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February 20, 2012

Keystone Pipeline: Everybody Wins!

The failure to move ahead with the construction of the Keystone XL oil pipeline, as regular readers will know, has cost the U.S. in all sorts of ways—in diplomatic relationships, in energy security, and in jobs. About a month ago, Via Meadia covered a story that pointed to yet another loss: By forcing American refineries in the Gulf to import more expensive Brent crude rather than the cheaper West Texas Intermediate variety, the status quo is frittering away national wealth and GDP.

This recent story from the WSJ’s MarketWatch notes that the problem is getting more acute. Geopolitical tensions with Iran and an unusual cold spell in Europe have Brent crude prices climbing, while WTI is getting cheaper due to a supply glut in Oklahoma, where oil is more difficult to transport to the Gulf for refining. As a result, the spread between the two prices is widening, more than doubling since the start of the year.

This is an unnecessary drain on American companies and the nation as a whole. So far greens have proposed one solution: taxing those evil oil companies. Via Meadia has an alternative solution: build the pipeline, allow big refiners to profit, and tax some of the excess.

This seems like a rare issue on which blues, greens, and capitalists should be able to come together in agreement. If you are wondering why we aren’t seeing more progress, so are we.

Posted in Blue Social Model, Economics & Business, Energy & Environment, Quick Takes
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  • http://politicalcorrection.org/blog/201201180005 Benjamin

    Perhaps one of the reasons people should object to this whole thing is that not only have the claims of permanent jobs being created been soundly debunked by Cornell University, but that one of the major proponents of this legislation has been using this as an opportunity to line his own pockets. Boehner has collected over $100,000 in contributions from organizations who will benefit from this pipeline and has invested his own money in other companies who benefit from it. While these kinds of shenanigans are not illegal, it is most certainly unethical for legislators to be profiting personally from the decisions they make.

  • Mrs. Davis

    We aren’t seeing more progress because of the reds.

  • bingogringo

    The Keystone pipeline will go through as planned. It is merely being postponed as political cover for the present administration. The administration WILL allow it to continue after it makes its required moral outrage arguments. ALL of the pump-houses have been built from Canada to Texas. The dotted lines have all been signed.

  • http://pubsecrets.wordpress.com Phineas

    “Via Meadia has an alternative solution: build the pipeline, allow big refiners to profit, and tax some of the excess.”

    With you on points one and two, but, in point three, determining what’s “excess” will be the sticking point. Why should government have any say in how much profit is reasonable and where “excess” begins? Grasping pols and ideologically driven Greens will always want more.

    On the broader issue of Keystone, for that alone, Obama should be turfed out.

  • stephen b

    Possibly good news, although since it is Mexico’s state run oil company, doubts persist:http://www.bloomberg.com/news/2012-02-20/clinton-signs-accord-in-mexico-for-oil-exploration-with-state-owned-pemex.html
    Could be a good deal for US consumers. It will take some of sting out of GOP Keystone critique. Of course Dems aren’t courting masses of Canadian immigrant voters, either.

  • Kenny

    “This seems like a rare issue on which blues, greens, and capitalists should be able to come together in agreement. If you are wondering why we aren’t seeing more progress, so are we.”

    What!

    Are you serious?

    Much of the Green movement embraces the ideology ofse influencial radicals view the human race as a plague on the earth and are anti-development, especially development in the U.S. which they feel is already too rich.

    As such, you’ll never get the Greens to agree to anything. The only mystery is why the Democratic Party hasn’t bounced these kooks a long time ago.

    How can you write this Mr. Mead: “

  • Kris

    Benjamin@1, are you for real?

    First, it would be nice of you not to insult our intelligence by implying that legislators opposing or delaying Keystone are, unlike their opponents, acting purely altruistically.

    Second, regarding the “sound” study by “Cornell University”. If you had bothered to provide us with a link, we would know this is a report from the Cornell Global Labor Institute, “established in 2005 to work with trade unions in the US and internationally.”

    Third, as to the quality of the study itself, I’ll reproduce one sentence and let readers draw their own conclusions: “Even one year of fuel price increases as a result of Keystone XL could cancel out some or all of the jobs created by the project.”

    Oh, and since I do provide links: http://www.ilr.cornell.edu/globallaborinstitute/research/Keystonexl.html

  • Bill

    I just read that it’s hard to get oil from Oklahoma to the Gulf, so we need a pipeline from Canada to the Gulf. I’m sure there’s some logic in there somewhere.

  • Corlyss

    “This is an unnecessary drain on American companies and the nation as a whole.”

    Is there any known evidence that Obama gives a tinker’s [darn] about either?

    I see from Economist that he’s loading up on “scientists” to put on the full-court press with the whole panoply of trendy junk science that gets folks like Benjamin all hot and sweaty. (My “scientist” can knock out your “denier!”)

  • Walter Sobchak

    Bill: The pipeline runs from Canada to the Gulf. Oklahoma just happens to be in between. Here is the map:

    http://www.state.gov/r/pa/plrmo/170342.htm

    It is worth noting that Cushing, Oklahoma is to oil pipelines what Chicago O’Hare is to airplane routes, the hub in the middle of the country where they meet.

    Bill & Benjamin: The internet can be your friend, if you use it to gain knowledge. But, you need to remember Lincoln’s maxim: It is better to keep silent and be thought a fool, than to speak and remove all doubt.

  • Ranger Rick

    Bill: There’s plenty of logic when you check a map of the project as a whole. It includes a lot more pipe than just the main trunk from Canada to Texas. There are spur lines that branch all over the place, including a stretch from Oklahoma to the Gulf coast refineries.

  • Kohl Haas

    The pipeline would come down from Canada bringing Canadian crude for about half of its capacity. It would also pick up crude from the northern Plains area and from the big terminal where things are backed up in the Cushing, Oklahoma area thus relieving the bottlenecks in the center of both countries where much new production is coming on line. That is the logic.

    The Greens now are going to have the Canadians building a pipeline across one of the most beautiful and pristine areas on the planet out to the head of a long, narrow fjord at Kitimat in an area which is often dark and foggy. A long narrow fjord is a great place for heavy tanker traffic. And they must come around several islands to even get into the fjord. A disaster waiting to happen. Another fine example of the so-called Green Movement sacrificing the environment for political considerations. How gullible can people be?

  • Tom Richards

    Bill, as Wikipedia (for example) could tell you, Phase 3 of Keystone XL is/was/would be to run from Cushing, Oklahoma, where domestic oil would be added to the pipeline, to Nederland, Texas.

  • EvilBuzzard

    Because we all know that what Robert Redford writes in The Huffington Post is waaay more important than providing jobs and cheap energy to the little people.

  • Bill

    I think you all missed my point. Oklahoma is a lot closer to the Gulf than Canada. So if we have a glut of oil in Oklahoma that is difficult to get to the Gulf, the logic would dictate a pipline from Oklahoma to the Gulf. Not a long drawn out project from Canada that, in ‘Phase 3′, finally installs the original solution.
    Let me state it more simply: work backwards from the Gulf.

  • Kohl Haas

    That is part of the solution. A pipeline from the Gulf to Oklahoma is going to be reversed; but it is not enough. The point still is: the environmental objections were phoney.

  • Toni

    Bill, you’re still missing the point. Keystone would pick up oil ALL ALONG ITS ROUTE, including in North Dakota and other Plains states now bursting with shale oil.

  • Toni

    American greens won’t go along because The Environment is their religion. Similarly devout Canadian greens won’t be able to stop the Rockies Pipeline Heresy because oil is too important to the Canadian economy.

  • Corlyss

    I’d like to object to the bowdlerization of my 300 yr. old epithet. It is hoary with age, and about as mild an oath as ever there was. Tinker’s darn isn’t even recognized. If you had to sanitize it, at least use the acceptable substitute, i.e., a tinker’s cuss! I’m left feeling potted and panned by the liberty!

  • Kohl Haas

    The Environment is not their religion; it is only used to recruit the gullible to a left (blue)economic model. Too many actions they take are contrary to environmental benefit.

  • a nissen

    Bill, time to drop the other shoe on all the “system” thinkers: where and how the refined products go once over-sized refineries have worked their magic.

  • a nissen

    Examples of opinions based on facts:

    “….plans were announced in November to reverse the flow of the Seaway pipeline, allowing crude oil that had built up in Cushing to flow down to the main refining hub in the U.S. Gulf, where it would compete with other foreign and domestic barrels.

    Market players said they expect inventories to continue to build at Cushing in coming weeks, as supplies build up ahead of the Seaway pipeline opening. Analysts said the cost of moving crude through the pipeline to the Gulf would be around $2 a barrel, a fraction of current costs of more than $7 a barrel for rail and barge movements.”

    http://www.4-traders.com/WTI-SPOT-2355639/news/OIL-FUTURES-Nymex-Crude-Settles-1-6-Brent-WTI-Spread-Narrows-14009700/

    “Crude stocks have built up at the Cushing delivery point of the Nymex contract, maintaining pressure on futures prices, while Brent continues to reflect the global concerns over potential tightening supplies.

    “It seems that when people want to buy, they buy Brent and when the want to sell, they sell [West Texas Intermediate],” said Tom Bentz, director at BNP Paribas Prime Brokerage.

    “A lot of players are having to scramble for oil and WTI really has nothing to do with the rest of the world’s crude right now,” he said.”

    http://www.nasdaq.com/article/oil-futures-nymex-crude-up-brent-drops-as-investors-play-spread-20120207-01269

  • Steve

    It was clear from the very beginning that the construction of the pipeline could have been one of the crucial steps to give our economy a boost it needs right now considering that the energy sector in Canada has recently been on the rise. Unfortunately, Obama gave up that opportunity and now he is left with little alternative but to look for other solutions such as higher taxes for the rich and the biggest corporations to reduce the budget deficit. After a series of unreasonable steps comes outright discrimination. What a policy!

  • http://www.ipec-ltd.com/ Carol

    Pipelines can be considered as the energy lifelines of human daily activities.Pipeline’s role is not only concentrated to our daily life’s but also,they are used to the nation’s industry standards.The pipeline companies are assigned the task of construction, operation, and maintenance of its pipeline systems in a safe, environmentally sound manner.

    pipeline companies canada