Keystone XL pipeline

Six Reasons Not To Ban Energy Exports*

by Marlo Lewis on April 19, 2012

in Features

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[* This column is a lightly edited version of my post earlier this week on National Journal’s Energy Experts Blog.]

You know we’re deep into the silly season when ‘progressives’ champion reverse protectionism – banning exports – as a solution to America’s economic woes. Congress should reject proposals to ban exports of petroleum products and natural gas for at least six reasons.

(1) Export bans are confiscatory, a form of legal plunder.

As economist Richard Stroup has often pointed out, property rights achieve their full value only when they are “3-D”: defined, defendable, and divestible (transferable). A total ban on the sale (transfer) of property rights in petroleum products or natural gas would reduce the asset’s value to zero (assuming no black market and no prospect of the ban’s repeal). To the owner, the injury would be the same as outright confiscation. A ban on sales to foreign customers would be similarly injurious, albeit to a lesser degree.

The foregoing is so obvious one is entitled to assume that harming oil and gas companies is the point. I would simply remind ‘progressives’ that the politics of plunder endangers the social compact on which civil government depends. Why should others respect your rights when you seek to deprive them of theirs? Every act of legal pillage is precedent for further abuses of power. Do you really think your team will always hold the reins of power in Washington, DC? [click to continue…]

Sen. Wyden’s Anti-Keystone Amendment Goes Down in Flames

by Marlo Lewis on March 8, 2012

in Blog, Features

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The Senate just voted down two highway bill amendments on the Keystone XL Pipeline: the Hoeven amendment to permit the pipeline (56-42) and the Wyden amendment prohibiting exports of Keystone crude and petroleum products made from it (34-64). Both amendments required 60 votes for passage. Hoeven’s amendment missed by four votes, Wyden’s by 26.

Eleven Democrats voted for Hoeven’s amendment: Kay Hagan (N.C.), Joe Manchin (W.Va.), Mary Landrieu (La.), Jim Webb (Va.), Claire McCaskill (Mo.), Mark Pryor (Ark.), Jon Tester (Mont.), Mark Begich (Alaska), Bob Casey (Pa.), Kent Conrad (N.D.) and Max Baucus (Mont.). Bottom line: There is now clear majority support in both the House and Senate for expeditious approval of the Keystone XL Pipeline.

As this blog has argued previously, proposals like Wyden’s to ban exports of U.S. petroleum products would violate U.S. treaty obligations under the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA).

Wyden claims an export ban would increase domestic supplies of gasoline and diesel fuel and, thus, lower prices, benefiting consumers. But the ban would likely backfire, increasing pain at the pump. It would drive refining-related investment, production, and jobs out of the USA, curbing production at home while making higher-priced foreign imports more competitive.

Banning petroleum product exports is also just plain dumb if you’re one of those people — like Wyden — who deplore America’s trade deficit with China. Well, okay, what Wyden deplores most (or only) is America’s trade deficit in “environmental goods” like solar panels. If you don’t understand the economic logic behind this selective indignation, it’s because there is none.

Gross self-contradiction is not uncommon in politics, but the angst and handwringing over Keystone XL as an “export pipeline” by many self-styled trade hawks is material suitable for a Monty Python skit. In the meantime, sober commentary will have to do. ExxonMobil’s Ken Cohen hit the key points in a recent post.   [click to continue…]

Rep. Markey’s Keystone ‘Fix’: Would It Increase Oil Imports from Saudi Arabia?

by Marlo Lewis on January 20, 2012

in Blog, Features

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What is fast-becoming the main talking point against the proposed Keystone XL Pipeline is the claim that greater access to Canadian crude oil would not enhance U.S. energy security.

According to pipeline opponents, most of the petroleum products made from Keystone crude would be exported by Gulf Coast refiners to Europe, South America, and Asia rather than sold in U.S. domestic markets. Thus, opponents contend, Canadian oil coming through the pipeline would displace little if any oil imported from unstable, undemocratic, or unfriendly countries like Nigeria, Saudi Arabia, or Venezuela.

Rep. Ed Markey (D-Mass.) made a media splash with this talking point at a House Energy and Commerce Committee hearing last month. Keystone, he said, would not “back out” any oil we import from the Middle East if it simply turns the USA into a “middle man” for exporting diesel fuel and other finished petroleum products made with Canadian crude. He noted that nothing in TransCanada company’s long-term sales contracts with Gulf Coast refiners ensures that products made from Canadian crude would be sold to U.S. consumers.

Markey challenged TransCanada exec Alex Pourbaix to support legislation prohibiting Gulf Coast refiners from exporting petroleum products refined from Keystone crude. Clever! Pourbaix could not support Markey’s proposal without jeopardizing the sales contracts on which the pipeline project’s commercial viability depends. Yet he could not reject Markey’s proposal without appearing to confirm that Keystone is a plot by TransCanada and Gulf Coast refiners to export more oil overseas. Pourbaix did reject Markey’s proposal, but without explaining why an export ban would be a mischievous ‘solution’ to a non-existent problem. [click to continue…]

Arguments Against Keystone Pipeline Fall Flat

by Brian McGraw on January 20, 2012

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Professional environmentalists are cheering President Obama’s rejection of construction permits for the KeystoneXL Pipeline. They are the only ones cheering, aside from a few NIMBY groups and The New York Times Obama’s always-loyal damage control cohorts. Even The Washington Post voted against Obama in this struggle. The pipeline was a small, but important part of our energy infrastructure and none of the arguments put forth against construction of the KeystoneXL Pipeline are convincing.

1. An initial argument claims that the KeystoneXL Pipeline will somehow not provide energy security for the United States.

Because consumers from around the country (and the world) use oil, pipelines are necessary to transfer mind-bogglingly large amounts of it around the country each day. Imagine a scenario where we randomly begin shutting down oil and natural gas pipelines around the United States. The obvious result of decreasing our capacity would be decreased security, as we are less capable of moving oil around our country to deal with shocks, disasters, etc. Now think about what adding a pipeline does: it increases our capacity to transport oil around the country. Ultimately, this must increase to some extent our energy security. [click to continue…]

Will Blocking Keystone XL Increase GHG Emissions?

by Marlo Lewis on November 16, 2011

in Blog, Features

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Last week, after three years of environmental review, public meetings, and public comment, President Obama postponed until first quarter 2013 a decision on whether or not to approve the Keystone XL Pipeline — the $7 billion, shovel-ready project to deliver up to 830,000 barrels a day of tar sands oil from Canada to U.S. Gulf Coast refineries. Obama’s punt, which Keystone opponents hope effectively kills the pipeline, is topic-of-the-week on National Journal’s Energy Experts Blog. So far, a dozen “experts” have posted, including yours truly.

Now, if you’ve been paying attention at all over the past 40 years, you may suspect that most Keystone opponents want to kill the pipeline just because they hate oil and oil companies — even as they fill up their tanks to drive to the next demonstration. Bill McKibben, lead organizer of the anti-Keystone protest rallies outside the White House, lives in Vermont. On the Colbert Report, host Stephen Colbert asked McKibben: “You’re from Vermont? Did you ride your bicycle down here? Or did you ride ox cart? How did you get down here? Or do you have a vehicle that runs on hypocrisy?”

If we take them at their word, McKibben and his climate guru, NASA scientist James Hansen, oppose Keystone because they believe it will contribute to global warming. How? The cutting-edge method for extracting oil from tar sands is a process called steam assisted gravity drainage. SAGD uses natural gas to heat and liquefy bitumen, a tar-like form of petroleum too viscous to be pumped by conventional wells, and burning natural gas emits carbon dioxide (CO2). So their gripe is that replacing conventional oil with tar sands oil will increase CO2 emissions from the U.S. transport sector. Maybe by only 1% annually,* but to hard-core warmists, any increase is intolerable.

Enter the Law of Unintended Consequences. If McKibben and Hansen succeed in killing the pipeline, petroleum-related CO2 emissions might actually increase! [click to continue…]

Obama Punts on Keystone Pipeline: Political Cynicism in the Guise of Energy Policy

by Marlo Lewis on November 11, 2011

in Features

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For President Obama, approving the Keystone XL Pipeline should have been a no-brainer. All the State Department had to do was conclude the obvious — the pipeline is in the U.S. national interest.

What other reasonable conclusion is possible? Building the 1,700-mile, shovel-ready project would create thousands of construction jobs, stimulate tens of billions of dollars in business spending, and generate billions of dollars in tax revenues. Once operational, the pipeline would enhance U.S. energy security, displacing oil imported from unsavory regimes with up to 830,000 barrels a day of tar sands oil from friendly, stable, environmentally fastidious, democratic Canada. Canada already ships us more oil than all Persian Gulf states combined, and Keystone would significantly expand our self-reliance on North American energy.

Obama had only two policy choices. He could either disapprove the pipeline on the grounds that environmental concerns over incremental greenhouse gas emissions and oil spill risk outweigh the substantial economic, fiscal, and energy security benefits of the pipeline. Or he could approve the pipeline on the grounds that its benefits outweigh potential environmental impacts.

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Keystone XL Pipeline: Alleged Conflict of Interest Much Ado about Nothing?

by Marlo Lewis on November 2, 2011

in Blog, Features

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Blocking the Keystone XL Pipeline — the $7 billion, 1,700-mile project that could create 20,000 construction jobs and eventually transport 830,000 barrels of tar sands oil from friendly, stable, democratic Canada to hubs in Oklahoma and Texas — has become the environmental movement’s top agenda item.

This is not surprising, because Canada’s booming oil sands industry demolishes two popular narratives of green ideology — the claim that oil is a dwindling resource from which we must rapidly decouple our economy before supplies run out, and the notion that most of the money we spend on gasoline ends up in the coffers of unsavory regimes like Saudi Arabia. In reality, more than half of all the oil we consume is produced in the USA, and we get more than twice as much oil from Canada as from Saudi Arabia.

Much of the anti-Keystone agitation is vintage ’60s stuff. In late August, during a weeks-long protest rally outside the White House, 800 demonstrators (including celebrities Margot Kidder and Daryl Hannah) were handcuffed and bused to local police stations. In late September, more than 100 demonstrators were arrested trying to enter Canada’s House of Commons. In October, 1,000 protesters showed up outside President Obama’s $5,000-a-head fundraiser in San Francisco, and organizers claim 6,000 demonstrators will encircle the White House on Sunday, Nov. 6.

Meanwhile, oil bashers on Capitol Hill are engaging in some political theater of their own. Last week, Sen. Bernie Sanders (I-Vt.), two other senators, and 11 congressmen requested that the State Department’s inspector general (IG) investigate an apparent conflict of interest in the preparation of State’s Environmental Impact Statement (EIS) for the Keystone XL Pipeline.

Sanders et al. point out that Cardno/Entrix, the firm State commissioned to conduct the EIS, listed TransCanada, the corportion proposing to build the pipeline, as a “major client.” This “financial relationship,” they suggest, could lead Cardno/Entrix to low-ball the project’s environmental risks. They even insinuate that Cardno/Entrix may have understated oil spill risk just so it could later get paid by TransCanada to clean up the mess.

Earlier this week, State responded to Sanders et al. As far as I can see, there’s no there, there.

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The Myth of Oil Addiction

by Marlo Lewis on September 1, 2011

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It’s a trick employed by rhetoricians from time immemorial. When their case against an opponent is unpersuasive on the merits, they invoke the image of something their target audience fears or hates. Thus, for example, political pleaders have asserted that money, Dick Cheney, or Zionism “is a cancer on the body politic.”

Perhaps the most influential use of this tactic in modern times is the attack on carbon dioxide (CO2) as “global warming pollution” and on CO2 emitters as “polluters.” Many who know better, including highly credentialed scientists, routinely couple the words “carbon” and “pollution” in their public discourse.

In reality, CO2 — like water vapor, the atmosphere’s main greenhouse gas — is a natural constituent of clean air. Colorless, odorless, and non-toxic to humans at 30 times ambient concentrations, CO2 is an essential building block of the planetary food chain. The increase in the air’s CO2 content since the dawn of the industrial revolution — from 280 to 390 parts per million – boosts the water-use efficiency of trees, crops, and other plants; helps protect green things from the damaging effects of smog and UV-B radiation; and helps make food more plentiful and nutritious. The many health and welfare benefits of atmospheric CO2 enrichment make CO2 unlike any other substance ever previously regulated as a “pollutant.”

A closely related abuse of the English languge is the oft-repeated claim that America is “addicted to oil.” Although popularized by a Texas oil man, former President G.W. Bush, the phrase is a rhetorical staple of the same folks who inveigh against “carbon pollution.” NASA scientist James Hansen, arguably the world’s most famous carbonophobe besides Al Gore, recently denounced the Keystone XL Pipeline as a “dirty needle” that, if approved, would feed our supposed oil addiction. [click to continue…]

Eight Reasons to Love the Keystone XL Pipeline

by Marlo Lewis on August 26, 2011

in Features

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The State Department is expected as soon as today to release its final environmental impact statement (FEIS) on the proposed 1,700-mile Keystone XL pipeline to bring up to 850,000 barrels per day (bpd) of Canadian heavy crude from Alberta’s oil sands down to refineries on the U.S. Gulf Coast.

According to anonymous sources at State, the FEIS will confirm the agency’s earlier finding that construction and operation of the pipeline will have “limited adverse environmental impacts,” reports Juliet Eilperin in the Washington Post. This will remove a key obstacle to State issuing an assessment that the pipeline is in the U.S. national interest. Then, presumably, this $7 billion, shovel-ready project could start creating thousands of high-wage jobs.

In July, the House passed H.R. 1938, the North American-Made Energy Security Act, by 279-147. The bi-partisan bill would require President Obama to issue a final order granting or denying a permit to construct Keystone XL by no later than November 1, 2011. The Center-Right is putting pressure on Team Obama, in the run-up to an election year, to expand U.S. access to oil from our friendly, democratic, politically stable neighbor to the north.

At the same time, Eilperin notes, Keystone XL “has strained President Obama’s relationship with his environmental base and become a proxy for the broader climate debate. Protesters from across the country have gathered daily in front of the White House since Saturday, resulting in 275 arrests so far.”

First to be arrested was Canadian actress Margot Kidder, who played Lois Lane in several Superman films. Her top reason for opposing the pipeline: “It’s bound to leak, there’s no way it’s not going to…. They always assure us these things are safe, and they never are.” By that logic, no pipeline should ever be built, and all should be dismantled. And then we could all live in Medieval squalor. Planet Saved!

I’ve been a Keystone booster for some time, but the fracus at the White House has taught me new reasons to love the pipeline.

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Rep. Henry Waxman’s Silly Sideshow

by William Yeatman on May 24, 2011

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I’ve long suspected that Rep. Henry Waxman (D-Beverly Hills) keeps Brawny paper towels in his kitchen cabinet. Brawny paper towels are the best—they’re the quickest, thickest picker-uppers—and Rep. Waxman lives in one of the richest Congressional districts, so it makes sense that he uses them, right? I think it does. Rep. Waxman’s logical affinity for Brawny paper towels is troubling, because they are manufactured by Georgia Pacific, which is owned by….KOCH INDUSTRIES!!! Possibly, every time Rep. Waxman wipes spilled caviar off his marble countertops, he’s funding the insidious KOCHTOPUS!!! I doubt his far-left base would appreciate this apparent financial link to a company reviled by liberals for supporting conservative causes. Why, it’s as if Rep. Waxman is contributing to the Tea Party!

I know what you are thinking: These are baseless and ridiculous claims. Indeed. Yet they are no more baseless and ridiculous than the stunt Rep. Waxman pulled yesterday at a House Energy and Commerce Committee hearing on the Keystone XL Pipeline. I explained in detail the politics of the pipeline in a previous post. Suffice it to say, it would double U.S. imports of Canadian tar sands oil, and it is staunchly opposed by environmentalist special interests. The focus of yesterday’s hearing was a Republican bill that would speed up the pipeline approval process, but Rep. Waxman wanted to take the panel in a different direction. Namely, he wanted to fabricate an association between the Keystone Pipeline and the left’s favorite piñata, Koch Industries, a.k.a, the Kochtopus.

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