Economist Ed Hirs pointed out in a paper in 2010, the loss of 10 million barrels a day of Middle East production could drive short-run oil prices to $413 a barrel, given the inability of consumers to rapidly shift to other fuels. And that kind of shock is enough to blast the U.S. economy back into recession. Economist Kevin Kliesen with the Federal Reserve Bank of St. Louis said that sudden and sustained increases in oil prices increase the odds of recession by 50% in the first year, and 90% after three years.
“If you look at the historical data, nine of the past 10 recessions in the U.S. were preceded by sharp increases in oil prices,” Kliesen said. “If it’s large enough, it can cause people to adjust their future path of spending.”
I support opening the Keystone Pipeline. The proposed Keystone pipeline would run down from Canada all the way to Texas to refine crude oil into marketable products, bringing jobs across the plains to Texas. President Obama signed broad payroll tax cut legislation last month that includes a GOP-backed provision requiring him to make a decision on the pipeline within 60 days. Obama earlier this year delayed a final verdict on the pipeline until after the 2012 election by calling for review of alternative routes around the environmentally sensitive Sand Hills region of Nebraska.
Time has run out.
While it is true Republicans are using this week’s threat by Iran to cut off access to the Strait of Hormuz, which could block transportation of most Persian Gulf oil, to highlight the need for the Keystone pipeline. But even if President Obama were to approve production of the Keystone pipeline this year, the project would not be complete until well after the Iranian standoff has been resolved. Will it be resolved?
President Obama has had more than enough time to approve KXL and the weakness the current Administration has shown around the world has now brought us to where we are with the current situation we face with Iran. Iran exports 40% of the world's oil.
We have to drill. We have to show a resolve to stand firm and even if ithat means we have to face the battle in the short run, we are at minimum preparing for the future by reducing Iran's ability to use oil as a weapon of mass destruction.
“Our message is loud and clear. More jobs, lower gas prices,” said American Tradition Partnership Executive Director Donald Ferguson. “People are sick of environmentalists targeting jobs for elimination. The safe, clean Keystone XL pipeline creates as many as 342,000 jobs and provides 700,000 barrels of oil a day.”
The Keystone Pipeline is privately funded, not another illegal green Solyndra. We need security and jobs, not more of the same radical green movement failed policies.