Keystone Capers

It would be unfair to say that the President's decision to reject the Keystone XL pipeline means that the Administration has no policy. In fact, it has at least two. Unfortunately, they are at odds with one another. The Washington Post editorial is devastating.

ON TUESDAY, President Obama's Jobs Council reminded the nation that it is still hooked on fossil fuels, and will be for a long time. "Continuing to deliver inexpensive and reliable energy," the council reported, "is going to require the United States to optimize all of its natural resources and construct pathways (pipelines, transmission and distribution) to deliver electricity and fuel."

It added that regulatory "and permitting obstacles that could threaten the development of some energy projects, negatively impact jobs and weaken our energy infrastructure need to be addressed."

Mr. Obama's Jobs Council could start by calling out . . . the Obama administration.

The Obama Administration's decision to shelve Keystone XL is an example of the obstacles to an effective energy policy that we are warned about by… the Obama Administration.

Critics of the Keystone XL pipeline, including my friend Cory Heidelberger, have made a number of very bad arguments against it. The Washington Post neatly disposes of all of them.

We almost hope this was a political call because, on the substance, there should be no question. Without the pipeline, Canada would still export its bitumen — with long-term trends in the global market, it's far too valuable to keep in the ground — but it would go to China. And, as a State Department report found, U.S. refineries would still import low-quality crude — just from the Middle East. Stopping the pipeline, then, wouldn't do anything to reduce global warming, but it would almost certainly require more oil to be transported across oceans in tankers.

Environmentalists and Nebraska politicians say that the route TransCanada proposed might threaten the state's ecologically sensitive Sand Hills region. But TransCanada has been willing to tweak the route, in consultation with Nebraska officials, even though a government analysis last year concluded that the original one would have "limited adverse environmental impacts." Surely the Obama administration didn't have to declare the whole project contrary to the national interest — that's the standard State was supposed to apply — and force the company to start all over again.

Environmentalists go on to argue that some of the fuel U.S. refineries produce from Canada's bitumen might be exported elsewhere. But even if that's true, why force those refineries to obtain their crude from farther away? Anti-Keystone activists insist that building the pipeline will raise gas prices in the Midwest. But shouldn't environmentalists want that? Finally, pipeline skeptics dispute the estimates of the number of jobs that the project would create. But, clearly, constructing the pipeline would still result in job gains during a sluggish economic recovery.

Yes. If Keystone isn't built, that will not mean less oil refined on the American side of the Gulf of Mexico, it will mean that the oil comes from the Middle East in tankers. It will not mean that the oil in the Canadian tar sands will not be extracted. It just means that will have to go west rather than south. Does anyone think that the Chinese will be more environmentally scrupulous in refining the oil than our own refineries would be? Will it be better for Canada's forests if a longer pipeline is cut to the West than to the South? Stopping Keystone pays no environmental benefits.

The most popular argument against Keystone is that the oil imported from Canada and refined on the Gulf Coast will shipped to China and so does not benefit the U.S. This is stupid and economically ignorant in equal portions. It's stupid because the oil will go to China anyway. It is economically ignorant because it ignores the fact that adding value to a raw material is the chief source of wealth in modern economies. Oil refined here will be refined by American workers and the profits will be taxed by American governments. Important raw materials and refining them is how nations prosper.

The Administration's claim that the project was contrary to American National Interests is utter nonsense. It would give us another source of oil close to our borders and easy to defend. It would increase our ties with our northern neighbor. The project has already been vetted for several years. The decision to halt the project was not based on any new finding. It was based solely on election strategy.

The Republicans tried to force the President's hand by tying the Keystone decision to the payroll tax bill. To some degree they succeeded. Both sides will have the issue to use in the coming Presidential campaign. They did not, however, force the President to make any final decision. He insisted that his decision did not reflect a judgment on the project, only a judgment on those bad Republicans who tried to make him make up his mind. That leaves him free to reverse his decision as soon as he is safely reelected.

He will almost certainly do that, if he gets reelected. We aren't really going to sit idly by while Canada builds a pipeline to their western coast. Of course we can wait until Barack Obama is forced to make a decision, or we can replace him with someone, anyone, who is not so resistant to reality and who really cares about national policy.

Comments

[caheidelberger]

The Post does not neatly dispose of my argument that Keystone XL would raise our gasoline prices and thus cause economic harm that could easily outweigh the meager job gains. Nor does it dispose of the argument that the maybe hundreds of jobs (not the exaggerated thousands or hundreds of thousands some proponents hyperbolically claim) outweigh the externalities (e.g., spills, explosions, loss of landowner rights through eminent domain). Your argument that we can get the value-add from refining the oil here before shipping it to China misses the point that, under the status quo, we can refine and use all of that oil here, wihch should be an even greater economic benefit, right?

Breaking an addiction hurts. But we gotta do it. Put down the bottle... or the barrel.

[Donald Pay]

Obama did not make a decisions "to shelve Keystone XL." Your entire precise is wrong.

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[A.I.]

I can't help but get the feeling KB that had you been of arguing age at the turn of the last century, you would have been supporting laws that forced cars to pull off the road to allow passage of horse drawn vehicles.

That said, there certainly is a political component to the President's decision. Of course the same can be said of Republican efforts to portray that decision as a job-killing, cowardly act of deference to those liberal, tree-hugging (probably Godless) greenies with no regard to the future of America.

But, once one gets past the hyperbolic rhetoric, the fact is Keystone likely will be built. It likely will be redesigned to address concerns expressed by some not-so-liberal Republicans in Nebraska. And, the delay will be something in the vicinity of one year. Somehow, I think the republics (Canada and the USA)will survive the wait--as will the Koch brothers and other Keystone investors.

By the way, as a political scientist you've no doubt noticed that this whole bogus issue is a win/win for Republicans and a near draw for the President. So who really has the most to gain from politicizing it?

[Ken Blanchard]

Cory: the post demolishes your arguments. Increasing the supply of oil is going to raise prices? On what planet? Maybe it will do so very locally, but it cannot possibly do so nationally. You are far too intelligent a fellow to be spouting such nonsense.

As for jobs, Cory, someone has to transport and assemble the materials for the pipeline. It won't be Keebler elves. Not to long ago you were estimating zero jobs. See last line above. Now you say hundreds. You are just pulling numbers out of the air. It has got to be in the thousands at least during construction. Workers have to be working. They have to be eating and buying toilet paper. The President has been going around demanding that Congress pass his jobs program right now because we can't wait. This is a sure thing and the President nixed it. His words mean nothing.

[A]

Here's a little video about Keystone job numbers:http://thinkprogress.org/green/2012/01/19/407485/video-fox-news-and-limbaugh-cant-keep-their-keystone-xl-jobs-lies-straight/?mobile=nc

[Donald Pay]

TransCanada has admitted higher oil prices will occur in the Midwest. That's not all bad, because that will drive alternative fuels and green energy. Thanks to KB's and TransCanada's higher energy costs the Midwest will be ever more rapidly switching to green energy.

http://stopbigoilripoffs.com/news/keystone-xl-may-mean-higher-canadian-crude-prices

[Ken Blanchard]

A.I.: you have been reading this blog long enough to know how silly your first remark was. I stopped buying vinyl as soon as the first CD players came out, figuring, rightly, that the age of pizza sized media was over. I love new technology but I do insist that, before I buy, the seller offer me some reason to believe that I will get my money's worth. When all the seller can tell me is that it's new an only Luddites would pass it up, I keep my wallet in my pocket.

Mostly we agree. Keystone will eventually be built. The reason the President rejected the application this week is the same reason he does virtually everything these days: it gave him a talking point to use against the Republicans.

[Ken Blanchard]

I don't believe that TransCanada or you are anyone else can really predict the effect of Keystone XL on a regional market. However, as the WaPo pointed out, if it does increase fuel costs, shouldn't environmentalists be for it? The arguments against Keystone XL are incoherent.

[Donald Pay]

Oh, it's pretty easy to figure out the what costs will do in the Midwest. One need only look at past incident when a pipeline breaks or there is disruption in the local supply. Taking oil out of the captive Midwest market and putting it on a ship to China is not that much different than a leak.

http://www.usatoday.com/money/industries/energy/2010-09-13-gas-prices_N.htm

[A.I.]

There is a difference between being a luddite and a skeptic exhibiting cynical obstructionist tendencies (modern conservative?). Of course you adopted CD technology. You could compare the finished products and easily determine which was superior. And compared to storing and rummaging through 3-4,000 CD's, you might want to consider moving on to an iPod Classic.

There well may be better analogies, but your attitudes about "green energy" have some commonality with those horse-drawn vehicle defenders of yesteryear.
They looked at automobiles of the day and could see no advantage over literal horse power and could imagine little of the improvements that would ensue. Some also had a vested interest in stymying the new technology. Whatever the case, they did what they could to obstruct change.

If you could buy an electric car with a cruising range, performance and sticker price comparable to that of a fuel-burner and it cost less for a charge than a tank of gas, would you buy it? How about the Chevy Volt you so often malign? If it's price were comparable to other cars in its size class--something that mass production will push closer and closer to reality, would you buy it? Applying the standards employed to convert your music collection, you certainly would.

The question isn't whether or not you are open to "developed" new tech that is superior to old, it is whether you are supportive of the process leading to that development--or at least willing to get out of the way. So far, I would have to conclude you are neither.

[duggersd]

A.I., I personally would not purchase a brand new Chevy Volt. I usually wait for someone else to take the depreciation hit. That being said, let us look at the Chevy Volt. We know the batteries have a tendency to explode. There seems to be a technological problem there. Perhaps it can be fixed. Next, it has a range of 40 miles on the battery. That is 40 miles if you do not use the air conditioner. Now we add to that the payload. My understanding is it is not particularly conducive to four passengers. The real problem with your argument is you ask if it was competitive in cruising range, performance and sticker price, would he buy it? That is the problem. It is not! And that might explain why nobody else is purchasing the Chevy Volt.

[A.I.]

There is no problem with my argument. It asks "if" which is full acknowledgement that electric vehicles are a work in progress. And it posits that you have neither the faith nor the patience needed to finish that work. Instead, you focus on the here and now and disparage efforts who do. So, thank you for confirming my point.

Also, from and AP article: "NHTSA said Friday (1/20/12 that it “continues to believe that electric vehicles show great promise as a safe and fuel-efficient option,” and that based on available data, electric cars don't appear to be riskier than gas-powered ones."

And they didn't "explode". What led to concern were fires in three vehicles ranging from 1 to 3 weeks after side-impact tests were conducted by the NHTSA.No such fires have occurred in general use but GM is offering a fix none-the-less.

That said, I would not buy a new Volt either. Like you, I prefer letting someone else take the new-car depreciation hit. And with that in mind, I did buy a reasonably-priced, low-mileage hybrid that is much more comfortable and gets better mileage than the smaller, gas-only car it replaced.

At the same time, I appreciate the early-adopters that bought the 7-8,000 Volts sold last year and the original Prius and other early hybrids. I also appreciate private and public spending on the R&D needed to make electric vehicles ever more practical and affordable.

[duggersd]

NHTSA = government. Who would expect them to come out with something contrary to Obama's agenda? At least you acknowledge the vehicles are not commercially viable. "If" is a big word. If the dog had not stopped to do his business, he would have caught the rabbit. If they were viable, I would consider it, but they are not and will not any time soon so I would not. I do not believe the government should be giving a subsidy to purchase them either, do you? Also, it seems the dealers do not even want them. http://www.autonews.com/apps/pbcs.dll/article?AID=/20120123/RETAIL07/301239977/1261.

[A.I.]

Apparently Dug Dugger in DC has more faith in the future of the Volt than you duggersd. And dealer/consumer demand has been impacted by safety concerns that have now been answered. So, the future of the Volt may be brighter than you imagine.

Do I think the government should subsidize their purchase? I'll answer yes in this perspective: If we are going to subsidize fossil fuel production with tax breaks, military protection, etc; then I certainly have no problem with subsidizing development and adoption of green energy including the Volt.

So you think the NHTSA would conspire with the administration to protect the Volt.
Are you not concerned the IRS might read your anti-Obama posts here and elsewhere and subject you to an audit. I'm not saying you try to cheat on your taxes, but are you sure you dotted every "I" and crossed every "T"?

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