The Keystone Pipeline: Not As Dirty Or Fiscally Sound As Some Say

The never ending argument about energy security in America has taken on new heights in America over President Obama’s decision to block one part of a 2,000+ mile pipeline known as Keystone XL. Environmentalists don’t like the idea of supporting energy-intensive Canadian tar sands. Conservatives claim that jobs are being lost and gas prices are going up because this pipeline was blocked.

But the truth of the matter is always somewhere in the middle. On the environmentalism side, it is worth considering that, while the tar sands are a dirtier form of drilling, it can be better regulated in a country like Canada versus a place like Venezuela. It is also less energy intensive to ship oil, even dirty tar sands oil, via pipeline, than it is to ship it in a container ship from halfway around the world. Oil will remain the dominant energy force for decades to come; I’d rather have it regulated here, than supporting fascism abroad.

On the same token, the hubbub about the Keystone XL pipeline being a job creator and lowering gas prices is much ado about nothing. Some estimates say that over 13,000 construction jobs would be created during the building of the pipeline through some especially hard hit areas of the country. Conservative critics claim that Obama’s blocking of the pipeline is costing Americans jobs, and raising gas prices.

Yet one doesn’t have to dig too deep to see the nonsense of this argument. How many people does it take to maintain a pipeline? Not many I’d wager. TransCanada, the company that wants to build the pipeline, estimates about 4,000 jobs will be created, most of them temporary. I’ve seen estimates that the entire length of the pipeline will employ just 1,300 people on a permanent basis. That won’t even budge national unemployment figures.

Another argument comes with rising gas prices. Some pundits say that by blocking the pipeline, Obama has indirectly caused prices at the pump to rise. But the Keystone XL pipeline would only bring an estimated 500,000 to 700,000 more barrels of oil into the U.S. per day. And much of that is slated for sale overseas (Brazil and other parts of South America in particular.) If anything, they Keystone XL pipeline would lead to higher gas prices.

A glut of oil is sitting in the MidWest, unable to be moved by a backed-up pipeline system (the rest of the Keystone line). This extra oil has suppressed prices in the MidWest, where a gallon of gas remains cheaper than along the more-populated coasts. The Keystone XL extension would move this oil to the south coast for refining, leading to an uptick in prices, especially in the MidWest. And that only makes sense to me. Why would TransCanada build a pipeline if it would cost them money by lowering gas prices? Even the Canadians are smarter than that.

Based on these facts, does the Keystone XL pipeline still sound like sound fiscal policy? Not to me. But is it better than the other option of importing more oil from unfriendly foreign producers? Sound off in the comments below.

Source: CNN

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Tags: adminstration, be created, gas prices, how many jobs would, jobs, Keystone Pipeline, Keystone XL, lowering, Obama, pipeline, President Obama, Tar sands, Trans Canada, TransCanada

About the Author

Christopher DeMorro A writer and gearhead who loves all things automotive, from hybrids to HEMIs, Chris can be found wrenching or writing- or esle, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.

Warren Clayton

Some of your points are well taken. However regarding jobs there are a few aspects it seems you have not considered. The state of Montana claims it will get $63 million in property taxes a year from its 281 mile stretch of line. Montana’s ave household income is $35 thousand so this would be the equivalent of 1800 permanent jobs. I t could reduce unemployment from 7.1% to 6.7% there. Other states’ figures may vary. Is there any other project requiring no government funding that could do this? Also, the project will run 510 kbpd across the border of oil not yet in production. This will require investment of $80 thousand per flowing barrel per day. About $40 billion. This creates opportunity in several ways for US interests that production in, say, Saudi Arabia doesn’t. US firms are welcome to invest and produce in Alberta, US workers are welcome (joining the currrent 60 thousand who work in Calgary), US investors could buy US company stock operating here or that of most major Canadian companies producing in the oilsands through the NYSE, and US based workers and companies are welcome to supply goods and services on a contract basis.

Will it lower fuel prices? It will enable oil to get to market thus lowering prices wherever that market is. XL will move more oil out of the WTI price discovery area than it introduces. ie 510 thousand bpd to Cushing and 700 to 830 thousand bpd out. So WTI will increase while Brent decreases.
- http://www.sublimeburnout.com Christopher DeMorro
  
  @ Warren Clayton
  
  I don’t buy it. The reason TransCanada wants to build the pipeline is because they can’t move their oil fast enough. But, even if they can move more oil, all OPEC has to do is ratchet down its exports to America a little bit. We still rely all too much on foreign countries for oil.
  
  Keystone XL would barely put a dent in that. Gas prices will march upward regardless of if Keystone XL passes.
http://maxhedrm.montebellopark.com/blog/ MaxHedrm

The pipeline will move oil, not gasoline. An oil glut in the Midwest is unlikely to effect their gasoline prices unless they have a huge amount of refining capability I’m unaware of.
- http://www.sublimeburnout.com Christopher DeMorro
  
  @ MaxHedrm
  
  As it turns out, yes, there are a number of refineries located in the MidWest. One of many reasons gas prices are somewhat suppressed in the area.
  
  http://en.wikipedia.org/wiki/List_of_oil_refineries#United_States
http://www.musconetcong.org Bill Leavens

There’s a larger question here. The oil going down the pipeline is coming from tar sands in northeast Alberta. Use GoogleEarth and type in ‘tar sands Alberta Canada’ and take a look at what’s going on. An area the size of Rhode Island has been decimated by processing the sands to extract bitumen. It’s one thing if the Canadian government and people want to lay waste to a huge swath of land, but in the process a pristine arboreal forest is being destroyed that serves as wildlife habitat and home to the indigenous people that live there.

A far better answer to our energy needs is thorium/nuclear. With cheap enough power we can generate hydrogen which is a superb motor fuel. Nobody is aware of it but the US had a successful thorium fission powerplant at Oak Ridge Tennessee fifty years ago. Thorium is appropriate technology for now and for the immediate future but its development is being actively thwarted by Big Oil, Big Coal and Big Uranium. We are the losers and our children will curse us for ignoring it for so long. As the Chinese and Indians develop their thorium fission technology, we will be left with huge imported hydrocarbon bills and continuing environmental degradation.
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