Trump's Executive Actions on Pipeline Construction - Global Trade Magazine
  February 2nd, 2017 | Written by

Trump’s Executive Actions on Pipeline Construction

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  • The resurfacing of the oil pipeline issue is no surprise.
  • Trump's pipeline action is part of an effort to undo Obama's climate change legacy.
  • The price of oil is so low that the pipelines may not add much new emissions-creating capacity.

President Donald Trump resurrected the Keystone XL and Dakota Access oil pipelines last week signing executive orders reviving the projects. Former President Barack Obama had vetoed the Keystone project after it had been reviewed by the Department of State.

Trump’s decision is significant on several policy layers, including infrastructure, trade, and climate change. One thing it is not is surprising.

“That this issue has resurfaced is no surprise,” said Joe Árvai, a professor at the University of Michigan’s Ross School of Business. “Mr. Trump promised to breathe new life into Keystone XL while he was campaigning, and he pledged his support for Dakota Access, over the objections of First Nations, environmentalists, and private landowners. Both Keystone XL and Dakota Access will pose considerable local risks—to the environment, economy and the social fabric—that should not go unaccounted for. On the other hand, the effects of this executive order for climate change are less certain.”

Trump’s decision is consistent with his efforts to undo Obama’s legacy on climate change, but the impact of the decision on emissions and climate are less clear. “This is all a tempest in a teapot,” said Andrew Hoffman, a professor and education director at U-M’s the Graham Sustainability Institute. “The Keystone pipeline will not substantively lower gas prices, reduce our dependence on foreign oil or create a significant number of jobs. Similarly, it will not significantly raise carbon dioxide emissions. It is just one more battlefield between the left and the right about free commerce, the role of government, and the influence of activists.”

“Modern pipelines are a vital part of our energy infrastructure and remain the safest, most efficient way to transport oil,” said Mark Barteau, an engineering professor and director of the U-M Energy Institute . “Whether we are building new pipelines or replacing old ones, we need to consider not only better technologies, but better practices for evaluating and mitigating risks and impacts on the environment and our communities. Accelerating review processes for large projects about which there is legitimate public concern is probably not one of these.”

Currently, the price of oil is so low that the pipelines may not add much new emissions-creating capacity. “On the other hand, I’m sure oil sands operators in Canada, as well as TransCanada Pipelines, will gladly take Keystone XL as a piece of infrastructure that may open up future opportunities should the price of oil rise,” said Arvai.

There’s an irony, according to Arvai, in that the president is taking aim at foreign trade with one set of executive orders—such as withdrawing from the Trans-Pacific Partnership—while creating potential windfalls for Canadian companies with another.

“Another set of issues that should not be overlooked here are potential conflicts of interest,” he added. The president recently sold his stake in Energy Transfer Partners, the company that is building Dakota Access. Rick Perry, the president’s nominee for Energy Secretary resigned from the company’s board of directors just a few days ago.