The stars may be finally aligning this year for the Keystone XL pipeline to bring crude oil from the Canadian province of Alberta to U.S. Gulf Coast refineries. Developing these “oil sands” and transporting the crude is not just one more infrastructure project.

It has global impact, directly affects trade and investment between the U.S. and Canada, and may reverse Alberta’s current economic slump. Mexico and Venezuela, both major oil players, will be monitoring the project carefully. However, there are several dynamics that still need to play out before the oil actually flows.

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After a mandatory 60-day review, the Trump administration formally reversed the Obama State Department’s denial of the project on Friday. Former Secretary of State Kerry had used the original prohibition of the project as a tool to persuade other countries to agree at the COP-21 Paris Climate Summit to reduce greenhouse gas emissions.

The high-sulfur, low-viscosity Canadian crude emits more CO2 when burned than other fuels, such as those produced in North Dakota’s Bakken fields or West Texas’s Permian Basin. Whether this will weaken the resolve of signatories to the Paris agreement remains to be seen.

Remarkably, the left-of-center Canadian government of Prime Minister Justin Trudeau Justin Pierre James TrudeauCanada says former ambassador to US violated conflict-of-interest law No new Canadian COVID-19 deaths reported for first time since mid-March Trudeau announces millions for first 'Black Entrepreneurship Program' MORE has endorsed the project despite its commitment to eliminating hydrocarbon usage over time. At the recent CERAWeek energy industry conference in Houston, he rejected the top-down climate policies of his late father, Pierre Trudeau, who was prime minister for 15 years until 1984.

Instead, the new prime minister argues in favor developing the resource and building pipelines to transport it. He says that this will employ thousands in Canada and reverse the decline in Alberta’s fortunes as it more actively commercializes 176 billion barrels of reserves. Earlier this month, the province posted a nearly $8 billion deficit that it blamed on low oil prices.

At the same time, the Trudeau administration actively promotes renewables and has implemented a “carbon tax” that starts at $10 per ton of carbon dioxide, and escalates over time. The proceeds of that tax stay in Alberta. The Trudeau administration promotes the development of oil sands “until such time as hydrocarbons are no longer needed.”

The biggest challenge to the pipeline now is not political. It is economic. Whether TransCanada will go forward with the project depends on its medium- and long-term price forecast. Oil sands, which sell at a discount to lighter crudes because of extra refining costs, are produced in a high-cost mining type of operation.

The carbon tax further erodes project economics. Additionally, the cost of infrastructure projects for the oil and gas industry had already begun to rise as service companies have more leverage. This will be a tough commercial decision.

Oil markets will follow the project for two reasons. It will add production to a global market that, even with recent OPEC cuts, produces more crude than the market absorbs. The difference builds up inventories and puts downward pressure on oil prices. Industry hopes of prices growing towards $60 this year seem further in the distance.

For the U.S., the project would add to our energy security, provide thousands of construction jobs, support capital investment along the Gulf Coast and moderate gasoline prices for consumers.

While Friday's action by the Trump administration will be perceived as welcome news by the oil industry, it could be a long time until the projected hundreds of thousands of barrels of oil a day begin to flow.

Bill Arnold is a professor in the practice of energy management at Rice University’s Jones Graduate School of Business. Previously, Arnold was Royal Dutch Shell's Washington director of international government relations and senior counsel for the Middle East, Latin America, and North Africa.

The views expressed by contributors are their own and not the views of The Hill.