Free Markets, Free People

More on the Keystone decision and why it was a decision based in politics, not what was best for America

More fallout from the Obama Keystone XL pipeline decision.  Read this carefully:

Prime Minister Stephen Harper, in a telephone call yesterday, told Obama “Canada will continue to work to diversify its energy exports,” according to details provided by Harper’s office. Canadian Natural Resource Minister Joe Oliver said relying less on the U.S. would help strengthen the country’s “financial security.”

The “decision by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market,” Oliver told reporters in Ottawa.

Currently, 99 percent of Canada’s crude exports go to the U.S., a figure that Harper wants to reduce in his bid to make Canada a “superpower” in global energy markets.

Canada accounts for more than 90 percent of all proven reserves outside the Organization of Petroleum Exporting Countries, according to data compiled in the BP Statistical Review of World Energy. Most of Canada’s crude is produced from oil-sands deposits in the landlocked province of Alberta, where output is expected to double over the next eight years, according to the Canadian Association of Petroleum Producers.

“Relying less on the U.S.”  “Diversify our markets”.  “99% of … crude exports go to U.S.”

Those three phrases shout one thing in unison: The U.S. is an unreliable trading partner.

One more shocking statistic, if we want to talk about safe and secure petroleum supplies in our future – “Canada accounts for more than 90 percent of all proven reserves outside the Organization of Petroleum Exporting Countries”.

In case you missed it that’s OPEC.  That’s right the very oil cartel in which we find most of the less than friendly oil exporters in this world.

As Gale Norton points out, this should have been a no brainer:

This seems like a truly simple determination. Iran is threatening to blockade the 20 percent of the world’s oil supply that flows through the Strait of Hormuz. The American economy is struggling from high unemployment. The volatility of oil prices, reflected in periodic spikes at the gas pump, is a threat to productivity. A privately funded pipeline project that would create tens of thousands of jobs while helping stabilize America’s energy supply clearly seems to be in the national interest.

Here we have, next door to us for heaven sake, a supply of oil from a friendly nation which is about as secure as it can get and we do what?

Reject it.

Warren Meyer, writing at Forbes, hits upon some apparent truths:

But local environmental concerns were merely the public pretext for a decision that is much more troubling.   Opposition to the pipeline began to rally among radical environmental groups long before any of them had the first clue about the pipeline route.  The real goal of these groups was not to protect water along the pipeline route, but to make it impossible to develop new sources of oil in Canada.  Unable to stop Canadian oil drilling and tar sand extraction programs, environmental groups are now trying to block any pipeline that is proposed out of the oil producing regions.

As I pointed out yesterday, the “local concerns” had been addressed or were being addressed successfully according to the Governor of Nebraska.  And, as Meyer points out, there was no real reason for this decision except:

The Keystone decision only makes sense in the context of a general push to limit energy supply and roll back our industrial economy and all its amazing gifts.  Part and parcel of this same effort has been the growing opposition to natural gas fracking.  Fracking is an underground procedure that has been used safely and successfully for decades to extend the life of older oil wells.  Fracking is one reason that serial predictions of older fields “running out of oil” have been repeatedly incorrect.

Recently, though, fracking has presented the promise of substantially increasing our domestic energy supply by opening up new shale formations previously thought to be impossible to produce.  With this new promise, anti-growth, anti-energy environmentalists have suddenly taken notice, and are gearing up to try to kill this exciting (and ironically quite clean) new energy source.

I think he has a very valid point – a point that William Tucker has also written about.  This is about stopping progress.  This is about a selfish belief that since they have theirs, the rest has no need for more.  Here’s Tucker’s description:

It is not that the average person is not concerned about the environment. Everyone weighs the balance of economic gain against a respect for nature. It is only the truly affluent, however, who can be concerned about the environment to the exclusion of everything else. Most people see the benefits of pipelines and power plants and admit they have to be built somewhere. Only in the highest echelons do we hear people say, "We don’t need to build any pipelines. We’ve already got enough energy. We can all sit around awaiting the day we live off wind and sunshine."

And that’s precisely the case with Keystone.  Meyer again:

Ostensibly, Obama made the decision to block the pipeline because of concern over contamination of the Ogallala Reservoir, a vast underground water source that makes much of Midwestern agriculture possible.  And I am sure there are folks whose concerns are narrowly about the Ogallala or other environmental and NIMBY concerns along the proposed route.   But the US has tens of thousands of miles of petroleum pipelines, many cris-crossing this same general area.  There is nothing unprecedented or unmanageable about this particular line.  Had these routing issues been the actual problem, the Obama Administration could easily have approved the line with conditions or route modifications.

The national security and energy needs of the nation are being held hostage by an affluent elite who have decided, because they can, that enough is enough.  And they have the perfect soul-mate/tool to implement their desires in the Oval Office.  Don’t forget, this is the guy who said that at some point, “you’ve made enough money”.  They couldn’t be more simpatico.

Meyer also asks a question to make a point about the red herring of the route:

Does anyone doubt that had this exact same route been for high speed rail, rather than a pipeline, it would already have been approved and President Obama likely would have been proposing to throw a pile of taxpayer money at it to boot?  This despite the fact that high-speed rail almost certainly has more environmental negatives than an underground  pipeline.  The route has always been a red herring — the real goal is reducing energy supply.

He’s dead right.   Also:

The Keystone XL pipeline would have single-handedly carried more energy to the United States than the sum of all the green energy projects funded by the Obama Administration.  And it would have done so entirely with private  funds rather than the Administrations increasingly ill-fated and ham-handed attempts at venture capitalism with taxpayer funds. 


In the case of the pipeline, the Obama administration killed a private infrastructure project that is widely supported, covers its own costs, and requires no taxpayer money.  I wonder where Thomas Friedman is — does he still lament our inability to do large infrastructure projects of the kind President Obama just blocked, or does he only support large state-funded triumphal projects?  This seems yet another example of what I called the tendency of government to shift capital from the productive to the sexy.

Spot on.

There you have it, all laid out in a neat bundle.  A “private infrastructure project that … covers its own costs and requires no taxpayer money”, vs. an environmentally destructive government boondoggle that most oppose and neither the federal or state government can afford?

The choice of this administration is the latter.

Finally, to once and for all put the “route” issue to bed, check out this map.  Find Omaha.  Yes, that’s right, there are oil pipelines all over Nebraska.

And surprise …the XL pipeline is the second phase of TransCanada’s pipeline plans. 

TransCanada won approval in 2008 for the first Keystone pipeline, which carries crude oil across Saskatchewan and Manitoba and through North Dakota, South Dakota, Nebraska, Kansas, Missouri and Illinois. That portion began moving crude in June 2010.

Uh, yes, that’s right … Nebraska.  And apparently, at least to this point, everything has operated as expected with no environmental problems.  So could these route problems have been handled without rejecting the pipeline in question?  Of course they could have.

P.S. I’ll have a lot more to say about fracking (which suffers from the same sorts of attacks by the same sorts of groups) in a post soon.


Twitter: @McQandO

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38 Responses to More on the Keystone decision and why it was a decision based in politics, not what was best for America

  • I picked up a stat that said that 25% of all N. Dakota crude is being moved by train. Except for trucks, there is no more expensive, mishap-prone mode of transport.

    Way to go, Collectivists. Idiots.

    • Lately, I have been feeling that Obama is not so bad, and that things are getting better, and that he will win re-election. Then we get something like this pipeline decision and where I used to get riled up, it somehow just feels so minor, like his first piffling error.

      I think its because there are virtually no media offering a drumbeat of “grim milestones” or scathing editorials. Some one talk radio reminded me…Solyndra, Fast and the Furious, all huge scandals, buried. This would sink most Republicans without even talking about Obamacare or the Porkulus.

      I think Obama wins because the anger faded after 2010, and the media is still down on their knee pads.

      Some one cheer me up.

      • @Harun Get you head up, dude! You had an Obami take the 5th just last week in the F&F thing, which is HUGE! You have Solyndra destroying assets…while in bankruptcy, which is considered VERY bad form, along with news on SeeBS that there are a dozen Solyndras waiting to file.

        AND you have Obama kiboshing the Keystone Pipeline, with universal declarations of “WTF!!!!”.

        Life is good. Don’t let them steal your joy.

      • The media cannot change the fact that the economy is still in the toilet, and it will not pick up that much in the next ten months. On the other hand, if the GOP picks Gingrich, well there is no telling what sort of stupid things he will say in ten months.@Harun

      • @Harun “Lately, I have been feeling that Obama is not so bad, and that things are getting better, and that he will win re-election. Then we get something like this pipeline decision and where I used to get riled up, it somehow just feels so minor, like his first piffling error.”

        Welcome to the reason he got in in the first place, you’re just mentally tired of it all. Unfortunately the Republicans are determined to give us a guy who doesn’t leave you feeling a whole lot better.

      • @Harun Obama’s former staff tried to steal the identity of a high-ranking Iowa GOP member to implicate him in a scandal. This guy and his cronies are so corrupt that something is bound to break that winds up hurting him.

        And look at this – if he wins, the motherf***er can always be impeached like he deserves for any one of a handful of scandals.

  • A Canadian saying what the MSM will not.

  • Next time someone starts spouting off about “ethical oil” laugh in their effing face.

  • I’m hearing a lot of thunder about fuel prices getting higher in the near future. That will be a killer for Obama.

  • A democrat staffer who I am friends with had this to say:

    “Maybe you are missing this – but the environmental issue isnt that there are pipelines going through the country – its that the new pipeline would be going through a drinking water reservoir. You can see the gaps in you map in S. Dakota and Nebraska. Thats where the water is. The administration has made it clear they would approve the pipeline if it didnt hit the water.”

    • @Johnny Jones Your friend is an idiot. Pipelines overlay aquifers all over the world. They underlay HUGE population centers.

      Actually, I suspect your friend is more disingenuous than stupid.

    • @Johnny Jones They didn’t have to stop the program to deal with this issue. In fact they could have begun the pipline and determined the exact route later. Obama ended the pipeline for other reasons.

  • There is no doubt that less than rational arguments are being used to oppose the pipeline, the primary being an intent to stop this particular method of extraction entirely. That’s a non-starter, the only way this method won’t continue is if oil prices drop so dramatically that it is not the worth the processing cost. OTOH, there are some bad arguments FOR immediately approving the pipeline, nameline the exagerrated economic benefits. The claim of 20,000 immediate US jobs is false, based on the data supplied to the State Dept by TransCanada indicates there would be 2500 to 4650 direct temporary non-local jobs and of the budget of $7B less than half would be spent in the US. The manufacturing jobs for the components would be in the Far East. Right now the existing pipeline delivers oil to the MIdwest, this oil would be diverted to the Gulf Coast where the primary benefit is the capacity to export the oil, and the effect on the Midwest would be a reducton in supplies and higher prices, TC admits this in their permit application stating that current delivery to the US Midwest has created a oversupply so they can’t sell the oil for as much as they could if it were delivered to an export market. How many jobs will .10 to .20 more for a gallon of gas cost in the US Midwest? The result could be a net LOSS of jobs. These factors warrant the additional time to review.

    • @CaptinSarcastic What I love is that you don’t even realize what a rich parody you are…very like our Erp.

      I reckon those pipeline components are going into the “Far East” teleporter, and will never see a U.S. port, or be trucked by U.S. truckers.

      And those mammoth Midwestern refineries (HA!) will simply starve for lack of crude, and have to raise prices to get all the feed-stock they need.

      You really will swallow anything from the moonbattery, and ask for more, right?

      • @Ragspierre Last I heard truck driver is not a manufacturing job, but hey, the GOP voted to call ketchup a vegtable and flipping burgers a manufacuring job, so maybe ths has changed. As to those Midwestern refineries, this is not the moonbattery talking points, this is from the TransCanada business plan. But hey, if saying anything you can imagine makes you happy, please, knock yourself out.

        • @CaptinSarcastic I know what it is from, liar, and it ain’t what you claim.

          Note that a lot of your “factual facts” are assumptions in that paper, dope. Like where material will come from.

          What a moron.

        • @Ragspierre Try again, I took it directly from the application TransCanada to the Canadien government in which they explicitly state that by redirecting the oil from the US midwest to the export friendly gulf area, they will INCREASE US oil prices by billions. “The resultant increase in the price of heavy crude is estimated to provide an increase in 15 annual revenue to the Canadian producing industry in 2013 of US $2 billion to US $3.9 billion.” This pipeline does not decrease US energy dependence, it INCREAES by allowing virtually 100% to be sold outside of the US, while the current pipeline sells 100% in the US. Here is the link to the application. Section 3: Supply and Markets, at 7. describes how the pipeline allows Canada to charge the US more for oil.

        • @CaptinSarcastic @Ragspierre “hey, the GOP voted to call ketchup a vegtable and flipping burgers a manufacuring job, so maybe ths has changed.

          Hey, the current Administration’s USDA tried to declare tomato paste a vegetable for the same purpose just last year in 2011, so, you need to update your problem with government checklist – that would be the Democrats, in 2011, tomato paste.

          Just keeping things in perspective for ya.

        • @looker @CaptinSarcastic @Ragspierre Tomato paste is, and always has been a vegetable, it is 100% tomato. The problem was the reduction in the serving size from 1/2 cup to 1/8 cup. On paper, there is nutritional value to tomato paste relative to whole tomatoes, but on paper, you could eat a serving of pure tomato paste. In the real world, tomato paste is pizza sauce. I agree completely that this is reckless pandering to agribusiness lobbies. I appreciate the perspective, you are correct, this (crappy goverment pandering to special interests) is not a one sided problem. I tend to point out problems on the side that is least represented in this forum.

        • @CaptinSarcastic @looker Tomatoes are a berry. Just FYI.

          Care to apologize for lying to the thread about the Keystone Pipeline?

        • @Ragspierre @looker I never lie, but I do err. Tell me the inaccuracy you think you found, and if I erred, I will admit the error.
          A tomato is technically the fruit of the tomato plant, but it’s used as a vegetable in cooking. The U.S. Supreme Court settled the controversy on May 10, 1893, by declaring that the tomato is a vegetable, based on the popular definition that classifies vegetables by use.

        • @CaptinSarcastic @looker Start with being truthful about your source.

        • @Ragspierre @looker Are you saying that the source that I quoted, sourced, and linked does not contain the quotes that I asserted it did? Look again, in the TC application to the Canadian government, it specifically states, “The resultant increase in the price of heavy crude is estimated to provide an increase in 15 annual revenue to the Canadian producing industry in 2013 of US $2 billion to US $3.9 billion.” Or are you talking about something else? The employment numbers do come from the Cornell, and as you stated, they are based on several assumptions, as would any estimate, the difference being that the assumptions Cornell used exclude jobs that would be created from building portions of the pipeline that have already been completed or that will be built in Canada, or that will be created in manufacturing the components which will be done outside of the US. None of the assumptions include jobs LOST in the Midwest to the rerouting of oil away from the US to the foreign trade zone on the Gulf Coast, nor the jobs lost due to increased gas prices in the US Midwest. I neither lied, nor erred on my source.

        • @CaptinSarcastic @looker “Are you saying that the source that I quoted, sourced, and linked…”

          Gee, you can’t stop, can you. You didn’t link to anything. You didn’t TRUTHFULLY source anything, either.

        • @CaptinSarcastic @looker Where is your real source?

        • @Ragspierre @CaptinSarcastic I note a lot of AGW nonsense in that link. Looks like a hit job, not a serious analysis.

        • @Don S @CaptinSarcastic Check out page 39. It tells the whole story.

        • @Ragspierre @looker Right here, like I posted before, the PDF copy of the TransCanada application to the Canadian government
          “The resultant increase in the price of heavy crude is estimated to provide an increase in 15 annual revenue to the Canadian producing industry in 2013 of US $2 billion to US $3.9 billion.”
          Here is what this means. Canadian oil producers will be able to ship every drop of oil to the foreign trade zone (zero US taxes) if they want to. If it is more profitable to do this, that is exactly what they will do, they are not in the “make oil cheaper for Americans” bidness. When the supply in the Midwest is reduced, prices will go up, and if they go up high enough, Canada will send oil to the Midwest. The point being, WITH the pipeline, US Midwest oil prices go up, and the cost in jobs of higher oil prices should be included in any cost/benefit calculations. How many jobs will an extra .10 to .20 per gallon of gas cost?

    • @CaptinSarcastic I find it highly unlikely they will close down a pipeline if they create this new one. They are recovering more oil, they will want to ship more oil as well.

      You were the idiot who thought we should follow the Spanish model on health care, right?

      • @Don S I don’t believe I have suggested the Spanish model on health care, so I must be some other idiot. As to closing down the pipeline, that’s not precisely the point, they will bypass PADDII (the Midwest refinery region) and send oil on to PADDIII (the Gulf Coast refinery region), this will allow Canadian oil producers to get higher prices for their oil by accessing the global market through the Gulf Coast Free Trade Zones. They will be able sell as much or as little as they want in PADDII, but at the moment, PADDII has an oversupply and therefore downward price pressure. The pipeline will allow them to reduce this oversupply and they will supply PADDII when and if they can get a higher or equal price in PADDII as PADDIII. The companies own estimates of diverting oil away from the MIdwest is up to $4b in Midwest annual US costs. This increased will of course be passed on to consumers, estimated at .10 to .20 per gallon of gas. According to a FoxNews report, every .10 in higher gas prices costs 100,000 jobs per year nationally (I don’t know what the effect would be in the 15 Midwest PADDII states). This is good business for Canadian oil producers, but bad economics for US consumers.

        • @CaptinSarcastic @don You are an AMAZING boob. What kills me is you think anybody here is so drop-dead dumb that kind of “limited pie” argument would fly.

          My gawd, we should kill this mad job-destroying machine instantly!!! Those crafty Canadian crypto-capitalists can’t fool you.

  • “Remember just a couple of years ago when all the ‘experts’ were telling us that exploring for oil was futile because it would take at least ten years to bring it to market? Now that the oil has actually been produced in places like Alberta and North Dakota, they’re reduced to denying the construction of pipelines.”

    – Instapundit reader Trevor Dahl.

  • Ugggghhhhh, Oil BAD!!!!!!!!

    Bankrupt solar power gooooooodddddd! Ughhhhhhhhhhhh.

  • This all smells like somebody didn’t get a payoff .. and I think we know who that was.

  • Warren Buffett’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanada Corp. (TRP)’s Keystone XL oil pipeline permit.

    With modest expansion, railroads can handle all new oil produced in western Canada through 2030, according to an analysis of the Keystone proposal by the U.S. State Department.

    “Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.”

    Or, a scarce resource will move from areas of supply to areas of demand…one of those gradients I go on about.

    If it can’t do it by the safest, cheapest means, other means are available.