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Proponents of Keystone XL tar sands pipeline spread misinformation on gas...

"Keystone XL: A Tar Sands Pipeline to Higher Prices,’’ a report that NRDC released on May 22, 2012 along with Oil Change International and ForestEthics Advocacy, has began to generate significant objections from oil industry lobbyists and other proponents...

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Proponents of Keystone XL tar sands pipeline spread misinformation on gas...

By Anthony Swift, May 25, 2012



"Keystone XL: A Tar Sands Pipeline to Higher Prices,’’ a report that NRDC released on May 22, 2012 along with Oil Change International and ForestEthics Advocacy, has began to generate significant objections from oil industry lobbyists and other proponents of the Keystone XL tar sands pipeline.

And it’s easy to see why – many of these interests have been trying to sell Keystone XL to the American public as a way to lower U.S. oil and gasoline prices. 

Instead, the report found that the pipeline would divert oil from the Midwest, where refineries maximize gasoline production, to the Gulf Coast, where refineries produce less gasoline and more diesel – much  of which they export internationally. Thus, the Keystone XL tar sands pipeline would reduce the volume of gasoline available to consumers, increasing prices at the pump. Oil industry lobbyists and politicians are making up facts to respond.

Here are the facts:

Fact 1: There is no EIA report on Keystone XL and gas prices

During a recent debate I had with American Petroleum Institute’s (API) Vice President Marty Durbin, Mr. Durbin cited a mythical report that the Energy Information Administration (EIA) did on Keystone XL’s impact on gasoline prices. To be clear, the EIA report that API continually cites on this issue simply does not exist.

Neither the EIA nor the Department of Energy (DOE) has evaluated Keystone XL’s impact on U.S. gasoline prices. When API lobbies on this issue, they present a white paper on the issue written by a DOE staffer (who doesn’t actually work at the EIA). DOE did not review, approve or issue the white paper. It’s an important distinction to make – there’s a big difference between analysis approved by an agency through its review process and a paper written by and representing the views of one of its staffers.   

Fact 2: Keystone XL will not increase U.S. oil supply – only shift it to the Gulf

Proponents of Keystone XL claim that the pipeline will increase the total supply of crude available to domestic refineries by more than 830,000 barrels a day. That’s simply not true. Canada can’t fill the pipelines it’s already got to the United States – Keystone XL won’t add to the U.S. crude oil supply for years. Meanwhile, it will simply divert oil from the U.S. domestic market in the Midwest to the internationally focused Gulf Coast.

That will decrease crude oil dedicated to the U.S. market. Moreover, that crude oil will produce less gasoline in the Gulf than it would in the Midwest.

Fact 3: If we don’t build Keystone XL, tar sands won’t just go to China

There are a lot of problems with this argument. It is completely out of touch with the political reality on Canada’s western coast. Two thirds of British Columbians oppose a tar sands pipeline through their province. Moreover, First Nations communities in Canada have strong constitutional powers and they oppose the project. In fact, the Yinka Dene turned down an offer from Enbridge valued at more than a billion dollars in exchange for easements for the Northern Gateway pipeline.

Also, it’s important to remember two things about pipeline projects to Canada’s western coast. The tar sands industry has been trying to push these things forward regardless of the outcome of the Keystone XL debate. And most maps would agree, California and its refineries are a lot closer to Canada’s western coast than China.

Finally, and perhaps most importantly, the rationalization that if we don’t press forward with tar sands development, then another country will is morally bankrupt and has been behind many of humanity’s most grievous errors. It’s fair to objectively discuss the impacts of tar sands development. However, the possibility that that development might happen independent of our action is not a legitimate reason to ignore those impacts. We are not absolved from the damage we do in this world simply because someone else might have done it.

Fact 4: Tar sands have significantly higher emissions than conventional drilling

In a recent press release, one notable proponent of the Keystone XL tar sands pipeline argued that because 80% of new development in the tar sands will be “in situ”, or by drilling, it will have similar emissions to conventional driller. That’s simply not true – in fact, the Congressional Research Service issued a report this month which showed that “in situ” wells actually have greater emissions than surface mining and that Keystone XL would have the same impact on U.S. emissions as adding another 4 million cars on the road.

Fact 5: NRDC’s Gas Price report was peer reviewed by economists

NRDC’s report was reviewed and positively received by several independent economists. It is notable that industry’s attacks have focused on attacking the credibility of NRDC rather than countering the issues that the report raises. It should be noted, there are many reasons to oppose Keystone XL, and the likelihood that pipeline will raise U.S. oil and gasoline prices is not a major one. But it is simply disingenuous to sell this pipeline as a means to improve U.S. energy security and reduce prices.

One issue that all Americans should agree upon is the need for a serious discussion on how to meet our nation’s energy needs. The United States has the potential to be a global leader in innovation, efficiency and clean energy. Keystone XL isn’t a part of that future.

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Report Shows Keystone Tar Sands Pipeline Will Raise Gas Prices and Cut...

Despite all the industry hype over jobs and purported energy security benefits from building the Keystone XL tar sands pipeline—benefits a Brooklyn bridge-builder could propose—a new report shows the mammoth Canadian tar sands pipeline will cut the amount of gasoline produced in the U.S. and jack up gas prices for...

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Report Shows Keystone Tar Sands Pipeline Will Raise Gas Prices and Cut...

By Rocky Kistner, May 22, 2012

Despite all the industry hype over jobs and purported energy security benefits from building the Keystone XL tar sands pipeline—benefits a Brooklyn bridge-builder could propose—a new report shows the mammoth Canadian tar sands pipeline will cut the amount of gasoline produced in the U.S. and jack up gas prices for American drivers, especially in Midwestern, Great Plains and Rocky Mountain states.

That’s right, the dirty oil pipeline from Canada will not only threaten North America’s greatest drinking water sources like the Ogallala Aquifer, slashing through the fertile farmlands and cattle country of America’s agricultural breadbasket, but it boost the price at the pump for consumers struggling to pay for gas prices near historic highs.

The report, Keystone XL; A Tar Sands Pipeline to Higher Oil Prices, lays out the facts that the oil industry doesn't want Americans to understand; the controversial TransCanada pipeline will ding consumers at the pump and cut oil supplies whose price is now discounted in the Midwest and in the Rockies. Here’s an excerpt from the report produced by NRDC, Oil Change International and ForestEthics Advocacy;; 

Keystone XL will take oil currently refined in the Midwest and Rockies and send it to the Gulf Coast where it can be sold on the international market. Oil supplies dedicated to the United States will decline while the Keystone XL pipeline provides the international market with access to that Canadian crude previously meant for the U.S. market. This will have a powerful impact on oil prices in the Midwest and Rockies—increasing the price of Canadian crude by $20 to $30 a barrel in the 2012 U.S. market, while doing nothing to decrease world oil prices.

The bottom line is that Gulf refineries are clamoring for crude they can turn into diesel, the most lucrative petrochemical product right now on the international market. Here's how NRDC's Anthony Swift describes it in his recent blog;

Keystone XL is going divert crude oil from the Midwest, a region of the United States where refineries are designed to produce as much gasoline as possible from a barrel of oil, to the Gulf Coast of Texas, where refineries have reconfigured themselves to produce as much diesel as possible from a barrel of crude.

These differences are due to recent changes in the world market for oil and refined products. Historically gasoline commanded higher prices than diesel, driven largely by increasing U.S. consumption. That has changed over the last ten years as U.S. gasoline consumption has plateaued, due in large part to increasing automobile efficiency standards, and global demand for diesel continues to rise. Today, diesel commands a higher price than gasoline, particularly in the international market.  

So we're going to take oil out of Midwest refineries producing gasoline for U.S. consumers and ship it to Gulf refineries who are focused on making diesel fuel for the international market. Sound like a good deal to you?

Well it doesn’t to people like Texas landowner Mike Hathorn, a welder concerned about his family’s property in his east Texas hill country home near Wells. That’s where TransCanada wants to run its 1,700 mile Keystone XL pipeline to the Gulf, straight through his family's river-fed land that he says now is threatened by a foreign corporation—and by foreign oil. 

Hathorn says he's always been worried about the environmental risks the toxic tar sands brew will pose in this water-rich community. But concerns over increases in gas prices is just icing on the cake to this proud Texan. “It doesn’t surprise me one bit,” Hathorn says in his thick Texas drawl. “This pipeline project isn’t helping people out here in the U.S. any. It’s just a Canadian company trying to use the U.S. as a route to get its oil out on the international market. We’re the ones having to take the risk. If it’s going to raise gas prices, then it’s just one more reason not to build it.”

Check out Mike Hathorn’s video and other videos of landowners, farmers, ranchers and citizens opposed to the expansion of tar sands mining operations and pipelines at NRDC’s new website Voices Against Tar Sands.

 

Other reporters have latched onto this oil price conundrum too; here’s Bloomberg columnist Jonathan Alter in a recent report;

TransCanada’s plan to jack up oil prices is hiding in plain sight. In the appendix to its application to the Canadian National Energy Board (helpfully provided to me by the Natural Resources Defense Council), the company brags that its project is “expected to realize an increase in the heavy crude price of approximately $3.00 per barrel by avoiding a discount” at the U.S. Gulf Coast. The market price of heavy crudes should rise an additional $3.55 per barrel when the new pipeline “relieves the oversupply situation in the Midwest.”

Of course, TransCanada made the claim that in 2009, when the discounted price for Canadian crude was only $3 a barrel. In 2012, that discount has skyrocketed to between $20 to $40 a barrel. And that’s why the tar sands industry wants Keystone XL so badly – it means adding to tens of billions of dollars to the annual price of their product, billions that would be paid by you and me.

These are facts that are not widely shared by the oil industry, for obvious reasons. But reporters who dig into this come up with the same conclusions; you can’t cut the price of gas Americans pay by importing more toxic tar sands oil from Canada. In fact, the reverse is true; it will boost prices we pay at the pump by creating a conduit of crude to Gulf refineries eager to turn the heavy Canadian bitumen into diesel for export—and turn a hefty profit doing it.

“Big oil and big money” is how Mike Hathorn explains it. And you can bet the American consumer—and all who depend on a sustainable and healthy planet—will be the last to benefit from the companies pushing this massive dirty tar sands oil pipeline plan.    

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