Keystone XL pipeline
TransCanada is proposing a 36-inch, 1,700 mile pipeline, that would carry 900,000 barrels of Tar Sands oil from Hardisy, Alberta to Port Arthur, Texas. The pipeline system,…
Nr. dodgy deals
Washington, Feb 8 2011
ON FRIDAY, President Obama discussed with Canadian Prime Minister Stephen Harper a controversial proposal to build the $7 billion Keystone XL oil pipeline from Alberta province to Texas. The pipeline would transport low-grade crude from Canadian "oil sands." The oil's extraction produces loads of greenhouse gases; the stuff is 82 percent dirtier than more traditional oil, according to the Environmental Protection Agency. Even as Mr. Harper presses the president to consent to the pipeline's construction, environmentalists and their allies in Congress want the administration to do just the opposite.
Oil sands crude is nasty, and the sooner the world stops burning it, the better. But that's actually not much of a reason to kill the pipeline.
Environmentalists admit that there's already plenty of unused pipeline capacity running into the United States, so declining to build a new pipeline wouldn't affect Canadian oil sands production until after 2020, according to an Energy Department report made public Wednesday. After then, Canadian production will decrease only if, as some environmentalists hope, "a widespread movement" halts construction not only of Keystone but of any other new pipelines leading from Canadian oil sands, as well as increased use of rail and barge transport.
That's exceptionally unlikely. Chinese firms are already buying stakes in Canadian oil sands production, and projects are planned or underway to increase exports from Alberta to Asia. Even if everything works out the way environmentalists would like and Canadian oil continues to be "shut-in," America and others will simply import and refine similar-grade crude from other sources, particularly the Middle East, the report concludes.
Environmentalists counter that, in the near term, building the Keystone XL pipeline will raise oil prices in the Midwest, currently the major market for Canadian oil sands crude, since it would link Alberta with the massive Gulf Coast refinery complex and, therefore, the world oil market.
But the underlying evil here is not that Canadian oil companies want to sell their product for the world market price - a privilege anyone who believes in "fair trade" should accommodate and one that market forces beyond America's control will see to eventually. (Why, anyway, wouldn't environmentalists be happy about higher oil prices?) The Energy Department report makes clear that the real way to reduce emissions resulting from the burning of oil extracted from oil sands and other sources is simply not to burn it - that is, to lower demand for the stuff.
There are other objections to the pipeline that have to do with safety and the environmental sensitivity of particular places along the proposed pipeline route. The Obama administration should carefully consider them and adjust the project accordingly, ensuring it's done responsibly.
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