Why Keystone XL pipeline won't buy US steel, despite Trump's order
From the start of President Trump鈥檚 election campaign, two aspects of his political identity 鈥撀爐he businessman and the populist 鈥撀爃ave dueled for dominance. At least in the case of the Keystone XL pipeline, the businessman appears to be winning out.
Speaking to reporters onboard Air Force One on Friday, White House spokeswoman Sarah Huckabee Sanders said that the pipeline, which has been in the works for a decade, will be exempt from an executive order Mr. Trump signed in January 鈥渢o the maximum extent possible.鈥� The justification for that decision: The pipeline is already under construction, and so is not covered by the executive order.
鈥淭he Keystone XL Pipeline is currently in the process of being constructed, so as a new, retrofitted, repaired, or expanded pipeline,鈥� Ms. Sanders said.
As the new administration works to live up to its campaign promises of job creation and a strong economy, some see the pipeline decision as a triumph of business-friendly ideas 鈥撀爈ike open economies 鈥撀爋ver populist calls to 鈥渂uy American and hire American.鈥�
鈥淭he value of a pipeline is that we have a pipeline that can be used. Which steel it is made from is an entirely subsidiary question,鈥� wrote Forbes contributor Tim Worstall, senior fellow at the Adam Smith Institute, in an opinion piece. 鈥淎nd if American steel is best to use then use that, if not American is better then use that instead. What we want is .鈥�
The Keystone XL pipeline was first proposed by developer TransCanada in 2008, and has made sporadic construction progress in the decade since. The Obama administration rejected the project, which would carry bitumen from the oilsands of Alberta to refineries on the Gulf Coast of the US, on environmental grounds in 2015. But in January, an executive order by Trump smoothed the way for construction on the pipeline to recommence. (The southern section of the pipeline, which does not cross an international border and so did not require State Department approval, .)
Allowing the pipeline to go forward was a way for Trump to live up to the pro-business pledges he made on the campaign trail, while improving American infrastructure. Keystone while the southern leg of the pipeline was under construction, according to the Institute for Energy Research, a Washington, DC-based nonprofit focused on energy research.
From ports to pipelines, Trump鈥檚 promised infrastructure upgrades were some of the most compelling features of his platform on the campaign trail. A January Gallup poll found that support for revitalizing infrastructure than any of Trump鈥檚 other campaign issues, with 69 percent of respondents rating it 鈥渧ery important.鈥澛�
And his business experience, Trump stressed, would allow him to rebuild America where other presidents had stumbled.
鈥淐辞苍蝉迟谤耻肠迟颈辞苍 ,鈥� Trump said over the summer, speaking from his hotel in New York City. 鈥淣obody knows it better.鈥�
But construction on the pipeline was threatened by Trump鈥檚 populist program, encapsulated in the phrase, 鈥淏uy American and hire American.鈥� His January 24 executive order, which called for all new pipelines to be built using American steel, would have slowed progress and increased costs for the project.
With that in mind, the Trump administration appears to have rolled back Trump鈥檚 initial statement that the executive order would apply to Keystone, too.聽
鈥淭he steel is already literally sitting there鈥� waiting to be used, White House spokeswoman Sanders told reporters, explaining the reversal. Evraz Steel, a Canadian subsidiary of Russia鈥檚 Evraz PLC, had signed on to provide 24 percent of the steel before the project was rejected under Obama, according to Reuters, and some pipe segments have already been built.
For supporters like Mr. Worstall, the move is a win for business and good economics 鈥撀燼nd may provide a lesson for the future.
鈥淲e are made richer in aggregate by using the cheapest inputs into any project,鈥� he writes. 鈥淭here should therefore be no insistences on using American steel in any pipeline, not just this one.鈥�
The Canadian government also lauded the decision, with Prime Minister Justin Trudeau鈥檚 office calling it a "recognition that the integrated Canadian and US steel industries are mutually beneficial."聽
But the move may be more a temporary demonstration of pragmatism than a sign of a shift in course. In addition, Politico suggested that allowing Keystone XL to go forward might against the US, which it brought after construction was suspended earlier this week. And American steel will be a feature of future pipelines, Sanders emphasized.
鈥淓verything moving forward would fall under that executive order," she said.
Material from Reuters was used in this report.
[Editor's note: This article has been edited to clarify Mr. Worstall's title.]
