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Proponents of Keystone XL tar sands pipeline spread misinformation on gas price issue

Anthony Swift

Posted May 25, 2012

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"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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Steve L.May 27 2012 07:08 AM

And of course there's always:

Fact 6: An America powered by windmills and solar panels is an impossible fantasy.

I rent an apartment in the suburbs, and I park my car in the street. I have no way to recharge an electric car overnight. I will forever depend on abundant supplies of gasoline to transport me where I need to go.

BSMay 27 2012 09:05 AM

Saying over and over that Keystone XL will divert oil away from the Midwest is not going to make it true.

If existing pipelines are not full, it's because the markets they are feeding are satisfied. If they could take more, they would ship more.

Between the annual growth of Canadian oil output and 100,000 barrels/day or more of Bakken oil, the Keystone XL system could be full from new production in about a year after it's built. Given other avenues (rail and other pipelines) and midwest refineries converting to use more Canadian oil, that wouldn't actually happen. But it could.

And by removing the transportation bottleneck and allowing more Canadian oil to flow, the price of that Canadian oil will go up $10-20/bbl, encouraging even more oil production in Canada. And as that happens, the global supply of oil increases, causing a net decrease in the average barrel of oil's price.

NRDC won't tell you this, but the above is what they are really worried about. They don't want additional production to hold oil prices down, and they don't want the price of Canadian oil to go up because that would encourage more production. Both of those things are good for the consumer, but bad for the NRDC's agenda.

Stephen SmithMay 29 2012 11:31 AM

NRDC won't tell you this, but the above is what they are really worried about. They don't want additional production to hold oil prices down, and they don't want the price of Canadian oil to go up because that would encourage more production. Both of those things are good for the consumer, but bad for the NRDC's agenda.

Responding only to this last paragraph: No, those things are not "good for the consumer." Both depressed gas prices (which would only encourage demand) and increased production of Tar Sands oil mean more greenhouse gas pollution.

And if you think more greenhouse gas pollution is "good for the consumer" ... well, there's no excuse for denial about climate change.

BSMay 29 2012 11:58 AM

My comment was only with respect to price, not global warming. My point is that NRDC is pretending that NOT producing more Canadian oil is going to lead to lower prices. In reality, the NRDC knows that is not the case.

However, with respect to global warming, the NRDC is also being disingenuous. Regardless of what is the cause (and I have no reason to belive that CO2 emissions are not contributing), the planet has warmed much less than all the models have predicted. This seems to indicate that (a) the models are not accurate, meaning that we don't really know the extent to which greehouse gases really do cause the planet to get warmer, and (b) we have more time to go from fossil fuels to alternates than previously thought.

Stephen SmithMay 29 2012 12:40 PM

Sorry, "BS," but you don't get to pretend that climate change isn't happening and have the discussion on your terms — e.g. within the frame of small-minded and short-term fears and anger about gas prices. The costs of uncontrolled climate change will make current fuel costs look like small change.

And as for your other contention: Bull****. Every major scientific society and institution in the world says it's happening, that warming is in fact precisely on pace with modeling, and that it will be unimaginably destructive unless the politics change and greenhouse emissions are drastically reduced.

Until we hear different from these institutions, attempts by amateurs to muddy the waters are either (a) cretinous, or (b) immoral, even (as Hansen has said) criminal.

BSMay 29 2012 04:31 PM

First, I'd ask that you abide by the code of conduct and refrain from making insulting comments. Taking a scientific discussion and turning it into insults implies frustration and a lack of ability to discuss the actual topic.

Also, I did not claim that global warming is not happening. In fact, I said the exact opposite, which suggests you did not actually read what I wrote.

If you'd like to discuss further, I'm more than willing to look at this with an open mind.

My point about the models is that if you go back to the 1990 IPCC predictions, you find that they were wrong. i.e. over the following 22 years, warming was less than even the lower bound of what they predicted). The models from 1990 were not accurate, meaning the modeled impact of CO2 on temperatures was not accurate.

Granted, the models being used today might be better, but it's tough to prove without waiting. The typical response is that you can prove they are accurate by comparing them to historical temperatures. However, this is not a valid statement since by definition, all models are tuned to match historical temperatures. Proof of accuracy lies in how well they predict the future. Of course, I am not necessarily saying we should wait 20 years to find out if they are accurate or not, but they still must be taken with a grain of salt.

Looking at sea level rise, the rate has not increased, but rather remained steady over the past 90 years or so (somewhere around 1910 the slope of the trend did increase slightly and then actually decreased slightly in the mid-1900s). And if you look back thousands of years, the longer term trend is that sea levels were already rising and the rate of increase has been approaching zero.

Since water expands as it warms, an ocean increasingly acting as a heat sink should be expanding at an increasing rate, but it isn't. This would seem to suggest that the oceans are not absorbing as much heat as is claimed. It also seems to suggest that ice is not melting at increasing rates. This doesn't disprove manmade global warming, but it does add some skepticism as to the magnitude of the effect.

And lastly, as the planet's temperature has mysteriously not warmed for the past 10-12 years, groups such as the NRDC and others have taken to putting out misleading statements to make people think otherwise. For example, saying 2011 was the "11th warmest year on record". Or focusing on the warm winter in the US while ignoring that the weather pattern that caused that warm winter also caused cold winters elsewhere (globaly, January was one of the coolest months the planet has seen in the past 10-20yrs). Why the need to mislead us if the science is sound?

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