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Why the Keystone XL tar sands pipeline doesn't provide the U.S. with energy security

Danielle Droitsch

Posted September 21, 2011 in Curbing Pollution, Moving Beyond Oil, Solving Global Warming

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Canadian Ambassador Gary Doer recently said that the final decision on the proposed Keystone XL tar sands pipeline should be made based on the facts.   We couldn’t agree more so we have laid out some key facts – and debunked myths – that demonstrate why millions of Americans argue the Keystone XL tar sands pipeline does not give us energy security and is not in America’s national interest.

The real purpose of the Keystone XL pipeline is to give Canadian tar sands producers access to Gulf Coast refineries - not to provide the U.S. with a more secure supply of oil. 

Myth: Supporters of Keystone XL paint a picture that the U.S. desperately needs to replace declining oil supplies from countries like Venezuela and Mexico as well as from the Middle East. 

Reality: The underlying purpose of the Keystone XL pipeline is to give tars sands producers access to Gulf Coast refineries and export markets. 

Pipeline proponents prey on old and entrenched fears that there is limited or uncertain access to oil particularly from Middle Eastern nations and point to rising global demand.  In fact, the U.S. oil market is shrinking and will continue to do so for several decades.  According to the U.S. Energy Information Administration, U.S gasoline demand is in decline and will continue through at least 2030.  This is the result of stronger fuel economy standards already in place.  The United States can further reduce oil use by over 4 million barrels a day by 2025 through fuel economy for heavy trucks, improvements to air travel, and building efficiency.  The Environmental Protection Agency suggests that even deeper cuts – around 7 million barrels a day – are possible by 2030. Meanwhile, U.S. domestic crude production such as in North Dakota and Texas is increasing and will continue through at least 2035.  

And rather than providing the U.S. with a supply of oil, tar sands producers will be able to ship their product to the Gulf Coast with access to international markets.  Oil companies like Valero, the largest exporter of refined products in the United States and one of the largest Keystone XL shippers, haven’t made any secret of their plans to export diesel from Port Arthur Texas to European and Latin American markets.  Other Keystone XL shippers are likely to follow Valero’s lead especially given several of them operate within a Foreign Trade Zone exempting them from customs duties on imports and exports.  The details of this are laid out in a report by Oil Change International.

The jobs created from the pipeline are a fraction of what has been promised.

Myth: TransCanada, the Government of Canada, the American Petroleum Institute and other pipeline proponents claim Keystone XL create anywhere from 20,000 to 342,000 direct jobs with hundreds of thousands more indirect jobs. 

Reality: There have been significant distortions of fact when it comes to job creation. According to the University of Cornell's Global Labor Institute, there are “major methodological flaws” in TransCanada’s job estimates making them “unreliable and therefore unsuitable for serious public debate.”   The State Department has put the job benefit at between 5,000 and 6,000 direct jobs.  And these jobs are temporary lasting three years or less.  And, for the most part, these temporary jobs will not draw from local markets.  As my colleague Liz Barratt-Brown has said the path forward to create jobs is not found in the expansion of fossil fuels but in renewable energy and efficiency strategies.  A study from the University of Berkeley found the U.S. could gain as many as 1.9 million jobs with a comprehensive energy and climate policy. 

Tar sands that would flow through the Keystone XL pipeline will not simply find other markets.

Myth: Proponents argue that tar sands production will proceed as planned regardless of whether Keystone XL is built.   They point to China as the alternative market or say that tar sands oil will somehow make its way to the Gulf Coast by other means such as rail or barge.

Reality:  In fact, Keystone XL is the expansion plan for industry for the next 10 to 15 years. Right now and for the foreseeable future, tar sands has one market: the U.S. Midwest.  Tar sands oil has little or no chance to overcome its status as “land locked” without Keystone XL. “Unless we get increased [market] access, like with Keystone XL, we’re going to be stuck,” said Ralph Glass and economist with AJM Petroleum Consultants in Calgary pointing out that refineries in the Midwest will reach capacity to process tar sands by 2015.

Cenovus Energy, one of the largest tar sands developers, has been forthcoming that Keystone XL is essential to facilitate their ambitious tar sands growth strategy – not rail, not barge, and not another pipeline accessing Asian markets.  Outside Washington, there is clear desperation by voices like Energy Minister Ron Liepert who is keenly aware that the prospects of moving ahead with alternative pipelines to the Canadian west coast are highly uncertain.

Financial analysts like Robert Johnston with the Eurasia Group who have suggested that Asian markets are “a long-term option at best” and the former Canadian Environment Minister Jim Prentice rightly acknowledged there is a “great deal of uncertainty” around the Gateway pipeline from Alberta to the British Columbia west coast pointing to the constitutional and legal rights of Canada’s First Nations. 

Another proposal, the Kinder Morgan’s TransMountain pipeline would go to ports in British Columbia but does not have commercial interest and has not and an application to Canada’s regulatory authorities has not been initiated.  Other options are even more far-flung, like the notion that tar sands can be easily shipped on rail cars in vast quantities.

As my colleague Elizabeth Shope has argued in her recent blog:  “All too frequently, industry has tried to “play the Asia card” when talking about Keystone XL. They make the false claim that if Keystone XL is not built, tar sands will be extracted and will be sent to Asia instead.”

Building Keystone XL will not make the U.S. less vulnerable to oil supply disruptions from the Middle East or prevent oil prices shocks.  The only way for the U.S. to address these problems is to reduce demand on all oil. 

Myth: Keystone XL proponents argue that bringing in more Canadian oil will give the U.S. a “supply cushion” and moderate oil price volatility.  They also argue that taking more tar sands from Canada will enable the U.S. to eliminate its reliance on oil from the Middle East.  

Reality:  Approving Keystone XL will not help reduce America’s vulnerability to oil supply disruptions or price shocks.  This is because the Organization of Petroleum Exporting Countries (OPEC) cartel effectively determines global supply and, as a consequence global price.

America’s military leaders have repeatedly said the only way for the U.S. to achieve energy security is to lessen the demand on all oil.  This is a central point that bears repeating.  Shifting demand from one supply source to another will not enable the U.S. to avoid the decades old problems of oil price shocks and supply disruptions that often initiate in the Middle East. Former Director of the Central Intelligence Agency James Woolsey and Anne Korin, Co-Director of the Institute for the Analysis of Global Securitysaid it best, “Even if the U.S. did not import a drop of oil-or if all, instead of just most, of our imports came from Canada and Mexico-we’d still be vulnerable to the vagaries of the oil markets and price manipulation by OPEC.”

More oil from Canada will also not prop up U.S. oil supplies in times of shortage or moderate oil prices when oil prices skyrocket.   We know this by looking to past experience. According to Oil Change International, gas prices were not moderated in the least during the 2008 oil spike when gas prices rose above $4 a gallon and while Canada was the single largest source of foreign oil to the United States.  The tar sands industry is equally unable to act as an emergency source of supply. The industry has to operate at maximum production to generate profits and has no spare capacity. 

Reducing oil demand – regardless of its source - is the only proven way to enable the U.S. to wean itself off Middle Eastern oil and the problems that come with it.  According to the United States Energy Security Council, a bipartisan organization comprised of former cabinet officials, scientists, national security and business leaders, “Oil’s status as a strategic commodity undermines U.S. national security and weakens the U.S. economy.  Reducing oil’s strategic importance requires breaking its virtual monopoly over transportation fuel.”

If U.S. reduces its oil demand, something that is helped along significantly by the adoption of fuel economy standards and other oil saving devices, the susceptibility of the U.S. to these global oil problems are minimized.  But approving Keystone XL, which would effectively double imports of Canadian tar sands, would further lock the U.S. into oil dependency and contradict efforts to make America energy independent.  In fact, Keystone XL would actually increase the price of oil in the Midwest adding almost $2 to $4 billion annually to the U.S. fuel bill.   It will do this by diverting major volumes of tar sands oil that currently goes to the U.S. Midwest to the Gulf Coast.

The enormous risks posed by Keystone XL such as possible contamination of the massive Ogallala aquifer far outweigh any benefits from the pipeline.

Myth:  Pipeline proponents have stated there is an urgent need to approve this pipeline and they have minimized the possible risks it could have on clean water and air. 

Reality:  The risks the pipeline poses to the Ogallala aquifer alone, which provides $17 billion in benefits just to the Nebraska economy, far outweighs any benefits offered.  The oil that would flow through the pipeline is just 4.7 percent of America’s total oil use.  But looking at this pipeline in terms of its potential to spill and contaminate the Ogallala Aquifer that provides water to more than eight million people, it could be devastating. 

In just its first year of operation alone, the first Keystone pipeline has spilled 14 times in the United States.  One of these spills in May 2011 spilled 21,000 gallons of crude in North Dakota.  A study by the University of Nebraska has projected that in a worst-case scenario Keystone XL could spill as much as 7.9 million gallons in Nebraska’s Sandhills above the Ogallala Aquifer and more than 6.9 million gallons of raw tar sands crude at the Yellowstone River crossing. In addition to the catastrophe this would be for the environment, the spill would take years to clean up from what we have learned from the tar sands spill into the Kalamazoo River. As my colleague Anthony Swift pointed out, claims the pipeline will be made safer through the adoption of “new” conditions are disingenuous.  The conditions are actually “a hodgepodge of current regulations – some conditions actually repeat regulations word for word” and generally do not go above and beyond what is required by law.

This is just one of many reasons why millions of Americans from all walks of life believe the pipeline isn’t in America’s national interest.  As my colleague Susan Casey Lefkowitz argues, there is ample evidence that Keystone XL will cause significant harm to climate, wildlife, water and health.   There is unprecedented public opposition to this pipeline including the National Farmers Union, Transport Workers Union, Amalgamated Transit Union, National Congress of American Indians, mayors, scientists, Nobel Peace Laureates, landowners, dozens of members of Congress and communities that would be hit hardest by refinery pollution in Texas.  

The facts speak for themselves.  The energy security and job benefits from Keystone XL have been exaggerated.  Keystone XL poses too many risks and doesn’t offer sufficient benefits and is not in the national interest.  The stakes are too high to put at risk public safety and the environment especially when it is clear the pipeline doesn’t offer the promised energy security benefits and there are better alternatives for our economy and energy security.

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