Our guest blogger is Ed Dolan, an economist and author of TANSTAAFL (There Ain’t No Such Thing as a Free Lunch), a book that outlines the libertarian case for a cleaner environment.

Joe Nocera replies to his Keystone XL critics in “The Politics of Keystone, Take 2” in Saturday’s New York Times. He still doesn’t get it. Like many people, Nocera doesn’t seem to understand the relationship between energy use and energy prices. He writes:

The seemingly inexorable rise in greenhouse gas emissions is the result of deeply ingrained human habits, which will not change if the pipeline is ultimately blocked.

The truth of the matter is that human habits are not really all that deeply ingrained. In countries where energy prices are higher, people systematically use less of it. How much less is shown dramatically in the chart attached to my response to Nocera’s first defense of KXL. Wealthy countries like Japan and Germany that have much higher fuel prices than the United States use only a half to a third as much per capita:

Nocera plunges even more deeply into economic confusion when he writes, “The benefits of the oil we stand to get from Canada, via Keystone, far outweigh the environmental risks,” and then goes on to list, as one of the benefits, the fact that Canadian oil is currently selling at a discount from Saudi crude.

Yes, Canadian oil is currently selling at a discount, but that is not a valid argument for building KXL. An especially low price on oil from a relatively dirty source is not a “benefit” — it is bad energy policy and bad environmental policy. What is more, even fans of underpriced energy need to recognize that building more pipelines would allow oil from Canadian sands to mix more thoroughly into the world oil market, so its price would go up.

Nocera’s “Take 2” does make some valid points. One is that the oil export issue is a red herring. If KXL is good, then it is good whether the products refined from it are consumed in the United States or exported. The same goes if KXL is bad. The fact that some of it would be re-exported doesn’t make it any worse.

Nocera also catches out Robert Redford for saying that oil from Canadian sands is “the dirtiest oil on the planet.” The truth is more nuanced. Andrew Leach and other observers point out that not all oil sands are alike. Oil from some deposits, recovered using some techniques, is much dirtier than others. The worst of it is pretty bad; the best is cleaner than some U.S. domestic oil, for example, thermally extracted heavy oil from California.

Whether Canadian oil is or is not the dirtiest on the planet is not the real point. The real point has always been that we need a comprehensive energy policy that encompasses economic, security and environmental dimensions. At a minimum, such a policy would raise energy prices across the board by enough to cover all environmental costs. At best, it would use price signals based on carbon content that would provide incentives to use energy from the cleanest sources first, and at the same time, develop even cleaner technologies for the future.

That is the part Nocera just doesn’t seem to get.

Attached to the payroll tax deal was a provision forcing President Obama to decide within 60 days whether or not to approve the Keystone XL tar sands pipeline, before its route is even finalized. The deadline runs out on February 21, 2012. The State Department has made it clear it can’t do a proper review of the pipeline, especially considering that TransCanada has agreed to change the pipeline’s pathway in Nebraska but hasn’t even finalized the new route.

With this new and arbitrary deadline, the punditocracy is relitigating the question of whether it should be built. The DC political elite assumed that the pipeline was an inevitability, dismissive or ignorant of the popular opposition to a risky, foreign tar sands pipeline cutting across the center of the nation. Most were blindsided when the State Department announced it needed to review its obviously flawed assessment of the project, and when the state of Nebraska held an emergency legislative session against the pipeline.

With the new rush to approve TransCanada’s tar sands pipeline, let’s review some key facts that should underlie any analysis of the proposed 1700-mile project from Alberta to Texas:

The approval process for the Keystone XL pipeline was tainted by corruption. The federal approval process was run by a contractor for the pipeline company itself. Cardno Entrix was chosen and paid by TransCanada to draft the State Department’s environmental and historical impact statement, manage public hearings, and receive public comment. Big oil’s lobbying group American Petroleum Institute was also involved in drafting the environmental impact statement while running ads in favor of tar sands development. TransCanada, who employed former Hillary Clinton aides as lobbyists, has bullied landowners and moved towards construction without needed approval. In response to a congressional request, the State Department’s Office of the Inspector General has launched an investigation.

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The inability of mainstream economists to grapple with the consequences of unrestrained global warming has been a recurring theme at ThinkProgress Green. However, the gold medal for sociopathic insouciance about a world of unimaginable biodiversity collapse, global desertification, the death of the oceans, and the inevitable wars and chaos that would bring would have to go to Karl Smith, one of the bloggers at the influential economics blog Modeled Behavior. In his post “In Praise of Dirty Energy: There Are Worse Things Than Pollution and We Have Them,” the assistant professor of public economics and government at the School of Government at the University of North Carolina at Chapel Hill argues that despite the risks, “we should pursue the development of fossil fuels as rapidly as possible including looking for ways to streamline regulation in North American regarding fossil fuel production.”

Smith claims to accept the science of climate change, but waves off the threat of rapid, accelerating global warming caused by a deliberate increase in fossil fuel pollution with a strain of blind techno-optimism that would make Dr. Pangloss blush. In what might be his most telling “solution” to unchecked global warming, Smith says that the billions of people living in parts of the world which will become marginally habitable or uninhabitable can just migrate to Siberia, which by that time will have turned into a dark, fetid swamp, releasing billions of tons of methane, a potent greenhouse gas that will accelerate climate change in a reinforcing feedback loop.

Honestly, it’s too psychologically disturbing to go through Smith’s post and discuss in detail why a world in which most existing species go extinct isn’t going to be one where billions of people are lifted out of poverty through free trade, and progressive leaders in Canada and Russia welcome the newly prosperous climate migrants with open arms, and our weather machines will cheaply fix any “intolerable” damage. So I’m just going to quote it in full:
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