The construction of the Keystone XL pipeline that would run from the Canadian tar sands to the Gulf of Mexico has struggled for completion almost since it was commissioned back in 2010.
Protestors and politicians have taken aim at the project for crossing through waterways on Native American lands and contributing to climate change. That division came to a head in early 2015 when both President Obama and the State Department rejected the project. Obama vetoed the Keystone Pipeline Approval Act, and the State Department declined to approve it; they were given authority since the pipeline crossed the international border with Canada.
At the time, both rejections effectively killed pipeline construction until president Trump approved the project four years later. President Biden canceled the project on his first week in office.
The rejection of the project in 2015 happened to occur during the largest collapse in oil prices in thirty years. Between 2014 and early 2015, the price of oil dropped almost $70 a barrel in a matter of months, crippling the North Dakota oil producers. Even the drop in oil prices during the pandemic, when prices went temporarily negative because of the lack of demand, wasn't as dramatic as the 2015 drop.
The drop in price also took down the stock of oil-related companies, including TransCanada, now known as TC Energy, the company behind the pipeline project. But slightly increasing oil prices and the renewal of the project under Trump.
That drop is associated with the increased output of oil from Saudi Arabia who started a price war because of the increased output from the Bakken formation.
The steep drop in oil prices undermined the benefits of the pipeline. According to a 2019 Congressional Research Service report, the pipeline was originally proposed when crude prices exceeded $100/barrel, and the drop in prices makes the Canadian tar sands oil less palatable since oil sands crude is costly to produce.
Keystone isn't the only pipeline in dispute as most other pipeline projects in North America and elsewhere have attracted Native American and climate change-related protests.
The State department's review of the project noted that Keystone would enable more tar sands development since the pipeline provided a cheaper transportation cost than other routes, which would make extraction profitable at times when sales prices were low, such as $65-$75/barrel. "In general, existing projects and those under development are unlikely to slow or stop unless revenues fall below current operating costs."
With the oil price drop, prices fell below $50/barrel, far below the price minimum to make it profitable. The drop in price was not cited by the State department report or President Obama as a reason for cancelling the pipeline.