This article first appeared at The McAlvany Intelligence Advisor on Monday, November 17, 2014:
Matthew Dowd, George W. Bush’s campaign strategist, saw it coming almost a month before the midterms, telling ABC News on September 15th that the president is “fast becoming irrelevant in Washington” and noting further that Obama was at precisely the same point George Bush was in 2005:
That point in time it was basically the beginning of the end of President Bush’s presidency.
I think the president [Obama] is a very big fan of history. He watched that go on with [Bush]. Unless the president changes his trajectory, he is on the road to irrelevancy.
He hasn’t, and he is. The Baltimore Sun used the “R” word (relevance) in its review of the demolition of the Democrats on November 4th:
In light of Tuesday’s sweeping Republican midterm success, President Obama now finds his own relevance in question.
The Republicans made the election a referendum on the incumbent president and it worked beyond their wildest hopes.
Obama got out of town as fast as he could, opening the Asia-Pacific Economic Cooperation summit in Beijing last Monday with a “victory” announcement: he and China’s “paramount leader,” Xi Jinping, had agreed to extend visas for each country from one year to ten. It was a vacuous victory indeed. A U.S. visa only serves as preliminary permission to seek admission to the United States. Final admission remains, as it always has, in the hands of a U.S. Customs officer who can then grant (or deny) issuance of Form I-94 which serves as the official government document authorizing the foreigner’s stay in the country.
Now the House has granted him another opportunity for redemption and the president has clearly and firmly declined it: approval of the Keystone XL Pipeline. On Friday, in its first significant vote of the lame duck session, the House passed, 252-161, its ninth attempt to approve the pipeline. Said Rep. Bill Cassidy (R-La.), the bill’s sponsor:
Here we are on the ninth attempt. It has been 539 days, about a year and a half, since the House first sent a Keystone approval bill to the Senate in this Congress.
We are going to make it as easy as possible for the Senate to finally get a bill to president’s desk.
In an ironic twist, Cassidy is getting some assistance in the Senate from his opponent in Louisiana’s runoff election to be held on December 6, Democrat Senator Mary Landrieu. She is moving heaven and earth to support passage of the Keystone in a last-ditch attempt to salvage her Senate career.
But it doesn’t matter, for two reasons: one, as already noted, is Obama’s determination not to approve Keystone. The other is that Keystone itself is already largely irrelevant, thanks to the fracking revolution.
Construction of Phase I of Keystone started in 2008, just as that revolution was getting started. It was designed to move crude oil from North Dakota and Hardisty, Alberta, Canada, down to Gulf coast refineries. Phase II was completed in February, 2011, while Phase III opened in January this year. Maximum capacity is 700,000 barrels per day and even if Phase IV – the one environmentalists have opposed – were approved, it would only increase daily production slightly and wouldn’t come on line until 2018.
By then Keystone will be just a dribble compared to crude being produced by all of America’s oil shale formations, if current projections hold. At present, those fields are generating more than nine million barrels a day, a 50-percent increase in just the last five years.
When environmentalists got their tails in a knot back in 2012, Obama put the Phase IV approval on hold, claiming that his administration needed more time to study the matter. When pressed, he said the hold would be permanent, using a court battle in Nebraska as his excuse. So Canadian pipeline companies began designing “workarounds” that Obama couldn’t touch, such as the Energy East project that would send Hardisty oil sands east to New Brunswick using an under-utilized natural gas pipeline already in place.
Enbridge Inc. doesn’t need Keystone. It is building its Northern Gateway Pipeline project to carry natural gas condensate eastward to markets on the east coast while simultaneously (using a double pipeline) carrying oil sands from Alberta to Kitimat, British Columbia, where it will be shipped to Asian refineries for processing. It is also building a new line, with the help of Marathon Petroleum Corporation, that will carry crude out of North Dakota to refineries in Michigan and Kentucky, starting in 2016.
Kinder-Morgan’s Trans-Mountain pipeline already delivers 300,000 barrels of crude every day from Alberta to Vancouver, BC, and is seeking approval from Canadian authorities to nearly triple that with an expansion.
However, what’s becoming increasingly clear is that tank cars carrying crude by rail, once considered a stop-gap, temporary solution, have now come into their own. Despite the tragedy in 2013 with the destruction of Lac-Megantic caused by a derailment of some 50 tank cars followed by an explosion, rail safety is unquestioned, even by an Obama appointee. Said Federal Railroad Administrator Joseph Szabo:
Rail has never been safer. I have said repeatedly, 2012 – by virtually all measures – was the safest year in railroading history, with train accidents down a remarkable 43% in 10 years.
And among the millions of annual shipments of hazardous materials by rail, less than a fraction of 1% of these has resulted in any type of release.
There’s another point: rail lines take the crude to where it is most needed, not just to where the pipelines end. As Canadian Ambassador Gary Doer said back in 2013:
[Obama’s] choice is to have it come down by a pipeline that he approves, or without his approval, it comes down on trains. That’s just the raw common sense of this thing….
At the end of the day, it’s trains or pipelines.
Besides, building a pipeline and committing to using it is a long-term deal that more and more producers are unwilling to make. As Ethan Bellamy, an analyst at investment firm Robert W. Baird, so inelegantly expressed it:
Making a pipeline volume commitment is like getting married. Shipping by rail is like a one-night stand.
Right now I suspect producers would rather stay bachelors.
The longer approval for Keystone’s Phase IV is delayed, the more irrelevant such approval becomes. Considering the three-year construction period, and its $10 billion cost, by the time that Keystone dribble comes on line it will be largely irrelevant, just like the president.
Washington Times: House approves Keystone pipeline, setting up final Senate showdown
The Globe and Mail: ‘Trains or pipelines,’ Doer warns U.S. over Keystone
Downstream Today: TransCanada: Oil Sands Exports Will Go To Asia If Blocked In US
Baltimore Sun: Is Obama now irrelevant?