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For Americans, Keystone pipeline brings a sharp divide

Is oil like red meat, or is it like tobacco? Your answer signals how you feel about the North American boom in unconventional sources of fossil fuel, particularly the Alberta oil sands.

If you think oil is like tobacco, it is a noxious commodity that seriously harms its users and those around them. We should stop consuming it at once and at all costs. But if you think oil is like red meat, you take a more nuanced view. For the health of the planet, we should find greener alternatives to it, but used wisely and in moderation, it has an honourable role in the 21st-century economy.

This debate is being acted out with great intensity in the fight over the proposed Keystone XL pipeline, which would stretch from Canada to the Texas Gulf Coast. "Keystone is really a symbol of oil, it is very emotive," Daniel Yergin, the Pulitzer Prize-winning energy expert and chairman of IHS Cambridge Energy Research Associates, told me. "It is a symbol around which the opponents of hydrocarbon have rallied."

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Last autumn, the consensus view was that the pipeline would be approved after the U.S. presidential election, no matter who won. In recent weeks, those odds have shifted.

"If you had asked me prior to the U.S. election, I would have said, 'Of course it's going to be built … regardless of who wins,' " said Mayor Naheed Nenshi of Calgary, where many of the oil companies that are counting on Keystone have their headquarters.

"If you had asked me immediately after the U.S. election, I would've said, 'Of course it's going to be built, now that the immediate political pressure is off,' " he said. Now he is less certain: "The feeling in Canada over the past four or five weeks has become less optimistic about this thing being built."

Finance Minister Jim Flaherty took the same view. "I actually don't know," he replied, when I asked him if the Keystone pipeline would be built. "I had reason for optimism before the election that the President would approve it, were he re-elected." But, he said, President Barack Obama's inaugural address "was not encouraging."

Many Canadian politicians and business leaders have been caught by surprise by the intense opposition to the Keystone pipeline, and to the oil sands crude it would carry south. The paperback edition of Mr. Yergin's latest book, The Quest, offers an explanation. "We have to start somewhere to end the addiction to oil," is the way one environmentalist explained the broader strategy to the author. "The pipeline is a convenient device for fighting a larger battle," Mr. Yergin said.

Canadians, who are accustomed to being thought of as the world's official nice guys, are uncomfortable with this new role as climate change villains. "I think it's a shame that a one-metre-in-diameter pipe is suddenly having to wear all of the sins of the carbon economy," Mr. Nenshi said. "You know, it's not clubbing seals with child labour."

Mr. Yergin agrees. "The one thing that doesn't get much talked about is that this oil sands technology continues to advance; it is not static," he said. "We reached peak oil demand in the U.S. more than half a decade ago. Our oil demand is going down. Our cars are getting more efficient," he said. "Meanwhile, there is a supply of energy we do need now. The real tradeoff is, is it going to be Canadian oil, or is it going to be Venezuelan oil?"

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For Americans, that tradeoff used to be viewed in primarily strategic terms: Were its oil suppliers political friends or foes? By that measure, Canada scores high. But the recent World Economic Forum at Davos, Switzerland, underscored another consequence of the North American boom in unconventional sources of oil: its impact on jobs.

Participants from slow-growth Europe and more vigorous Asia alike were dazzled by the job-creating potential of North America's renaissance as a fossil fuel producer. These jobs are the very sort that are being hollowed out by globalization and the technology revolution: high-paying, skilled, blue-collar work that cannot be outsourced or done by robots.

Which may be why Canadians are picking up mixed messages from the White House on the Keystone pipeline. For the Al Gore wing of the Democratic Party, it is a symbolic battle in the fight to save the planet; for the Joe Biden wing, Keystone and the unconventional oil revolution are a source of the middle-class jobs that many feared modern economies could no longer provide.

So the pipeline is also a litmus test for what you think is the most important problem in the early 21st century.

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