Post investigated and found that the same author of the Keystone report, Ray Perryman also wrote a report predicting massive job gains from a Wind Farm project. Among the predicted jobs were:
“51 dancers and choreographers, 138 dentists, 176 dental hygienists, 100 librarians, 510 bread bakers, 448 clergy, 154 stenographers, 865 hairdressers, 136 manicurists, 110 shampooers, 65 farmers, and (our favorite) 1,714 bartenders.“
Furthermore all of these estimates ignore potential job losses they may affect existing workers in the oil industry once the Pipeline is complete. It is perfectly possible that there will be a net loss of jobs.
As for the Unions, it will provide short-term construction jobs, which is why they support it. But almost any project would do the same.
 United States Department of State Bureau of Oceans and International Environmental and Scientific Affairs, ‘Executive Summary Final Environmental Impact Statement for the Proposed Keystone XL Project’, 26 August 2011, http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf/03_KX...
Canada’s Oil reserves will be of major strategic value in the next century. Currently the United States is Canada’s preferred trading partner and strategic ally, both because of a history of past cooperation, and because the US is both more willing and able to support Canadian claims to the Arctic than China. The Pipeline would consolidate this relationship, ensuring that the development of Canada’s reserves would occur with the American market in mind, because once built, it would be far more expensive to build a second Pipeline than to simply use the existing one.
The United States, is not however, Canada’s only option. Canada is determined to sell the oil one way or another, and an American refusal will not save the environment. What it will do is make Canada look elsewhere. The Canadian government publicly floated a joint-Canadian-Chinese pipeline proposal which would bring the oil to the Pacific after the Obama Administration delayed consideration of the project until after 2012.
Just as the Keystone Pipeline would lock Canada into the US Market, a decision to develop Canadian reserves with the Chinese market in mind would be difficult to reverse, and undermine the energy independence of the United States rather than secure it.
 Tan, Florence, and Hua, Judy, ‘Analysis: Harper’s bet may pay off; China open to Canadian oil’, Reuters, 25 November 2011, http://news.yahoo.com/analysis-harpers-bet-may-pay-off-china-open-045143...
Canada’s friendship with the United States is based on shared values, interests and a shared language, things it does not and never can share with China in the foreseeable future. As such, while delaying approval of the Keystone Pipeline might well cost the United States a pipeline, it is unlikely to cost America Canadian friendship.
Furthermore, while the delay of the Pipeline project may well have made the Chinese bid more attractive, the fact that the Chinese government already owns 10% of the Canadian oil industry and was willing to put up the money for a Pipeline is an indication that they may well be willing to a build a second Pipeline of their own regardless of what the United States does, even if it does not make economic sense in the short-run.
 Radia, Andy, ‘Should the Harper government allow Chinese ownership of Alberta’s oil sands’, Canada Politics, 13 October 2011, http://ca.news.yahoo.com/blogs/canada-politics/harper-government-allow-c...
There are serious environmental factors that should be fully examined before any decision is made to approve the Pipeline project.
For one thing, the Pipeline will mostly extract Oil from Tar Sands. Extracting oil from tar sands is much more complicated than pumping conventional crude oil out of the ground. It requires steam-heating the sands to produce a petroleum slurry, then further dilution. One result of this process, the Canadian Environmental Ministry says, is that greenhouse gas emissions from the oil and gas sector as a whole will rise by nearly one-third from 2005 to 2020 — even as other sectors are reducing emissions.
Former NASA Climatologist James Hansen has suggested that if the Pipeline is completed it is “Game Over for the Planet”. 
Furthermore, the path of the proposed Pipeline will bring it close to the Ogallala Aquifer which provides 30% of the United States’ total irrigation supply and 82% of the drinking water to the 2.3 million people who live within the region it serves. Furthermore, within that region is just under 20% of all US agricultural production. A major spill along the Pipeline would have the potential to render the entire Aquifer unusable.
 Girling, Russell K., ‘The proposed Keystone XL pipeline will be built responsibly’, The Hill’s Congress Blog, 13 July 2011, http://thehill.com/blogs/congress-blog/energy-a-environment/171321-the-p...
 Mayer, Jane, ‘Taking it to the streets’, The New Yorker, 28 November 2011, http://www.newyorker.com/talk/comment/2011/11/28/111128taco_talk_mayer#i...
 US Geological Survey, ‘High Plains Regional Ground-Water Study’, http://co.water.usgs.gov/nawqa/hpgw/factsheets/DENNEHYFS1.html
Almost any form of producing and transporting oil risks an environmental disaster if things go wrong, as was demonstrated in the summer of 2010 by the major British Petroleum spill in the Gulf of Mexico.
Historically however land-based Pipelines have been far safer than Oil Freighters or off-shore platforms because of the ease of access, which means that spills can usually be responded to rapidly. The real damage with the BP Spill was due to its isolated location in deep water and the consequent difficulty of reaching it.
Furthermore, fears of the carbon emissions are flawed because they are based on the assumption that if the Pipeline is not approved the Tar Sands will not be developed. But this is not the case. The Canadian Government has already shown interested in an alternative Chinese proposal which would see a Pipeline built to deliver the oil to the Pacific, and eventually to the Chinese market. If the oil is going to be burned one way or another, it is best for the United States to do it, because the United States enjoys higher fuel efficiency standards and generally cleaner vehicles.
A successful development of the Pipeline would deepen the Unite States’ dependence on Oil, and undermine the drive towards renewable fuels.
Historically, consumers switch fuels not when alternatives are available, but when economic forces cause costs to rise to such a point that it becomes inefficient not to switch. This is one reason why the EU has found such success with taxes on gasoline which brought its price above 4$ a gallon long before it reached that price on the market. The result was a rush to adopt smaller and more fuel efficient cars, and to ration other energy consuming hardware.
The main result of the Keystone Pipeline will be to lower fuel costs in the short-term, under pricing electric cars and alternative fuel sources. When gas prices finally rise, as they eventually will, the United States will find itself far behind the rest of the World in renewable technology.
Given that renewable technology will be one of the major sources of economic power in the next few decades, choosing short-term savings over-long term investment seems like a bad idea.
History does show that renewable technology tends to develop when it is economically efficient. Alternatives to fossil fuels will be found when fossil fuels are too expensive to buy, and therefore people are willing to buy what is initially an inferior product. It is only then after general adoption, that the inferior product will improve to the point at which it is equal to the product it is replacing.
The fact is that as long as there are large scale supplies of fossil fuels available, and those supplies are plentiful enough to be affordable, consumers will be unwilling to accept the inferior performance they will get from electric cars, or the inferior comfort of smaller vehicles. The EU, with a far superior public transportation system is a bad comparison with the United States, as it is likely that the price at which Americans would accept the same sort of compromises is much higher, and no amount of environmental concern or preaching about alternative energy will generate the political capital to force them to if they don’t have to.
Furthermore, what the opposition ignores in this argument is that it is often the poor who will suffer the most from artificially high fuel prices. Raising prices will increasingly make driving a luxury good, limiting the mobility of low income workers. This will both reduce their standard of living (i.e. ability to take vacations) and reduce their options for work and therefore for advancement.