Wednesday, January 4, 2012


Can you believe that some Americans think this pipeline is needed to connect us to a "new" source of oil? 

The United States has been a destination for Canadian oil for decades for decades, and is already the US's number one source of imported oil—this likely won't change with Keystone.

OK, I know this is not a Fracking issue, but regarding safety and envronmental considerations, the acquisition of export markets and the consequential hoicking of prices for the domestic consumer, there ARE comparisons to be made with fracked natural gas. In my conversations with people over here, it seems that most Americans are either confused and/or don't know much about the proposed Keystone XL pipeline, so here goes with some pertinent information:

The Keystone XL pipeline is a 2,000 mile pipeline that would transport crude oil derived from Canadian tar sands from Alberta to Texas.

The midwestern United States has long used Canadian oil (also referred to as Canadian Sour, which describes its quality, as sour crude is more difficult to refine and not as desirable as the light sweet crude oil that virtually any refinery can process). Refineries in the Midwest are nearly all capable of processing this oil—which takes special equipment to refine. Since not all refineries can process this oil, the price for it is comparably lower than higher quality crudes. The fact that Canadian oil can't leave Canada or the United States also keeps the price lower. By keeping Canadian oil off world markets, demand for it stays lower, which keeps the price for it lower. By connecting Canadian oil to the Gulf, there is the distinct and likely possibility that Canada will begin exporting this type of crude oil, which would open the possibility for international buyers, thus increasing demand for Canadian Sour, and causing the price to rise. This is exactly why Canada is pushing so hard for this pipeline--the more potential buyers, the more demand, the higher it can be sold for. This is bad for American and Canadian motorists.

The pipeline will raise gas and diesel prices in the Midwest, where they are already among the highest in the country. It is estimated that the added cost of the pipeline would be roughly equal to 15 cents per gallon, driving up the cost of living for families at a time when we can least afford it. 

Keystone XL will increase the price of in the Midwest by almost $2 to $4 billion annually, and it will escalate for several years. It will do this by diverting major volumes of tar sands oil now supplying the Midwest refineries, so it can be sold at higher prices to the Gulf Coast and export markets. As a result, consumers in the Midwest could be paying 10 to 20 cents more per gallon for gasoline and diesel fuel, adding up to $5 billion to the annual U.S. fuel bill.

The total drain on America’s economy and pocket books could total as much as $3.9 billion annually in 2013, according to what TransCanada told Canada’s National Energy Board. 
Any jobs created will be offset by the higher price of gas and the layoffs that result from the higher cost of doing business. Further, they will be temporary and may not go to local residents, or even Americans.  

Sure, Keystone will add construction jobs—temporary construction jobs. This is a huge area of misinformation. 20,000 jobs? 10,000 jobs? With November elections on the way, every politician wants to show how many jobs he or she has helped add, and what easier way to do it by inflating potential jobs added and advertising it? Recently, Cornell University completed an independent assessment which stated the project may produce between 2,500-4,650 jobs and could even COST the country jobs in the years ahead!  TransCanada admits permanent jobs would only number in the hundreds.  

Even the State Department, which broadly backs the pipeline, thinks 5,000-6,000 direct jobs, few of them permanent, is a reasonable number. Of course, even 5,000 temporary jobs would be welcome if they were good jobs that add value to the economy. They would do so only if producers, refiners, and pipeline operators bore all the internal and external costs associated with producing, transporting, and using the bitumen. At present, we cannot be sure that would be the case, since neither Canada nor the United States has a regime in place to charge environmental damage back to the parties that cause it. In the absence of a comprehensive energy policy (preferably on both sides of the border), there is no guarantee that KXL pipeline jobs are of the value-adding variety.

On the flip side, the pipeline would be permanent, and the rise in price for this oil that we already consume would rise for decades to come. How are higher oil prices going to help the economy? They won't.

TransCanada will generate billions of dollars in profits at the expense of American consumers, and that money will go back to Canada, deepening the U.S. deficit. The pipeline will facilitate Canadian crude oil exports to CHINA, not the United States. The market for Canadian crude oil in the Gulf is small. Americans wouldn’t benefit from the crude oil piped in through the Keystone XL. 

Want to know why diesel prices are hovering at or over $4 per gallon? Look no further—high exports of diesel/distillate are keeping supply tight. What's to stop that situation from happening with Canadian oil? Nothing. Who will it hurt most if Keystone XL is built and Canada uses it to export oil out of North America? Americans and Canadians. Exactly why Keystone XL may not be a good idea—unless there are restrictions on exporting the oil out of North America, but something that will probably never happen.

Quote "If the Keystone XL pipeline really offers big benefits, it should be able to win approval on its own merits. The reason the Senate is trying to sneak the project through as a rider on unrelated legislation is that its benefits are largely illusory"

No comments:

Post a Comment