January 29, 2012. President Obama has postponed the final decision on the Keystone pipeline, saying his rejection was "not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people." Although the big question is probably oil spills, the case for the pipeline is based on jobs. Let's take a look.
“President Obama's decision to reject the Keystone XL crude oil pipeline is as shocking as it is revealing,” declared Mitt Romney, while Newt Gingrich called the decision a “stunningly stupid thing to do. ... it’s as if they were [#governing Mars].” Pretty harsh criticism. So, who would not want to move us toward energy independence?
First remember that this is a Canadian pipeline (with some U.S. investors) that will transport Canadian tar sands sour crude oil to the U.S. for refining. It should be easy to read between the lines that what is meant is that the Canadian tar sands oil will help us become independent of Middle East oil, and the Middle East is currently a little "unstable." And for some it means independence from those Muslims. As hinted in Bob's recent joke note, "Coffee in Heaven," we all know how much Muslims are disliked, right? (43% of Americans admit to feeling at least "a little" prejudice toward Muslims. - Gallup poll, 2010, http://www.gallup.com/poll/
Forty percent of Canadian oil comes from tar sands and, currently, 20% of the United States' oil imports come from Canada. The United States currently imports 21% of its oil from the Middle East. - Investopedia
America’s #1 export in 2011 was refined fuel. Shocked? Don’t be. Despite the staggering price of gas at the pump, the US ships gas, diesel and jet fuel off to developing countries like China. The reason? US consumption of oil has declined since 2006 and North Dakota has a glut of shale oil. Underutilized Midwest refineries refine the shale and export to China [and other countries]. And Big Oil wants to export even more.
That’s where the Keystone Pipeline XL enters the room. Few Americans understand that Keystone is an export pipeline. It will link Alberta Canada’s tar sands to Gulf Coast refineries where it will be exported to the highest bidder, most likely China and India.
The TransCanada Corp. folks want you to believe Keystone will benefit you. It will do nothing of the tar sands sort. It will not reduce American dependence on Middle Eastern oil. It will not reduce the price of gas. It will not produce thousands of permanent jobs. - MetroWest Daily News, Jan 29, 2012
Valero, the top beneficiary of the Keystone XL pipeline, has recently explicitly detailed an export strategy to its investors. The nation's top refiner has locked in at least 20 percent of the pipeline's capacity, and, because its refinery in Port Arthur is within a Foreign Trade Zone, the company will accomplish its export strategy tax free.
The oil market has changed markedly in the last several years, with U.S. demand decreasing, and U.S. production increasing for the first time in 40 years. Higher fuel economy standards and slow economic growth have led to a decline in U.S. gasoline demand, while technological advances have opened up new sources in the United States. Increasingly, U.S. refiners are turning to export.
The construction of Keystone XL will not lessen U.S. dependence on foreign oil—rather, it will feed the growing trend of exporting refined products out of the United States, thereby doing nothing to enhance energy security or to stabilize oil prices or gasoline prices at the pump. If completed, it will successfully achieve a long-term objective of Canadian tar sands producers—to gain access to export markets. - Policy Innovations http://www.policyinnovations.
25 percent of Gulf Coast refinery output is now going to export and Keystone XL will feed this growing trend because the heavy sour oil derived from tar sands is ideal for producing diesel, the product most in demand on the export market.
Keystone XL will help maximize Big Oil’s profits while doing nothing to enhance U.S. energy security.
• There is currently a glut of pipeline capacity from Canada to the U.S. with around 50% currently unused;
• Canadian oil production is not forecast to fill existing pipeline capacity until after 2025;
• This means that Keystone XL would simply be diverting oil to the Gulf Coast that would have supplied the Mid West;
• This will likely raise the price of Canadian oil in the Mid West as Canadian oil moves from surplus to shortage;
• Gulf Coast refiners represent a comparatively limitless market because they are able to export products to anywhere in the world;
• With U.S. gasoline demand in terminal decline, Gulf Coast refiners are maximizing diesel output to serve the export market;
• With 25% of refinery output, and growing, going to export, the Gulf Coast is becoming an international refining center in which U.S. domestic demand is becoming increasingly irrelevant.
- Oil Change International, NRDC http://priceofoil.org/
Lower Gas Prices
As chairman of the House Energy & Commerce Committee, Rep. Fred Upton (R-MI) is among its most ardent and unequivocal supporters. In a July interview with CNBC he stated:
"According to the Department of Energy, this one project will "essentially eliminate" oil imports from the Middle East. It will create more than 100,000 jobs and strengthen our relationship with a close ally and trading partner. A project like this should be a no-brainer, and there's simply no good reason it has been stuck in the State Department's red tape for nearly three years."
Rep. Upton also stated that the project would likely help lower gasoline prices and reduce volatility. In that same interview he said:
"If we take steps today to safely develop our resources for the future, we can quickly and consistently hold down prices. I think the American people understand supply and demand, and they understand if we increase the supply of American-made energy, prices will come down. It's as simple as that.
Well, this is probably obviously not true if the tar sands sour crude is destined for export.
TransCanada's tar sands pipeline will actually INCREASE gas prices for Americans—especially farmers—according to TransCanada’s 2008 Permit Application which states “Existing markets for Canadian heavy crude, principally [the U.S. Midwest], are currently oversupplied, resulting in price discounting for Canadian heavy crude oil. Access to the USGC [U.S. Gulf Coast] via the Keystone XL Pipeline is expected to strengthen Canadian crude oil pricing in [the Midwest] by removing this oversupply. The resultant increase in the price of heavy crude is estimated to provide an increase in annual revenue to the Canadian producing industry in 2013 of US $2 billion to US $3.9 billion.”
Independent analysis of these figures found this might increase per-gallon prices by 10-20 cents/gallon in the Midwest. - Cornell University Global Labor Institute http://www.ilr.cornell.edu/
Well, hooey. So it might RAISE gas prices.
|[=governing Mars] “President Obama's decision to reject the Keystone XL crude oil pipeline is as shocking as it is revealing,” Mitt Romney, the frontrunner for the GOP nomination, said in a statement. “By declaring that the Keystone pipeline is not in the ‘national interest,’ the president demonstrates a lack of seriousness about bringing down unemployment, restoring economic growth, and achieving energy independence. He seems to have confused the national interest with his own interest in pleasing the environmentalists in his political base.” . . . At a campaign event in Warrensville, S.C., Newt Gingrich called the decision a “stunningly stupid thing to do.” The large crowd gathered to see Gingrich roared. “There’s no better word. These people are so out of touch with reality, it’s as if they were governing Mars.” —Los Angeles Times,|
|[=PopNotes] Just hover over green-underline links above to see the "pop" notes.|