November 18, 2014
David Brooks is unhappy that President Obama won’t support the Keystone Pipeline. Maybe he would happier if he got the economics right. Brooks tells readers:
“Keystone XL has been studied to the point of exhaustion, and the evidence overwhelmingly suggests that it’s a modest-but-good idea. The latest State Department study found that it would not significantly worsen the environment. The oil’s going to come out anyway, and it’s greener to transport it by pipeline than by train. The economic impact isn’t huge, but at least there’d be a $5.3 billion infrastructure project.”
I think there may be a problem of reading comprehension here. The studies all show that the pipeline would make it cheaper to get a very dirty type of oil (Canadian tar sands) to the market. There are issues associated with the risk of a spill, but more importantly, the pipeline will increase the amount of the oil that is burned thereby spewing more carbon dioxide into the atmosphere and worsening global warming.
The assertion that “the oil’s going to come out anywhere,” is what economists refer to as “wrong.” The pipeline would make the tar sands oil cheaper to bring to market, which would mean that more of it would be used. Not building the pipeline is equivalent to imposing a tax on tar sands oil. This is exactly what most economists, including Republican ones like Greg Mankiw (this is a piece touting bipartisan approaches), would advocate.
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