Canadian Oil Sands (Photo credit: Wikipedia)
I have talked about this before, and now I see that it is being discussed occasionally elsewhere, but not nearly enough. The State Department process for approval or denial of approval for the Keystone XL pipeline is nearing its conclusion, but the public debate on the subject of the benefit derived from the pipeline--that is, who will benefit from it--seems to have been successfully swept under the rug by conservative forces. So for the record, the answer to that question is, oil refiners along the Gulf of Mexico, which is the end-point for the pipeline. To be blunt, it is not a project that serves the needs of the American people. It is for the benefit of American oil refiners, including the big oil companies, and whether or not we pay an environmental price for it, it shouldn't be built.
It isn't abundantly clear to most people why certain interests are so keen on the Keystone XL, so here are a few facts that everyone should know when taking a position on it. First, there has been a ban on the exportation of petroleum for 40 years, and that prevents the big oil companies--they now produce something like 60% of the fossil fuels we need in this country--from exporting our oil to other countries...only because the government has forced them to give our people what they need from what is produced from under our soil and waters. The reason that such a law was necessary is that the price they can get for that oil elsewhere would be higher than it is here, like OPEC oil, especially now that Americans are conserving in both the number of miles that they drive and the mileage their cars get, among other things. But there is no ban on exportation of gasoline, which as you know comes from petroleum. We export from this country something in excess of 100,000,000 gallons of gasoline per day from this country. In other words, since the petroleum companies cannot export petroleum, they refine it into gasoline--and other petroleum derivatives as well--and export them instead. In unvarnished terms, the oil companies have found a way around the ban on exports, and the Keystone XL pipeline will allow them to take advantage of that loophole in the law not just with American oil, but with Canadian oil that they import as well. They will pipe it down to the Gulf Coast in the pipeline, refine it into gasoline and diesel fuel, and then export those products to other countries since they cannot export the raw material: petroleum. That isn't some liberal canard. All you have to do to confirm that it's true is look up the facts...and you can do that online...and then apply a little simple analysis to what you find...and by simple analysis I mean addition and subtraction...nothing complex...it's that obvious.
But that isn't the only money-making part of the scheme to import Canadian tar-sands oil directly to our Gulf Coast. When they import the Canadian oil, it all goes into an undifferentiated pool with the oil they import from elsewhere, which is the basis of the price we pay for the products refined from it. Thus, the cost of that oil goes into calculating what we pay here for gasoline even though we will never see the Canadian oil except for when it passes over our country's hinterlands in order to get to the refineries where it will be turned directly into profits for the refiners, including Exxon-Mobil, BP and others. They get to gouge us twice with the same oil. It's all just a money making scheme. But there is an alternative. Instead of transporting that oil across the country, the oil companies could build refineries along the Canadian border, and transport the products they produce from Canadian oil far shorter distances to where they will be consumed in this country, thus bringing down the price we pay for them. That may seem like an imposition on they oil companies, but consider this. There is currently a shortage of propane here in the United States, and as a consequence, there is rationing on the wholesale level and the price of propane has more than doubled in a period of just months. But propane is produced during the process of refining petroleum and is also a byproduct of processing natural gas, which as you know is streaming out of the ground in the Dakotas--which by the way are right next to Canada. So, the raw ingredients for propane are already there, and oil refineries would produce...as a byproduct of the refining they have to do anyway...more propane for use largely in the agricultural areas of the United States, right where the Canadian oil comes into the country and where the natural gas comes out of the ground. Currently, the greatest need for the fuel, which is used to keep livestock warm among other things, is in our mid-west, and shortages are causing hardship there; problem solved. In fact, by building refineries in the northern mid-west, we could solve a few problems. First, we would minimize the risks inherent in transporting tar-sands oil across land in pipelines. Second, we could reduce the cost of the infrastructure needed to transport the new supply of propane because we already receive the preponderance of the propane we now import from Canada by pipeline. Those extant pipelines could provide the trunk from which subordinate supply lines could start; a far less expensive endeavor than building a 1,500 mile pipeline and then building new pipelines to carry the increased supply of propane back up north. Third, we could reduce our imports of propane because we could produce more of our own right where it is needed...in farm country...thus making ourselves even more energy independent. And fourth, we would be reducing the price of both the propane and the gasoline and other products refined there because they would be closer to the points of distribution for wholesale and retail sale. Everybody wins, so why not do it that way. Here's the answer to that question: the oil industry doesn't want it that way.
If the Canadian oil goes directly to the refineries in Louisiana and Texas, it is just one small step to make it into exportable products...more profitable products. That's the long and short of it. This has nothing to do with jobs, because it takes workers to build refineries too, maybe even more of them than it takes to build a pipeline. But despite the Republican misdirection about creating jobs by building the pipeline, jobs have nothing to do with it. The Republicans are fed by the oil industry. They continue to pule about drilling for more oil when we are exporting a huge amount of petroleum in the form of petroleum derivatives every day, as if we can become energy independent while we allow the oil companies to export what we produce here for more profit. We will never be independent as long as there is a market elsewhere...unless we begin to make smart decisions, that is, unless our government gets on our side instead of theirs. So remember all this, and all the other ways in which Republican, supply-side economics puts money in someone else's pocket on the premise that it will find its way into the pockets of the American people. Check your pockets and see if it has arrived yet. I don't know about you, but it's been over thirty years since the supply-side has been in the process of producing my dollars, and they still haven't come.
Your friend,
Mike
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