The Lies of the Keystone XL pipeline

The most common mistake that politicians and the media make when discussing the Keystone XL pipeline is to frame it as an “environment vs. economy” issue. When presented this way, it appears to be a niche issue that will only resonate with the liberal base. The key to effectively informing people, and arguing the case against the pipeline, is to point out that the claims of benefits are lies.

While the environmental impacts of the Keystone XL pipeline would be numerous and extreme, it is too easy for people to dismiss the consequences when they perceive the benefits to be more jobs, less dependence on foreign oil, and cheaper gas at the pump.

There aren’t any actual benefits to the pipeline – only perceived benefits. It is within this context that the environmental impacts are even worse, since we will be destroying our planet for no real reason. 

Conservatives have been obsessive about the pipeline for years, frequently attacking President Obama and Democrats every chance they get for not supporting it. Their rationale can be summarized by former Senator Scott Brown (R-MA):  “[it is] a project that will create thousands of new jobs, reduce gas prices in the Northeast, and help free us from dependence on Middle East oil. In doing so, the Keystone project strengthens American economic and national security.” The problem is that these are blatant lies.

 The first lie is that the Keystone XL pipeline would create jobs.

Pipeline advocates have touted a wide variety of figures ranging anywhere from 6,500 up to 1 million jobs, but their sources are wildly misleading (or simply non-existent). In a previous blog post, I pointed out that the US Chamber of Commerce took out a full-page ad in Rupert Murdoch’s Wall Street Journal claiming that “20,000 jobs” would be created. It is not surprising that the right-wing Chamber would lie to support an anti-environment agenda; especially considering their president recently advocated a civilization-ending policy of pollution to satisfy our energy needs.

The fact is that many of these figures are based on misleading metrics such as claiming that if a job lasts two years, that’s “two jobs,” and that the pipeline will be a tourist attraction that draws 51 NYC dancers to the Midwest to entertain the “100 librarians, 510 bread bakers” and “1,714 bartenders”.

Among the studies conducted to estimate jobs created, there were only two not affiliated with TransCanada: those conducted by the US State Department and Cornell University. The State Department concluded that it would create a maximum of “5,000 to 6,000 direct construction jobs in the United States that would last for two years.” Cornell’s study found that only 2,500-4,650 temporary jobs would be created, and the net effect would job losses over the long-term. This is not the solution to our jobs crisis; it would make it worse. Strike 1.

The second lie is that the pipeline would decrease our dependency on Middle Eastern oil. 

This lie hinges on two ideas: 1) that the pipeline would necessarily increase oil flow out of Canada, and 2) that the oil would necessarily be used within the United States. Neither is true.

The first idea was pushed by Senate Minority Leader Mitch McConnell (R-KY) when he said the pipeline “could have brought 700,000 barrels of oil to the market each day…” As FactCheck.org pointed out, that would be the additional capacity only if Canada had that to send, which it does not. A 2010 study (by EnSys Energy & Systems Inc. of Lexington, MA) found that existing pipelines can handle any theoretical surplus, even without the Keystone XL.

So if it is not going to increase oil flow, why build it?  Most of Canada’s existing pipelines go to Cushing, Oklahoma, with the rest terminating elsewhere in the Midwest such as Wisconsin and Illinois. This is a great deal for us, but Canada’s Natural Resources Minister, Joe Oliver, indicated that Canada wants to “diversify” to increase profits.

This is why the Keystone XL is being built: to bypass Cushing and other Midwestern refineries, and bring Canadian crude to Texas’ Foreign Trade Zones for export.

Amid concerns that this was the intention, Massachusetts’ Congressional Representative Ed Markey, asked TransCanada’s president to require any oil transported in the Keystone XL to be sold to the United States. Mr. Pourbaix refused.  The purpose of the pipeline is to increase Canadian oil profits by taking access away from the US; it will not decrease our dependency on Middle Eastern oil. Strike 2.

The last lie is that the Keystone XL pipeline would decrease prices at the pump.

There are two reasons why this statement is a lie. First, the pipeline would actually be in two sections. The larger, more controversial section would travel through the Ogallala aquifer as currently proposed. The smaller section, or “lower leg,” will run from Cushing to Texas. Unbeknownst to most people, President Obama actually approved this section, and construction began this past summer. The point of the lower leg is to transport excess crude out of Cushing .

The fact that there is so much oil in Oklahoma is economically good for Americans, and particularly good for Mid-westerners, because the supply is keeping prices artificially low. However, when the lower leg is completed, TransCanada has stated that they will use it to extract $5 billion/year more from Midwestern refineries by ending existing discounts, causing prices at the pump to increase.

The second reason this is a lie, is that prices at the pump will increase nationwide by roughly 10-20 cents per gallon due to Canadian oil customers being “diversified.”   Pump prices are not dictated by simple “supply and demand” economics.  This is the myth that has allowed conservatives to run the table on energy for years, from 2008’s “drill, baby, drill” to the Keystone XL of today.

There are two main standards for pricing barrels of oil: the US’s West Texas Intermediate (WTI), and the UK’s Brent. The best explanation I’ve seen of the two is from Vedran Vuk (of the conservative-biased Heritage Foundation). WTI is a lighter crude than Brent, and is easier to process. Thus, WTI has been the more desirable crude around the world, and has historically driven the global pricing of oil.

However, in recent years, WTI cost has been kept artificially low mainly due to the bottleneck of crude in Cushing. This crude has increasingly become composed of natural gas from shale, and bitumen from the Canadian tar sands. Dr. Stuart Stanford explained that this shale/bitumen transition has contributed to a wide divergence in WTI and Brent pricing, and “landlocked oil [in Cushing] had to be discounted to persuade reachable consumers to use more of it.”  This has been confirmed by TransCanada officials in their testimony to the Canadian National Energy Board.

When the lower leg is completed, and if the rest is green-lighted, Canadian oil will flow to Texas, where the price is actually based on the Brent standard. Vuk accurately pointed out that the way to end the WTI-Brent discrepancy is to build the Keystone XL, driving WTI price up – not bringing Brent price down.  The US will not see lower prices at the pump when this happens. In fact, prices will increase.

This all flows from the fact that the price of a barrel of oil actually isn’t based purely on “supply and demand.” The price is largely influenced by speculation in oil futures on the commodities exchange.  An article in Forbes Magazine pointed out that “speculation in crude oil adds $23.39 to the price per barrel… this translates out into a premium for gasoline at the pump of $0.56 a gallon.”

There are plenty of other of analyses that show this correlation between barrel price and speculation, and many are outlined in a MediaMatters.org article entitled “STUDY: Media Missing the Mark on Gas Prices,” and it is definitely worth a read.  In fact, back in 2009 a stock broker at PVM Oil Futures got really drunk one night and accidentally purchased 69% of the world’s oil futures stock. This had nothing to do with physical supply, and yet it drove up the price of oil by $1.65/barrel to an 8-month high. 

Based on these market forces, Canada’s National Energy Board expects the US to pay upwards of $3.9 billion more per year if the pipeline is built, causing prices at the pump to go up. Strike 3.

Environmental Impacts
Conservatives in politics and in the media (Wall Street Journal, FOX News, Rush Limbaugh – who my first blog post was about, etc.) are completely fabricating “benefits” to overshadow the consequences. They know they can fool some of us into thinking that they are looking out for our best interests, when really, all they want is to make the rich and powerful even more rich and powerful – consequences be damned.

Make no mistake – the consequences of building the pipeline, and continuing to encourage exploitation of the Canadian Tar Sands, would be extreme and devastating. First, tar sands crude carries diluted bitumen, which the National Resources Defense Council indicates is “highly corrosive, acidic, and potentially unstable blend of thick raw bitumen and volatile natural gas liquid condensate.” Rupture of the pipe, and thus spills, are inevitable. One of these spills (which didn’t get a ton of press coverage due to the fact that it happened while everyone’s attention was on the BP oil spill in the Gulf of Mexico) happened near Marshall, Michigan in July 2010. 1.1 million gallons of oil flooded the Kalamazoo River, with clean-up efforts lasting 18 months (the EPA maintains that further clean-up is still required). A key property of the bitumen-containing crude is that it sinks in water… so the only way they could separate the oil was to literally shake the riverbed.

The pipeline’s currently proposed route would put at risk the Ogallala aquifer, which not only provides safe drinking water to 82% of those living within the aquifer boundary (including parts of South Dakota, Nebraska, Wyoming, Colorado, Kansas, Oklahoma, New Mexico, and Texas), but also provides irrigation water for 30% of the entire nation’s crops.

The second problem with further exploiting the tar sands can be summed up by NASA’s top climatologist, Jim Hansen, who pointed out that if we “tap this stuff heavily, it’s game over for the climate.” And this comes at a time when we can already see and feel the effects of Global Warming through continually more-frequent and more-devastating storms (the article in the link is a VERY good read). The recent Hurricane Sandy was the largest hurricane to ever hit the northeastern United States, killing at least 75 people, stranding thousands in their homes, leaving millions without power, and carrying an estimated clean-up cost of $60 billion.

By peddling these three lies to advocate for a project that would cause so much devastation, every politician who voted for the pipeline (such as the 42 Senators who voted for the Hoeven amendment), or continues to support the pipeline (such as Mitt Romney), has shown that they simply cannot be trusted to represent the best interests not just of America, but also humanity as a whole.

They should be called out for it, forced to answer for their lies, and be thoroughly defeated.

*     *     *     *

Two proposed amendments to the March 2012 Transportation Bill related to the Keystone XL. The first, the “Hoeven amendment,” would’ve approved the project without an environmental impact study. The second, the “Wyden amendment,” would’ve required all oil transported by the Keystone XL to be used within the US:

Rollcall Vote on “Hoeven amendment”, YEAs (approve pipeline):

Rollcall Vote on Wyden amendment, NAYs (do not require crude from Keystone to be used in US):