Free Markets, Free People

Keystone XL


Observations: The QandO Podcast for 22 Jan 12

This week, Bruce, Michael, and Dale talk about the Republican primaries and the Keystone decision.

The direct link to the podcast can be found here.

Observations

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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. 

And:

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.

~McQ

Twitter: @McQandO


Economic ignorance, thy name is Obama

I’m not sure how else to describe this statement from “the smartest man in the room” concerning the Keystone XL pipeline and unemployment benefits:

As Obama called for passage of those bills, he also responded to a recent Republican push to require him to approve the construction of the Keystone XL pipeline from Canada. "However many jobs might be generated by a Keystone pipeline," he said, "they’re going to be a lot fewer than the jobs that are created by extending the payroll tax cut and extending unemployment insurance."

It’s rather hard to even imagine someone thinking that’s true.  Yet here’s the guy who is supposed to be making jobs his focus and economic recovery his priority and he thinks he’s doing his job by trying to get unemployment insurance extended?  He believes that the extension of the payroll tax cut is job creator?   Note the word – create, as in what Obama said.  While it certainly can be argued that on some level it might save a few jobs, if there were any to be created from its extension, they’ve most likely already been created. 

The Keystone XL pipeline on the other hand, will create thousands and thousands of jobs.

TransCanada is poised to put 13,000 Americans to work to construct the pipeline – pipefitters, welders, mechanics, electricians, heavy equipment operators, among other jobs – in addition to 7,000 manufacturing jobs that would be created across the U.S.  Additionally, local businesses along the pipeline route will benefit from the 118,000 spin-off jobs Keystone XL will create through increased business for local goods and service providers.

Of course, besides the pure economic ignorance displayed by the statement, Mr. Obama offers nothing in terms of numbers to back his claim.  It’s another in a long line of claims made recently that just aren’t true.

~McQ

Twitter: @McQandO


Obama can’t wait on Congress for jobs, but can wait on the Keystone XL pipeline decision

While President Obama continues to claim that he and America can’t wait on Congress to act on his jobs bill, he apparently might delay a decision that would create hundreds of thousands of jobs till after the next election:

The Obama administration is considering a move that could delay a decision on the controversial Keystone XL pipeline by requiring sponsors to reduce the project’s environmental risks before it can be approved, according to people with knowledge of the deliberations.

The step might put off a decision until after the 2012 election and be a way for the White House to at least temporarily avoid antagonizing either the unions that support the pipeline or the environmental activists who oppose it as President Obama gears up for his campaign.

That’s right, it’s about politics.  Need a job?  Keystone XL pipeline might be the very project to provide that.  But to heck with you, your President has an election to win and he can’t afford to alienate or antagonize anyone in his base.   And this decision is going to hack off some of his supporters.  He’s either going to make the environmental extremists that populate the left very unhappy or the labor unions that back the Keystone project and the jobs it will create.

So, in typical Obama style, he’ll just delay the decision till after the November 2012 election.  He apparently can wait on that.

~McQ

Twitter: @McQandO


Obama takes ownership of Keystone XL pipeline decision

A day after the White House said that the State Department would make the call, President Obama has decided he’ll make the ultimate decision on the Keystone XL pipeline which would bring petroleum product from the tar sands of Canada to the US.

This has become a cause the “climate change” crowd has embraced and have tried to paint as one which would supposedly increase “global warming”.  Of course the actual science of “global warming” doesn’t support the contention that the earth is warming, however that is a part of the science that these folks have decided to ignore.

The fact that Obama has chosen to make the decision himself may confuse some – why not let the State Department, who makes decisions such as this when a foreign nation is involved?  Well that’s what makes me uneasy.   There’s an election coming and his environmental base has been very disappointed in him.  Read between the lines of the statement he made and the answer he provided to a question:

“We need to encourage domestic oil and natural gas production,” Obama added. “We need to make sure that we have energy security and aren’t just relying on Middle East sources. But there’s a way of doing that and still making sure that the health and safety of the American people and folks in Nebraska are protected, and that’s how I’ll be measuring these recommendations when they come to me.”

The “but” is rather pregnant isn’t it?

Then the question concerning jobs and the promise of thousands of jobs if the pipeline is approved.   Will that have an effect on his decision?

“It does, but I think folks in Nebraska like all across the country aren’t going to say to themselves, ‘We’ll take a few thousand jobs if it means that our kids are potentially drinking water that would damage their health or rich land that’s so important to agriculture in Nebraska are being adversely affected,’” Obama said, adding, “because those create jobs, and you know when somebody gets sick that’s a cost that the society has to bear as well. So these are all things that you have to take a look at when you make these decisions.”

For your information, petroleum pipelines crisscross this country.  In fact, more than 168,000 miles of petroleum pipelines have been in operation, safely, for decades. 85% of all petroleum product is moved by pipeline.

usMap

So this isn’t about “safety” – the product has been moved in safety for years.  It’s much like the fracking argument.  It is unfounded and based in fear of something that isn’t true.  And like the fracking argument, the opposition likes to try to frame the procedure as something new and dangerous.   Well it isn’t new.   Fracking has been in use since 1948 very safely and over a million wells have been developed using it.

The argument used by opponents of the Keystone XL pipeline is that the petroleum shipped in that pipeline is more corrosive and dangerous than regular petroleum product.   The Association of Oil Pipelines answers that question:

Opponents have also wrongly suggested that crude from the Canadian oil sands is somehow more corrosive than other heavy crudes, which have been moved safely for decades.  It is not.  The oil sands may be produced differently, but the product readied for pipeline transportation will be behave like any other heavy crude oil. There is simply no evidence pipelines carrying diluted bitumen behave any differently than a pipeline carrying conventional crude oil, or that diluted bitumen is more corrosive than other crude oils. Pipeline operators don’t build multi-billion dollar assets to then destroy them with a corrosive product.

So Obama gets to decide between jobs and increased energy security and politics.  We currently get 400,000 barrels a day from the oil sands in Alberta.  This pipeline promises to add another 700,000 barrels a day from a secure source.   Or will Canada be forced to build a pipeline to the west coast and ship it to China?

This should be a no brainer.   Jobs along with safe transportation of a vital commodity which powers our economy is a winner for the nation.  But this is a president in political trouble and desperately trying to shore up his eroding base.

Will he put the well being and energy security of America and Americans first? 

Or will he play the politics card?

Unfortunately, the latter is much more probable than the former, given how political Obama is.  Don’t be surprised if he turns down jobs and energy security for the promise of increased political support from his base.

~McQ

Twitter: @McQandO


Keystone XL pipeline: Energy security held hostage

One of the arguments you consistently hear from the left is we can’t become “energy independent”, or said another way, we can’t become independent from “foreign oil”.

Well, there’s foreign oil and then there’s “foreign oil”.  While it is true, at least at the moment, that we’re unable to fully develop and use our own national fossil fuel assets to make us independent, there is certainly a way we can pick and choose from whom we buy our oil to lessen the possibility that we’ll become hostage to unfriendly foreign powers.   Friendly neighbors who are close are the solution to our energy security.  But only if we recognize that fact and understand how strategically that lessens our energy vulnerability markedly.

Obviously two close neighbors, Mexico and Canada, fit that profile.  So it seems a no-brainer to exploit those relationships and do all that is possible to make sure it is the US that secures the bulk of what they’re willing to produce and offer on the world market, no?

No, apparently.

It seems there’s an expectation on the part of the left that President Obama and his administration will block the Keystone XL pipeline that would transport oil taken from Canada’s oil sands to the US.  A means of tying up secure oil from a safe, secure and friendly neighbor are in the air because of absurd environmental concerns.   And those protesting the pipeline fully expect Obama to back their demands.

Of course, unsaid, until now at least, is Keystone XL isn’t the only pipeline Canada will build, and it certainly isn’t going to wait on the US to make up its mind:

Considering geography, exporting oil from Canada to a non-American market doesn’t sound easy; Canada’s tar sands are close to the U.S. border, but not much else. So we asked John Baird — Canada’s new foreign minister, who was in Washington recently to speak with Ms. Clinton — which nations would buy oil that America decided not to take. His answer was quick and unequivocal: the Chinese. New pipeline infrastructure will transport oil between the tar sands and Canada’s west coast, from which tankers can ship it across the Pacific Ocean. And, even now, Chinese firms are buying stakes in Canadian tar sands.

Ron Liepert, energy minister of Alberta is crystal clear about which nation is most interested:

He noted China is poised for action, investing $15 billion in the province over the past 18 months. "There is a long-term plan to get oil to the East," he said.

That investment isn’t being made for grins.  It is being made by China to secure their energy future at the cost of ours.

As usual, when it comes to this administration, we dither about our energy future and security, while others act aggressively. Another reason to have them join the growing ranks of the unemployed in 2012.

~McQ

Twitter: @McQandO

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