Editorial: The Keystone XL Pipeline is a Good Idea

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The problem with the complex national debate about the Keystone XL pipeline is that it’s not really about energy, the environment or job creation – it’s about political gamesmanship and misinformation from at least three different interest groups.

The painful truth is that the Keystone XL Pipeline is a good idea because it gives the United States more energy options by expanding our pipeline grid and because the environmental impact of the tar sands will increase without it. But you could spend a couple weeks sifting through all the half-truths and sins of omission emanating from the energy, farm and environmental lobbies just to get to the facts you need to figure that out.

The American public deserves better.

The first interest group is a profit-driven energy industry that sometimes seems incapable of telling the truth and regularly subverts representative democracy via legalized political bribery. The ridiculous job creation and national security claims emanating from energy trade groups, like the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers, are meant to mislead the public about Keystone. Not to educate.

The struggles this worthwhile project is experiencing are a perfect illustration of the downside of the energy industry’s heavy-handed political ways, its penchant for half-truths and sins of omission, its alliance with the Republican Party, and its cavalier attitude toward the suffering its quest for profit growth creates among the 99%.

The second interest group is comprised of environmental organizations advancing the fiction that energy without risk is possible in the near term. They routinely hold energy projects hostage to sometimes impossible environmental standards and their opposition to Keystone is really about their opposition to global warming and the Canadian tar sands.
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Environmental groups have a vested interest in waging this battle because of past environmental damage, because the American public doesn’t trust its own energy industry, and because the attendant media attention boosts donations from a population that doesn’t fully appreciate what fuels its laptops, cars, lights and hot water heaters. Enviros also have a shameful history of pushing policies  that disproportionately burden the 99% via higher energy and food prices, because it’s easier than making the 1% pay their fair share.

The third interest group is an ethanol farm lobby that is getting rich by diverting corn from food production to fuel production. Less Canadian oil increases ethanol demand. The problem with ethanol farmers is that they’re also cavalier about the suffering created among the 99% by the higher fuel and corn prices they favor.

Meanwhile, political hookers and pimps are profiting from both sides as they work our pay-to-play government for legalized bribes. They’ve squeezed more than $1.65 billion from the energy sector and more than $80 million from environmental groups since 2008, according to the Open Secrets website. The vast majority of those political donations has been slipped into Republican G-strings. The lobbyists and their politicians aTar sandsre also cavalier about the disporportionate burdens they place on the 99%.

The only losers in this episode of American Kabuki Theater are the 99% and the truth. Working families have no lobbyists and few champions. That’s why our pockets get picked with such regularity.


Political Timing

Republicans tried to rush through the government permit for the pipeline to turn the issue into a political bludgeon ahead of the 2012 presidential election, by forcing President Barack Obama to take a position on the controversial project. They inserted a clause in unrelated legislation in December, requiring he approve or deny the pipeline within 60 days.

President Obama refused to be rushed and balked at signing the permit by the Jan. 18 deadline. However, he has not staked out a public position either opposing or supporting the Keystone XL.

The portion of the proposed route that passes over a large freshwater aquifer in Nebraska faces environmental opposition from a farm lobby that wants to increase ethanol demand. The U.S. State Department announced in November that it was pushing the deadline back a year to 2013 to give Nebraska officials time to explore alternative routes in less environmentally sensitive areas.

President Obama is likely to approve the pipeline after the 2012 election to avoid losing support from environmentalists at the voting booth. He may have to toss a bone to ethanol farmers to secure their support by renewing the 30-year-old ethanol tax credit which expired at the end of 2011. Those ethanol tax credits have already cost U.S. taxpayers about $20 billion.

The Republicans are still trying to force the project through before the November election to force Obama to commit to killing or supporting it. The politicians doing the forcing include U.S. Sen. Richard Lugar (R-Ind.), U.S. Sen John Hoeven (R-N.D.), U.S. Sen. David Vitter (R-La.), House Speaker John Boehner (R-Ohio) and House Majority Leader EriOpen Secretsc Cantor (R-Va.). They’ve received $5.67 million in donations from the energy industry, according to Open Secrets.

Energy Sector Nonsense

The energy sector has played fast and loose with the number of jobs that would be created by Keystone XL and the potential savings it would provide to motorists at the pump, as well as the consequnces of not building the pipeline extension.

They’ve implied that the pipeline is needed to access oil extracted from the tar sands. The truth is that the U.S. could still access this crude without the $7 billion extension by TransCanada Corp., just as we do today.

In fact, Canada is already the largest single supplier of foreign oil to the U.S.

We currently consumes about 17 million barrels of oil a day and import about 2 million barrels of that amount from Canada. It’s cheap, nasty stuff that can only be refined into gasoline, jet fuel and other petroleum products by the kind of complex refineries that are concentrated along the Gulf Coast.

The 1,661 mile-long Keystone extension would carry more than 700,000 barrels of oil per day directly to Gulf refineries from the Canadian tar sands. It would reduce transportation costs for the multinatiObamaonal oil companies and independent refiners, which would be returned to their investors in the 1% as profit growth.

The savings would not be shared with the U.S. public.

Why?

Because the U.S. doesn’t have a national oil company or a national refining company. We have private energy companies that exist solely to boost their own profits by any means necessary, not to advance the greater good.

When oil companies extract a barrel of oil they sell it on the world market to the highest bidder. They don’t set it aside for U.S. consumption because it was pulled from our soil.

The implication that refiners would charge motorists less at the pump because of the Keystone is knowing bull.  When refiners get a cheaper price on oil they routinely pocket the difference and pass it along to investors, not motorists.

 The energy sector’s claims about national energy security are equally specious, both for the Keystone and for the Arctic National Wildlife Refuge. Our national energy security is advanced in the longer term by having oil reserves in the ground and being able to tap them in a crisis. Not by consuming them more rapidly.

Meeting more of our energy needs via North American sources of fossil fuel by pumping out those finite reserves more rapidly only increases our security in the short term.

PipeThe energy sector’s job creation claims for Keystone are equally disconnected from reality.

The American Petroleum Institute maintains that the pipeline will create 20,000 construction jobs and “realize an additional 500,000 U.S. jobs” through 2035. However, there’s a big difference between creating contract work and creating jobs.

Building the Keystone will create temporary construction work – not jobs. Once the pipeline is finished the work will be too.

API’s other claim that an additional 500,000 jobs will be created by 2035 is just flat-out ridiculous. It implies Keystone is a novel project for a nation that already has roughly 100,000 miles of oil pipeline and 1.21 million miles of natural gas pipeline. And it implies that we’re not already receiving Canadian oil via tankers and other pipelines.

Meanwhile, the ethanol industry is trying to push the pile in the opposite direction with its own misrepresentations. Nebraska farmers are crying bloody murder about the risk the Keystone will pollute an underground aquifer it passes over, implying that an oil spill on land would pose the same dire environmental risks as one in coastal waters, and acting as if oil is the equivalent of spent nuclear fuel rods.

Not true.

Oil is not some manmade product or pollutant. It exists naturally in the ground in huge amounts. Nebraska actually has 9 million barrels of oil reserves in its soil. If mankind had never evolved beyond neanderthals it would still be there.

No oil spill is ever a good thing, but a pipeline spill on empty prairie is infitely superior to a tanker spill in coastal waters.

If the farm lobby really wanted to level with the American public, they’d tell us that they’re getting rich by turning corn into ethanol. They’d tell us that they’d like to plant more corn for ethanol and make more per bushel, even though the inefficient process hurts the environment and has led to a surge in food prices.

The diversion of corn to fuel production has pushed food prices beyond the means of many of the poor people who depend on corn as a fuel staple. It was responsible for the Mexican “tortilla riots” of 2007 and similar protests around the world.

Nitrogen runoff from all the additional fertilizer uses in corn production has dramatically expanded the dead zone at the mouth of the Mississippi, as crop sizes have grown. It kills everything that breathes.

The other problem with ethanol is that it takes almost as much energy to grow the corn used to make it as the amount of energy extracted from that corn, due to tractor fuel and fertilizer.

RefineryU.S. Refinery Basics

TransCanada’s proposed Keystone XL pipeline expansion will link Canada’s shale oil fields with Gulf Coast refineries that already possess the delayed coking units needed to process this tar. These coking units will need to be expanded if Keystone is approved, but the number of new refinery jobs created will be negligible due to automation.

We’re not talking about building new refineries because of Keystone. That’s one of the reasons it’s such a good idea.

The new pipeline will allow oil from the Canadian tar sands to be processed by existing complex refineries along the Gulf Coast. The capacity of their delayed coking units will have to be expanded to accommodate the additional volume.

However, that expansion won’t necessarily translate into more refinery jobs because delayed coking units are run mainly by workers sitting in control rooms. It doesn’t take another set of hands to run four coking drums rather than two.

U.S. refineries currently have the ability to process about 17.7 million barrels of oil a day. Only 2.49 million barrels of that capacity is attached to a delayed cokiDelayed Coking Unitng unit. Most of those cokers (below right) are in Texas and Louisiana; they run everything from Russian crude to heavy oil from Venezuelan and Canada.

The easiest oil to process is called “light and sweet.” This grade fetches the highest price from refiners and is produced in large quantities by countries like Saudi Arabia and Libya, and closer to home here in Texas.

The hardest oil to refine is called “heavy and sour” and comes from places like the Canadian oil sands region. The extraction site is centered in the Canadian province of Alberta, which begins north of Montana.

The energy industry terms “sweet” and “sour” refer to the amount of sulfur in a grade of oil. Sour grades with more sulfur are harder to refine.

The terms “light” and “heavy” refer to the density of the petroleum. Lighter oil moves more freely through pipelines and yields more useful petroleum products, such as gasoline and jet fuel.

Heavy oil is difficult to work with because it doesn’t flow as freely. In fact, most of the heavy oil extracted from the Canadian tar sands is not even a liquid. It’s solid clumps of dirt permeated with petroleum.

Environmental Nonsense

You know that old saying about “cutting off your nose to spite your face?” Well, that’s pretty much what environmentalists are trying to accomplish by opposing the Keystone.

Their arguments against the pipeline extension are really arguments against the tar sands and against global warming. They’re meant to mislead the 99%, just like the claims of the energy industry. Neither side is trying to empower decent working people with the information to reach their own conclusions.
upgraders
The environmental lobby’s opposition to Keystone is premised on the ridiculous notion that the tar sands can be made to go away. That’s not going to happen until solar and wind-energy is so cheap and plentiful that oil from the tar sands can no longer compete with them in the global market.

It’s going to take many decades to reach that point. The Energy Information Administration forecasts that renewable energy sources, like solar and wind, will account for only 14% of the world’s energy needs by 2035.

Working families need access to affordable gasoline and home heating oil during this prolonged transition. We don’t need to be handed the pricetag again by environmentalists.

The environmental lobby is trying to undermine the tar sands by suggesting the Keystone will create more problems than it solves for the environment. However, the painful truth is that the pipeline will reduce environmental impacts. Blocking it will only shift more of the environmental burden of refining tar sands oil to Canada from the U.S.

tankerWithout the Keystone, the energy industry will simply build their own complex refineries in the tar sands region, doing even more damage to the environment there. The region already uses a basic form of a refinery (left), called an “upgrader,” to turn shale into a liquid form of petroleum that can be transported by pipeline.

The Canadians may also build a pipeline to the Pacific Coast if we don’t approve the Keystone extension and sell their oil to China, which has a penchant for locking up huge energy reserves for decades. It would have the same environmental risks as the Keystone.

Finally, the environmental hazards posed by modern oil pipelines are less serious than those posed by oilbird tankers like the Exxon Valdez, which devastated Alaska’s Prince William Sound when it ran aground in 1989 and spilled half its cargo. The Valdez carries about 1.48 million barrels of oil. The Keystone could move that amount in two days.

So, we’re looking at removing more than 180 tanker loads from coastal seas every year by moving oil through the Keystone instead of by sea. That’s a good thing.

In a perfect world none of this would be necessary, but we don’t live in a perfect world with energy without risk. Sure, thespian Leonardo DiCaprio and his fellow celebrities can afford to drive fully electric Teslsa sports cars that cost $101,000 and they can afford to spend $40,000 to $100,000 retrofitting their homes into green friendly eco-systems. Photo credit: NASA

Members of the 1% have that luxury.

Most members of the 99% do not.

We’re living through the toughest economic climate for the middle class since The Great Depression. Many of us are without health insurance and without any prospects of a decent job. We’re swaddled in tuition and mortgage debt. And we simply can no longer afford to bankroll the feel-good initiatives of the environmental lobby.

Energy without risk does not exist in the here and now in the kind of amounts that are meaningful to any discussion about the Alberta tar sands.

The painful truth is that the tar sands region and the fuel extracted from it are major contributors to global warming. The site grew  into a huge environmental eyesore from 1984 (right) to 2011 (below right), whicPhoto credit: NASAh is now visible from space. However, it’s also a very necessary environmental eyesore, given our nation’s continued dependence on fossil fuels.

We can’t turn the oil spigot off overnight, without severely and disproportionately impacting the welfare of the middle-class families who traditionally have paid for this nation’s environmental safeguards.

Environmental leaders rarely consider the impact their sweeping reforms have on the 99%, mostly because the small fees and surcharges involved are meaningless to them. Sadly, those fees and surcharges are eating working families alive right now.

New environmental proposals tend to be funded via flat fees, like road tolls and energy surcharges, instead of tax increases. This is done because fees and surcharges are a bargain for the rich, whereas tax hikes impose similar burdens on the 99% and the 1%.

As always, just do the math for yourself.

When a middle-class family making $100,000 a year is hit with a $1 environmental surcharge on their utility bill they pay a flat fee of $1. They would pay the same amount if they were hit instead with a tax increase of .001%.

A wealthy family with a household income of $1 billion a year pays the same $1 utility surcharge on a flat-fee basis, but they would pay $100,000 if they were hit with a tax increase of .001% instead on their much larger income.

The problem is that the rich and super-rich want to live like billionaires, but pay taxes like paupers. They want the benefits of U.S. citizenship without the burdens, like paying their fair share when it’s time to shoulder the cost of environmental improvements.

Sadly, the environmental lobby has shown us time and again that they don’t care. The easiest way to bankroll their projects is to burden the defenseless 99%, and that’s what they’ve done.

There’s a solid core of support among environmentalists to raise the price of gasoline so high that the average Americans will no longer be able to afford to drive, thereby reducing pollution. Once again, the burden for improving the environment via this plan would be borne almost entirely by the 99%.

Jon CorzineFormer New Jersey Gov. Jon Corzine (left) pushed through a similar lopsided environmental plan in 2009, when he was looking for a way to accelerate construction of solar arrays and wind turbine farms. Instead of charging the heaviest energy users, this former CEO of Goldman Sachs bankrolled $515 million of new projects on the backs of the midde class.

New Jersey energy regulators paid for those projects by imposing a flat surcharge on all utility customers, regardless of their usage. The surcharge will escalate from $1.28 per customer a year in 2010 to $4.08 by 2028. It didn’t sound like much until solar arrays and wind turbines started to appear on factory roofs, city halls and local telephone poles.

The utilities funneled the benefits of the programs to local governments and to their largest private customers. About $10 million went to create a solar array to power a candy factory owned by privately held Mars Inc., which makes M&Ms, Snickers and the like.

The privately-held company needed the gift because only three of its primary owners are ranked among the wealthiest 25 Americans by Fortune Magazine right now. Forrest Mars, Jacqueline Mars and John Mars have combined riches of $31.6 billion.
Photo Credit: PSEG
The 99% that actually paid for most of the new gear received almost nothing. The state didn’t build any solar cell and wind turbines on our rooftops.

Instead of shouldering the largest share of the burden for going green, the state’s heaviest energy users received the lion’s share of the benefits. The burden was shifted to the 99%.

The practice of burdening the middle class with environmental fees and surcharges in lieu of tax hikes is a favorite tactic of New York City Mayor Michael Bloomberg (right), the billionaire icon of the 1% who allowed Manhattan bridge and tunnel tolls to rise to $12 from $8 in September.

Bloomberg tried unsuccessfully to push through a congestion pricing plan in 2008 which would have imposed a $8 surcharge on cars and a $21 surcharge on trucks entering mBloombergidtown and lower Manhattan on workdays. It would have priced many of the 99% out of their vehicles, thereby clearing the streets for rich people like Mike.

Was he trying to hurt the 99%?

Probably not.

Most of the time Bloomberg and his fellow one percenters doen’t even think about working families. They just don’t care. The 99% is the human equivalent of white noise to them. That’s why they’re unsuited to public office.

But we can and should expect more from the environmental interests trying to block the Keystone. They need to start crafting policies that ensure the burden of making the shift to cleaner energy is fairly distributed among the poor, middle class, rich and super rich.

Approve the Keystone

Photo Credit: TransCanadaKeystone XL is a worthwhile project because the 99% has a vested interest in easy access to plentiful fossil fuel and will continue to need huge amounts for decades to come as we transition to cleaner energy sources. We will continue to need petroleum for everything from lubricants to chemicals to plastic long after solar energy arrays and wind farms displace powerplants fueled by coal and oil.

As a nation, the U.S. has an obligation to share the environmental impacts of the tar sands region with Canada, instead of just taking the benefits and sticking them with the burdens. Refining the oil in the Gulf, instead of requiring the construction of complex refineries in Canada, is a step in that direction.

The environmental lobby needs to publicly embrace the position that there is no energy without risk right now. We have to balance the environmental impacts of our quest for energy and manage them. Not pretend that we live in a world where energy without risk is viable in the short term.

Opposing the Keystone is not the right way for the environmental lobby to take on the energy industry. The way to stop global warming is to make cheaper and more efficient solar panels and wind turbines.

Until they’re available in adequate amounts, the tar sands region will continue to be excavated, regardless of whether the Keystone is approved. Pretending otherwise is as pointless as a child holding their breath to get their way.

At the same time, there is clear evidence that blocking the Keystone will harm both the environment and the environmental lobby.

If the Keystone is blocked, the most likely outcome is a similar pipeline with similar enviromental risks connecting the tar sands with a Pacific port to serve China, instead of the United States. If that happens the environmental burdens will still be the same. Only the benefits will change as oil that might have come to the U.S. is purchased by China.

The second possibility is that the Canadians will build their own refineries in the tar sands region, which would expand the project’s impact on the environment. The third possibility is that the Canadians will simply ship the same volume of oil on the high seas, via the equivalent of about 180 tanker voyages.

It’s entirely possible that the Canadians will do all three of these things even if the Keystone is approved. We can’t stop them, but we can and should share in the fuel extracted from the tar sands via this pipeline.

The Keystone will give us the option of pumping Canadian oil directly to Gulf refineries over a land route, which is less hazardous to the environment than carrying it by tanker. It’s also cheaper – but only for the oil companies and refiners. It’s not going to be cheaper for the 99% at the pump.

There is also a very real danger that the environmental lobby will succeed in blocking the Keystone. If that were to be accompanied by sharply higher gasoline prices they could lose popular support.

Neither environmentalists nor energy professionals advance their own interests by misleading the public about the pros and cons of such projects. And it gives good people everywhere pause when they to embarrass President Obama by transforming a worthwhile project into a political football.

The energy sector has expanded its political clout at the expense of the 99% and it needs to stop gaming our democratic system of government and begin to rebuild its broken bond of trust with the American public. Until the leaders of the energy industry start leveling with the Americans people again, instead of acting like grifters, every energy project is going to be viewed with the same skepticism as the worthy plan to extend the Keystone XL.

The same is true of the public posturing by the environmental lobby. The key to stopping global warming is to continue to expand the amount of energy generated without greenhouses gases by solar arrays, wind turbine farms and hydro powerplants.

It’s a disservice to the 99% to suggest that working families should have less access to affordable energy while that transition is underway.