Keystone Kops or Robbers XL?

Keystone- Cops or RobbersXL?

One of the more sensational issues on the political battlefield is the controversial Keystone XL Pipeline.

Great, big, hairy, problem.

So, I thought I'd take a look.

I ididn't really find a clear picture right away. Lot's of players in the game. Congressmorons, lobbyists, environmentalists, media pundits and one or two science nerds.

So, I searched through the details a bit- hit the websites for the affiliated parties, etc.

The best information came from the Wiki folks, and surprise- the oil company- the captain for team 'pipeline'.

It's Trans Canada Oil- they have oil property in the midwest of Canada that they want to harvest and export. They think they can make more selling it overseas than they can locally (to us).

Ok....

Now, they don't mind that it costs more to extract oil from the tarry globs of sand. They'll make it up through export sales.

Ok... This involves us, how?

......wait for it.......

You see, they're already selling us quite a bit of tar sands oil.

The catch is, there's easy sand oil, and tough sand oil. Canadian oilers are aready selling us the easy stuff at max level.

The initial controversy is over the method of extracting that deeply solidified oil- an invasive strip-mining and chemical process that leaves the terrain coal-mine-barren and steeped in toxic waste. It uses double or more the natural resources in refining to crude oil for transport, (not for gasoline- just to be liquid enough to pump). And it would require this method to travel through any pipeline. All this has to happen fairly near the oil fields to end up with crude oil to pipe.

Seems that extracting that deep tar sands oil causes 10-35% more greenhouse gas emissions in production than traditional crude oil as well.

There was considerable ecological protest against the project, but, ultimately, the Canadian PM gave his blessing, saying the area affected is minimal and the impact no greater than other methods. They have a greenlight for production and export.

Why then, aren't they using the shorter North-Eastern route to Hudson Bay? Or West to the Pacific for the Asian market? Why not both? Surely the Canadian government wants additional export trade bad enough to approve these pipelines.

They do. They are. There is. There was.

Canada says they already have the pipelines and they're at only 50% capacity, so, plenty of room for the new tar sands oil in the system.

That's not what Trans Canada wants.

They say they need a shortcut connector and hubs between their pipelines to the south and a Gulf extension to export oil to, where was it? Oh, yeah- Asia and Europe.

The Keystone XL Pipeline will carry that tar sands oil to the Gulf of Mexico for international export from a Texas port. The main reason it's been vetoed and delayed in current form is the pollution controversy over the route.

Understand?

Of course not.

Let Me Just Not Say This About That

To get it, you need to know this-

That Trans Canada is a long-time major oil player in the US. They have wells and pipelines all over both countries. What they want to build here is a short-cut connector between two turns and an extension of the Keystone line they already have running south from the fields in Alberta through the US.

So, to us, not knowing the oil is intended for other customers and can already go through Canada, it's believable that this company is being unduly restrained by environmentalists. We buy into their 'opression' and their promise to bring us jobs and lower prices if they can just have one little favor- this pipeline thing, really, it's good- you'll see.

Still. Why?

With all their fields and lines- 200,000 miles of them, across the landscape, they sell us our own oil as well as Canadian import. They have the lines in place to sell us oil from up there and refine what they pump here.

They lack 2 crucial items.

An American seaport and a hub to join all their lines to it.

That, with a refinery or 2 routed in along the way, is exactly what the Keystone XL will accomplish.

What's wrong with that? Well, nothing- if we're talking about noble, patriotic players from both countries that want to stabilize our common market and protect it from OPEC tryanny.

HAHA- sorry. I couldn't say it with a straight face, either.

TC has stated that the Texas port is intended for overseas trade, meaning they don't intend the new tar sands oil for us. That would only dilute the price we pay, which is lower than most of the world market they want to access.

It's important to remember that despite being a daily necessity like foodstuffs, subject to market supply and demand, oil is sold like Kobe beef or gourmet seafood- market rate for a rare commodity. Anyone in the market can spike the price for all by raising rates or curbing production.

No member of the oil hierarchy would ever drop their price to spark an advantage over the competition, as most other types of merchants routinely do. Only the individual gas station owners at the very end, where the margin is already gutted to pennies per gallon, do this. They war amongst themselves over nickels while their suppliers exploit them for the highest wholesale price allowable every day.

That's why, ever since back in the 70's 'energy crisis', oil companies have held reserves- to keep prices up. When they have too much on hand, they have to slow production, sell cheap or find another market for the excess.

Stop production? Don't like that. Sell cheap? Uuuuuuuuuhhhh, no. What was that 3rd one? More markets?

Bingo!!

The Detail Is In the Devil

The hubs are the key to understanding this. They join all Trans Canada's US interests to their Gulf port through the Keystone XL.

The physical design of the system blends the tar sands oil with local refinery production at the hubs and can then send it all out of the US through the south.

If we're very lucky, they'll still sell us the normal amount of Canadian oil while they sell their surplus of our oil abroad for more, raising the price per barrel they can charge here, too.

"But, we won't use it that way, I assure you".

Let's not hold our breath.

Yes, in the short run, building the pipeline would add temporary jobs, but few permanent. Maintenance would be a minimal crew, so only the hub would have any real staff. The refineries already exist. They would just be hooked up to receive the new sands oil and feed the coast.

Even if we're blind as to quite why TransCanada doesn't want to use the pipelines in Canada, despite targeting the oil for sales abroad, we can surely see that this plan links multiple US refineries to a foreign exporter's port on our coast. Can't we?

Um, no.

To date, only environmentalists have stood in the way of the project, and mostly on the grounds of natural impact of the route and possible leakage.

Huh???

No one with a voice in this issue seems wise to the real deal. While so many immediately saw the un-worded right to indefinite detention in the NDAA, the obvious map of US oil going out our south end has eluded everyone.

If this really was about fuel dependecy and the economy of North America, that would be great. The oil industry doesn't work that way. Given the choice between less per barrel by making oil plentiful in the US, or far more per barrel by setting a new benchmark overseas, well, guess which one every oil CEO would choose.

The President's veto is all that holds it now, and even that is ignorant of this aspect.

Our Congressmorons will, though, eventually find a way around the President and get the project approved anyway.

Sadly, they are too stupid to have gleaned this motivation from it's 3 Stooges level obviousness, and hence, have gotten no promises of oil discounts or guarantees, taxes or job assurance past 'we'll let you build this for us'.

Way to go- fearless leaders! Always lookin out for all of us, aren't ya'?