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As a follow on to “Why Can’t Conservatives Be Honest About Keystone?” and as a result of an e-mail exchange I had with a conservative friend I thought it best to bring up a sidebar story related to the Keystone pipeline decision. A corollary issue that conservatives have tried to raise is that Obama’s vetoing of the first Keystone application will result in Canadian Oil being sold to China and that this rejection will preclude any further chance of that oil being shipped into the American market. As it turns out nothing could be further from the truth. While Canadian Prime Minister Stephen Harper reiterated his country’s own national interest in saying “Canada will continue to work to diversify its energy exports”; that statement can only be seen to represent the fact that Canada has had an ongoing interest in more than one market for its natural resources, and that predates Keystone. In his conversation with President Obama Prime Minister Harper indicated “that he hoped that this project would continue given the significant contribution it would make to jobs and economic growth both in Canada and the United States of America.”
Juliet Eilperin of The Washington Post who has followed this story closely said “it would be more expensive for Canada to ship its tarsand oil to China but it could happen.” But does that mean it will, absolutely not as it’s in the interest of both Canada and the U.S. to pursue the alternate route for the pipeline. Why, because it would be much cheaper to construct a pipeline through the Great Plains of the United States than it would be to build one through the mountainous regions of western Canada. This is particularly true when you factor in the costs involved in building an oil out load port on the Canadian west coast, something not required when shipping oil to the United States via the Keystone pipeline. Moreover with the bulk of the background work on the original Keystone project completed, the costs involved in rerouting the pipeline are minimal compared to what it would cost to create a new project to Canada’s west coast? Why even the Premier of Alberta doesn’t expect to see his province’s oil shipped to the west. Quoting Bill McKibben a writer and activist monitoring Keystone: “The premier of Alberta said that without Keystone he’d be ‘landlocked in Bitumen.” More importantly TransCanada’s CEO, Russ Girling has made public his decision to reapply for a permit to build the pipeline and asked that the process be expedited so as to enable a 2014 construction start. Barack Obama yet to take issue with Mr. Girling’s new request and its not likely he will so long as environmental safeguards are respected.
Thus there is nothing in the Prime Minister’s comments or in TransCanada’s actions that would lead one to conclude that we have forfeited our opportunity to purchase Canadian oil. What I find remarkable in this particular conservative attack is the complete and total willingness to ignore the fact that Prime Minister Harper seems to be engaged in political posturing for the sake of Canadian public consumption on the one hand, and the fact that he in no way rules out a revival of the project after environmental concerns are addressed on the other. Harper’s own words clearly prove he would prefer to ship oil to the United States than to China and you can bet he’s more than aware of the far higher costs involved in the later. As such there is no reasonable indication that the rejection of the first Keystone application signals the end of any chance that Canadian oil will flow into the United States.
S.J. Gulitti
1/26/12
Sources:
“Why Can’t Conservatives Be Honest About Keystone?”; http://open.salon.com/blog/steven_j_gulitti/2012/01/24/why_cant_conservatives_be_honest_about_keystone
Canada will look to China to sell its oil; http://articles.cnn.com/2012-01-18/americas/world_americas_canada-keystone-oil_1_pipeline-project-northern-gateway-pipeline-oil-exports?_s=PM:AMERICAS.
Keystone XL rejected by Obama; will Canada just sell that oil to China?;http://www.washingtonpost.com/blogs/blogpost/post/keystone-xl-rejected-by-obama-will-canada-just-sell-that-oil-to china/2012/01/19/gIQA7WnkBQ_blog.html
Could Keystone Pipeline Plan Be Revived After Obama’s Rejection?”; http://www.pbs.org/newshour/bb/politics/jan-june12/pipeline_01-18.html
5 Comments
Last I looked the Keystone contracts ship oil to a Saudi owned Texas refinery where they will be shipped out of the US to South America, replacing mid-east oil, and in the process draining the current excess oil in the mid-west, allowing a $0.20 rice in gas prices in the mid-west.
There is no intent to sell into the US market – indeed oil supply to the US market becomes smaller, not larger, with Keystone, because everyone is afraid of requiring a new refinery to be built in Illinois.
It is similar to Alaska oil – which never gets to the lower 48 as it is sold into the Far-east. The rational for saying it helps our oil supply is that if one nets our exports with our imports, the net import number is reduced.
Since Keystone is in and then out, there is little effect of “net US imports” – all we get is more up time at a Texas refinery and a few hundred jobs in return for our our accepting massive environmental danger – and higher prices in the mid-west.
Selling to the west coast has the cost of a better port that needs to be developed and a longer stretch that needs a heating system to keep the cold north from stopping flow in the pipeline.
I have not heard of an economic model that shows economic gains from Keystone beyond perhaps the 20,000 jobs that last the 2 year period needed to build it.
Interesting observation. I would love to see your data sources.
http://www.usnews.com/opinion/blogs/peter-roff/2012/01/25/kochs-wont-benefit-from-keystone-xl-but-warren-buffett-might
Conservatives are all about the fear. Same sex marriage is threatening your children. Liberals are hiding under your bed. Obama is going to turn America into a socialist FEMA camp.
If we don’t approve this environmental nightmare pipeline we will lose jobs and you will all starve oh booga booga booga!
The Canadian government is also conservative.
If you don’t approve this environmental nightmare pipeline we will sell our oil to your enemies oh booga booga booga!
“…we will sell our oil to your enemies…”
What do you mean “your oil”? It seems this is Chinese oil before it ever leaves the ground
“AP) BEIJING — A Chinese state-owned oil company has acquired Canada’s Daylight Energy in the second major Chinese purchase of a Canadian energy company this year.
A unit of Sinopec Corp. and Daylight Energy Ltd. announced the 2.2 billion Canadian dollar ($2.1 billion) acquisition was completed Friday.”
January 3, 2012, 8:04 a.m.
“TORONTO–PetroChina, Asia’s largest oil and gas company, will take full ownership of the MacKay River oil sands project in Canada after Athabasca Oil Sands Corp announced Tuesday it sold the remaining 40% of the development for US$673 million.
The deal continues a trend that has seen China’s state-owned oil companies invest billions of dollars in exploration or production ventures in Canada, Africa, Latin America and elsewhere. It gives PetroChina full control of one of Alberta’s newest oil sands developments. Athabasca had previously sold PetroChina a 60% stake in two oil sands projects owned by Athabasca.”