The Keystone XL pipeline extension, proposed by TransCanada Pipeline to increase capacity of oil from Canada to refining centers on the Gulf Coast, has become a political football over the last several years, a victim of hyperbole and demagoguing, is coming up for a vote on Capitol Hill maybe as early as today. The reason? A runoff election for the US Senate between Democrat Mary Landrieu and Republican challenger US Representative Bill Cassidy, who is so far leading in the polls. Landrieu, an oil industry friendly Democrat, has been fighting for her political life during this midterm election season where Republicans have recently swept both the House and Senate, as well as many state houses and governor’s mansions. The rush to vote is a Hail Mary by the Democrats to save Landrieu. The Republicans are claiming the vote for themselves and their guy. The reality, unfortunately, is that the XL pipeline has become cannon fodder in the war of words in Washington, relegated to that status after the Obama administration punted on what should have been an easy decision 3 years ago.
First, a refresher on the XL pipeline. The most important fact to understand is that there already is a Keystone pipeline and has been for years. It carries oil south from Canada and northern production points to refining centers in the midwest. The proposed extension, dubbed XL, provides a more direct route to northern refineries as well as an additional leg down to refining centers on the Gulf Coast. When completed, the extension will add about another 830,000 barrels of oil capacity to our refining centers. Some of this oil is scheduled to come from the oil sands projects in Alberta, but also will pick up oil being produced from the prolific Bakken play in North Dakota, producing now just over 1 million barrels of oil per day and still increasing. Today, much of that oil is being shipped by rail, one of the least secure forms of oil transportation. This pipeline would reduce a significant portion of that now being shipped by rail.
Rather than allowing routine approval of the project to cross the US border, Obama folded under pressure from environmentalists in 2011, punting the decision to “further study”. Now XL has become a do or die issue for both sides, screaming at the top of their lungs for their own positions.
Much to the consternation of many of my friends in the environmental community, I have always supported the construction of this project. My reasons are pretty simple: First, and most important, is that it’s a national security issue. We still import around half of our daily burn of oil from other countries. Admittedly, our largest import partners are already Canada and Mexico, but we still import about 3 million barrels a day from OPEC countries. If we can get another 800,000 barrels a day by more secure pipeline, I would rather do that than import from elsewhere or transport by rail, which is easily disrupted. Second, we have over 2.5 million miles of pipeline in the US today, with about 150,000 miles of that in crude and product pipelines. I maintain that the XL pipeline is not some grand tipping point that will somehow single handedly destroy the planet as many environmentalists like to declare.
Now, you’ll notice I didn’t mention jobs or economy. The Republicans like to shout about how much this will add to the economy, but again, that’s hyperbole and nonsense. Sure, it will provide a couple of thousand temporary jobs during construction, but permanent jobs will likely be much less than 50 for the pipe itself. On the other hand, though, having more supply of crude will make it an easier decision for refiners and transporters to invest in their own infrastructure, which certainly won’t hurt the economy by any means. Either way, it’s not some gigantic factor either way. It’s simply an incremental project.
Even with all the shouting between sides, though, we’re still not discussing the real issue…The United States of America has NO comprehensive energy policy, and we stumble, under the terrible lack of leadership in Washington, from crisis to crisis with little effort to reduce our overall demand for heavy hydrocarbons such as crude and coal. With a long view to promoting fuel efficiency, which is the fastest and most effective way to reduce hydrocarbon use, actual incentives to grow alternative energy sources, and a strong government bias against heavy fuels towards lighter and non-hydrocarbon fuels, we can convert our economy to one of sustainability and vibrant growth; however, it takes a concerted effort and adults driving the bus. We have neither.
We need to clearly understand that our political leaders don’t lead; they follow. LBJ didn’t push the Civil Rights Act because it was certainly the right thing to do, he did it because thousands and thousands of people were marching. We didn’t end the Viet Nam war because it was the right thing to do; we ended it because thousands and thousands of people were marching, sick of watching carnage on national network news every night. Nobody is marching about energy policy (at least in enough numbers); no one is pounding on politicians’ doors demanding a comprehensive policy. Special interests bribe politicians to vote their way, all on short term measures that have no hope of actually fixing anything, or, God forbid, establishing policy.
The environmental community is vehemently opposed to the the XL pipeline for admirable reasons, but they’re trying to fix a symptom, not the disease itself, stamping their feet and demanding that the big, bad oil industry should just stop. But the industry can’t stop. The economics, and their shareholders, demand that they continue. It’s not a moral decision on their part, it’s economic, period, the end. To effectuate real change, you must change the economics. The oil sands projects are some of the most expensive oil production operations on the planet. Break even price for that crude is about $85 per barrel. So, if you don’t like Canada sending oil to the US through the XL pipeline, then help drive policy that reduces demand. Today, due to high crude production, very high stocks, and some reduction in demand, oil has fallen to $76 today. If oil stays down at the level for an extended period of time, the oil sands become uneconomic and production will slow to a virtual stop. By pushing our politicians into long term policy decisions that reduce our reliance on heavy hydrocarbons, demand will go down, price will go down, and the industry will shift to better economics from other fuels. It’s simple. And can happen quickly.
Imagine a world where the vast majority of our fuel sources are sustainable. Imagine a world where we don’t have to outspend the rest of the world by 14 or 15 times for a military to protect our energy supply in the middle east. Imagine a world where we are not pouring millions of tons of carbon into the air damaging our climate. All these imaginings are not unachievable pipe dreams. They are achievable and reachable in a reasonable time frame if we just stand up as a People and say enough.
We can take control of our energy future and hold our politicians accountable for leading us to that future, if only we would.
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