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Keystone, China and Access to Canadian Oil

5:44 pm in Uncategorized by SJGulitti

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

Why Can’t Conservatives Be Honest About Keystone?

1:15 pm in Uncategorized by SJGulitti

It has been quite amusing to read over some comments posted recently that tried to portray Barack Obama as being opposed to building the Keystone Pipeline when the reality is that the president isn’t opposed to the project at all, he’s just opposed to being railroaded into a hasty decision by Republican political maneuvering. Let’s take a look at what Obama actually said: “This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people…I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil.” Obama Rejects Keystone Pipeline From Canada to Texas”; http://www.usatoday.com/news/washington/story/2012-01-18/obama-rejects-keystone-pipeline/52655762/1

Okay so where is the evidence in the words of the president that he’s fundamentally opposed to the Keystone Project? There isn’t any, as is obvious in his comments. Furthermore 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. Did Barack Obama take issue with Mr. Girling’s new request, emphatically no, thus the very argument that Obama is fundamentally opposed to Keystone is rendered moot based on this fact alone. Instead what we’ve seen here is yet another crass attempt to distort the facts to fit the ongoing ideological attack of trying to portray Barack Obama as indifferent to job creation along with his being anti-business. A further look into what the article above states reinforces this: “Obama said House Republicans forced his decision by including a provision in last month’s legislation for a short-term extension to the payroll tax cut that required him to either issue a permit to allow the 1,700-mile pipeline to be built or explain why it was not in the national interest by Feb. 21. Obama said he rejected the permit application now based on the State Department’s recommendation, which concluded there wasn’t enough time to vet alternate pipeline routes…The State Department announced in November that it would explore a new route for the pipeline and pushed a final decision on the controversial project past the 2012 election.” Thus it is more than apparent that Republicans aren’t really interested in creating jobs through Keystone either and if they were they would have pushed for some sort of expedited environmental approval process rather than having insisted on an arbitrary date so soon in coming which they knew wouldn’t allow for the legally required environmental impact studies. Moreover, Republicans and their allies are inflating the number of jobs that would be created: “Business leaders and Republicans say approving the project now would create as many as 20,000 jobs for an ailing U.S. economy and lessen dependence on foreign oil.” However according to Juliet Eilperin of The Washington Post who has followed this story closely and got her information directly from Mr. Girling of TransCanada, she said of Keystone “we’re talking more in the range of 6,500 construction jobs for both the first and second year of the project. And they’ve already spent some money that would cut into the supply chain jobs. When you’re talking about those big numbers, that includes everything, kind of indirect jobs, including who’s going to be serving these construction workers’ dinners, to other things…” “Could Keystone Pipeline Plan Be Revived After Obama’s Rejection?”; http://www.pbs.org/newshour/bb/politics/jan-june12/pipeline_01-18.html

What’s clear to this writer is that Capitol Hill Republicans were trying to manufacture some sort of political victory from their defeat on last month’s legislation for a short-term extension to the payroll tax cut by forcing Obama into making a decision on Keystone that they knew would mean a rejection of the pipeline. They had hoped in turn to use this decision as a political ploy but will this maneuver ultimately come back to hurt the G.O.P.? If you look further into the permitting process and the environmental due diligence involved in this project it reveals to what extent the congressional Republicans are playing politics. Commenting on the issue of redirecting the pipeline, Juliet Eilperin said: “Their argument [ The Obama Administration] is that they had been looking at an alternative route through Nebraska which has an environmentally sensitive habitat in a place called the Sandhills region. And they had asked basically TransCanada to work with Nebraska’s Department of Environmental Quality and look for a new way to do this, and had predicted that this would delay a final decision on this pipeline permit until early 2013. When the Republicans forced a decision by a deadline that was actually Feb. 21, the administration said, there’s no way we can do it. We’re not even going to go through the pretense of analyzing it, and we are rejecting this.” Moreover, there has been cause for concern in both parties at the state level over the original Keystone route: “Elected officials from both parties in Nebraska had expressed concerns a leak in the pipeline could endanger the [Ogallala] aquifer that provides much of Nebraska’s water supply.” Why even Nebraska’s Republican governor, Dave Heineman originally opposed Keystone having the same environmental concerns voiced by the president and others. With the aforementioned understood what is the real story of Keystone – the Obama administration not caring about jobs or Beltway Republican’s being more interested in playing the politics of obstruction than anything else? I think based on Obama’s comments and concerns at the state level among Nebraska’s Republican lawmakers and the governor the answer can only be the latter. Seems pretty open and shut to me.

S.J. Gulitti

1/24/12