Keystone Cops do Energy Security

Keystone Cop Cory Heidelberger announced an arrest recently on his blog. He has thrown the Keystone pipeline project in the slammer, on charges of marketing and fraud.

Keystone XL could indeed help American national security… if the oil it carried were intended for use in America… We won't burn a drop of Keystone XL oil in the U.S. Pipe the Bakken oil into the mix, and that shale oil too will go straight to tax-free Port Arthur and eager Chinese buyers.

I must admit some surprise here. After all that Cory has told us about leaks in the existing Keystone pipeline, can they really get "every drop" of the new crude out of the country?

While we are waiting for the pipeline to make bail, let me consider the complaint. Cory claims that all the Keystone oil will go abroad and provides a link as evidence. I followed the link to Treehugger.com.

Treehugger is a quaint little site with a green wine guide and a fashion and beauty page sporting vampish young women wearing black gloves and sitting next to luggage. They were also sitting very close to each other. Being a fan of fashion porn, I liked it well enough.

I followed the Treehugger link to some folks who call themselves Oil Change International. Here is how they describe themselves.

Oil Change International campaigns to expose the true costs of oil and facilitate the coming transition towards clean energy. We are dedicated to identifying and overcoming barriers to that transition.

Maybe I was harsh in describing Keystone opponents as opposed to energy. They are only opposed to viable and ample sources of energy. Anyway, these OCI folks are surely opposed to oil. It's no good very bad stuff.

From that page I read the report that provides the sole support for Cory's claims. It is very big on declarative statements, bullet lists, and charts. As for actual evidence, that seems to amount to a handful of quotes. I am underwhelmed.

There is no way to determine from the report how many drops of oil will end up where, but let's assume that the claim is right. All the oil arriving at Port Arthur, Texas, is intended for export. What does that mean? Here are my own thoughts, in bullet list form as if they were as authoritative as the OCI report.

1. "Oil is a fundamentally global market," says Mr. Heidelberger. He is right, of course. Increased demand resulting from economic development in India and China has driven the price of energy upwards recently. That hurts everyone. If the Keystone oil is sold on the world market to whoever needs it, that will increase the supply and so decrease the pressure on energy prices. That helps everyone, including the U.S., no?
2. Whoever buys the refined fuel, it will be refined in the U.S. by American workers. That is better for the latter than if it is refined in some other country, isn't it?
3. OCI seems to think that the U.S. doesn't need any more energy, because "higher fuel economy standards and slow economic growth mean declining U.S. oil demand." Wouldn't it be nice if our economic growth sped up a little? OCI probably doesn't think so, but I think so. If it does, might it not be nice to have more oil to fuel that growth with? If demand in the U.S. increases, the business model of the refiners will change.
4. The Keystone pipeline will be a secure source of a lot of crude for the Gulf Coast refineries. Should there be a disruption in the oil supply from abroad, the pipeline will help make up for it. That oil will be available to supply the American market, regardless of the business plans of Valero Energy Corporation, which anyway will be happy to make the change. That makes us less dependent on "foreign oil".

Having a pipeline that connects an oil field in Canada with refineries in Texas increases the security of the U.S. in the same way that the Atlantic and Pacific oceans increase our security. It is stupid to suggest otherwise.

Comments

[Donald Pay]

The pipeline shouldn't be built if the goal is energy security for the US.

http://americansecurityproject.org/blog/2011/on-the-canadian-oil-or-tar-sands/

[Ken Blanchard]

Donald: the article you cite is interesting and thoughtful, but it simply restates the argument I have addressed above. I am sure that Canadian oil refined at Port Arthur will be sold to whomever is willing to pay for it. Right now that may be China. We cannot predict who it will be in a few years, let alone a decade or so. At any rate, more oil on the world market has to decrease pressure on energy costs. I don't see how that can be bad for our security.

Likewise, I don't see how Canada can gain some measure of independence from the U.S. (that is a silly goal if indeed they are pursuing it) by shipping more oil through the U.S. to our refineries. Surely it is the opposite. It means that the U.S. and Canada will be more interdependent. That is a key element of American security, as I stated.

[Donald Pay]

Excuse me. The point is the Keystone XL decreases the interdependence of the US and Canada. Also, it makes it far more likely that domestically produced oil from the Bakken in ND will be shipped out to China, not used in the US.

It's not like I haven't thought about this long and hard. I have some inherited mineral rights up in Williams County, ND. Right now we're trying to figure out whether we are going to participate in some oil drilling, lease the rights, or just wait to be force pooled. I prefer not to produce the oil at all. Although I'm the owner of the mineral rights under a certain portion of land, I have no right to what happens with my property. Big oil controls the rights to most of the pool, and since I'm a little guy, I get run over by the rich and powerful oil interests. So, if they're for the Keystone XL pipeline to steal my property and sell it to China, then I'm against it.

[Ken Blanchard]

Donald: did you turn into a parrot? You keep saying the same thing over and over again, but logic says the opposite and you offer no arguments. How can one more pipeline through the U.S. make Canada less dependent on the U.S.? It can't.

[caheidelberger]

(Hey, I thought I submitted a comment yesterday! I included many links: perhaps the spam filter was twitchy?)

"If it does, might it not..."? Ken, you sound pretty iffy here.

The immediate effect of the Keystone XL pipeline will be an increase in prices at the pump, as Keystone XL clears the Midwest "glut" of oil at Cushing OK and closes the price gap between West Texas Intermediate and Brent Crude. TransCanada and oil market analysts see this as the clear intent of the pipeline. How do higher oil prices help U.S. national security?

Now let's travel down some of your "if" roads, Ken. Suppose there is some disruption of foreign supplies. If that disruption is a giant solar flare that wipes out the entire Eastern Hemisphere while we slumber peacefully, then sure, the Canadian tar sands oil will end supplementing our supplies. But suppose the disruption is something less Irwin Allen or Roland Emmerich. Suppose it's just a good old-fashioned embargo, with Chavez and the sheiks deciding they are tired of our money. Do TransCanada and the refiners stop exporting to China and India and hand their oil to us out of the goodness of their hearts? Or do they expect us to outbid China in a suddenly tight oil market? Or do you expect us to nationalize the pipeline and the refineries to expropriate the oil for ourselves? The latter sounds like great fun... but it also sounds like a recipe for war with Canada and China.

Now I suppose there is some Rube-Goldbergian foreign policy we could play here. We help Canada ship that tar sands oil out to the export market as fast as possible. We get China hooked, and then whenever they act up, we remind them that one of their main energy arteries runs right across our heartland, and that we could pinch off that supply with one little EPA or PHMSA order at a moment's notice. In a twisted way, Keystone XL could boot our national security, not by decreasing our dependence on foreign oil, but by increasing China's dependence on foreign oil.

But that argument, along with your argument above about getting those pipeline and refinery jobs in the U.S., is akin to saying, "China's going to do opium whether we like it or not. We might as well get something out of his addiction. Let's deal drugs!"

Dependence on fossil fuels only delays progress on the search for energy alternatives and increases the possibility for conflict. Sustainable national security depends on sustainable energy.

[Donald Pay]

I keep saying the same thing over and over because it is empirical fact, and you are arguing from some sort of twisted ideological "logic," which, unfortunately for you, is pure bunkum. I don't know where you are getting your so called "logic," but it has nothing to do with reality. Cory has provided a pipeline of facts for you but you keep coming back with "logic' that is simply made up.

[Ken Blanchard]

Donald: you provide slogans, innocent of innocent of empirical facts or logic. I have yet to see real evidence that the crude refined in Texas will really go to China. I expect it to go wherever there is a market for it. That is how the market is supposed to work. Meanwhile, a pipeline through the U.S. is a pipeline through the U.S., and not through Canada to the West. A pipeline through the U.S. is under U.S. control. That is as straight forward as logic gets.

[Ken Blanchard]

Cory: When I said "if it does, might it not", I was being facetious. I didn't expect that to go over your head. I take it as obvious that, if the American economy begins growing again, it will need more oil.

One moment you are telling me exactly what will happen to gas prices three years from now if the pipeline is built, and then you become skeptical when I argue that one more secure source of oil might be a good thing if there is a disruption in the world oil market. All of this talk about where the oil is going is speculation. It will go where there is demand for it and I am sorry if I lack confidence in your clairvoyance.

Oil is a resource for modern economies. Events sometimes happen to constrict the supply. It is a good idea to have other sources to rely on. Am I going too fast for you? Ask the Japanese empire in the years just before Pearl Harbor. That wasn't an imaginary event.

In a real crisis, there will be vicious competition among powers for oil, as you seem dimly to understand. I don't expect oil producers to do anything "out of the goodness of their hearts." I do expect them to recognize who controls the pipeline and the refineries. In any event, the fact that the Keystone pipeline crosses the U.S. and ends in Texas will give the U.S. leverage that it would not have if the oil field were unexploited or it a pipeline were built across Canada. To suggest otherwise is nonsense.

Your last comments give the game away. You are not really concerned with American energy security unless it is the right kind of energy security. You have a dream. You want us to run short of oil in the expectation that this will stimulate the search for "sustainable energy alternatives".

There are two problems with this strategy. One is that it will require a dramatic increase in energy prices. That will mean higher prices for everything produced with energy which is everything. Okay, you are willing to let everyone pay that price.

The second problem is that there are no "sustainable energy alternatives" on the horizon. Wind power and solar energy cannot possibly supply more than a fraction of the energy we will need for the rest of this century. We've been told for the last forty years that fusion power is a decade away. It isn't.

I really do encourage you to keep up your war against oil. Convince the Obama Administration and the rest of the Democrats to tie their flag to your dream. As for me, I will believe in your "sustainable energy alternatives" when you suddenly start telling us that they are bad ideas, violate property rights, and endanger national security. That is when we will know that they are real.