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Keystone XL: You Aren't Getting the Real Story If You Aren't Reading in Canada

Josh Mogerman

Posted January 13, 2012

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Pipes5 image by andrewottoson via Flickr

Over the long Keystone XL campaign, I have continued to be astounded at how differently the pipeline---and tar sands infrastructure projects in general---are seen in the U.S. and Canada. The narratives from binational pipeline supporters couldn’t be further apart from one side of the border to the other.

Here, the media has been captured in the construct cynically put out by the oil industry and their pipeline pushing pals in Congress: that the pipeline is a wondrous job creator that will fill our gas tanks with friendlier fuels from our friends to the north, freeing us from the dastardly sheiks in the Middle East. If you are paying attention, you know that is bogus---and in fact, quite the opposite of reality:

  • The 1700 mile pipeline is good for “hundreds, certainly not thousands” of permanent jobs, which is far from the tens and hundreds of thousands offered up by supporters. Given the size of the project, there are shockingly few jobs, but that hasn’t stopped its backers from circulating numbers that are nothing short of fiction. Of course, the loudest of those backers have rejected numerous jobs bills in Congress and directly eliminated tens of thousands of jobs, which begs the question of how much they really care about jobs at all…
  • Instead of jobs, this pipeline is about getting Canada’s carbon-heavy tar sands oil to foreign markets---not Americans. We are using less and less oil, while they are desperately trying to ramp up production at geometric rates, leaving them no choice but to find a way to reach new markets.
  • It is also about getting us to pay more for a big chunk the million barrels of oil that Americans buy from Canada every day. A bottleneck in the pipeline system and the difficult nature of the work refining tar sands (you need specially outfitted facilities to deal with all that sulfur and silica) force the Canadians to sell at a discount in the middle of the country. Keystone XL will raise the price of gas in much of the U.S. as soon as it starts flowing by evaporating that discount. Make no mistake; this is about increasing Big Oil profits. We will continue to get lots and lots of oil from the north, we will just be paying a lot more for it.

This is why Keystone XL is Big Oil’s pet project, worthy of calling in all their chits in Washington, DC to get boutique laws passed to force the project through.

Don’t believe me? Fair enough. Try reading Canadian newspapers. There is nothing secret about this stuff. Take this article that ran earlier in the week on Canada’s Postmedia Newswire which looks at a new pipe scheme to ship the gunk east inside Canada (they don’t like Alberta’s muck in Ontario or Quebec either, and the nation’s largest refinery isn’t set up to deal with the demands of the “dirtiest oil in the world”). Without talking about Keystone XL, all of the reasons for the pipeline are laid out by former Premiers and industry folk (here’s a chunk of the article, emphasis is mine): 

With production slated to increase over the next three years to three million barrels a day from about 1.7 million, everyone agrees that Alberta needs to diversify its market for bitumen beyond its sole export customer, the U.S. Midwest.

"Obviously, the most economic route to Asia is via the West Coast [via the now-stalled Northern Gateway pipeline], but what if that gets delayed so long that customers look elsewhere?" asks Eddie Goldenberg, who noted that the on-again-off-again Mackenzie Valley proposed pipeline in the North took 10 years to review.

India and China, the two largest emerging economies, have massive demand for oil. They aren't sitting around waiting for public hearings on new pipelines to be completed but are looking for sources of oil now, says Goldenberg, a former adviser to Jean Chretien. Canada got a wake-up call this fall when the Obama administration delayed approval to the Keystone pipeline that would take another 800,000 barrels a day from the oilsands in Alberta to U.S. refineries.

"Everyone agrees we should not put all our eggs in the basket of one customer," says Goldenberg, now a lawyer at Bennett Jones, a Calgary-based law firm.

It's not just about market access, but also about price. Right now, Alberta bitumen sells into the U.S. Midwest at $10 to $20 a barrel less than the world price for oil, partly because a glut of oil there is pushing the price down.

That price disparity is costing Canada's economy billions, and government's huge amounts in lost royalties. A new study from the University of Calgary says Canada would gain $131 billion in gross domestic product from 2016 to 2030 if Alberta crude gets sold to new markets at the world price. That underscores the importance of pipeline expansion.

The only way to get that world price is to give Alberta oilsands products easy access to overseas markets, says Frank McKenna, former ambassador to the U.S. and former premier of New Brunswick.

Amazingly, this looks a lot like the points we have been making over and over again in this fight. Big Oil doesn’t deny these concerns; they just pump up the volume on the Orwellian public messaging. Here in the U.S., we are told that rather than fueling those coveted emerging markets, the oil will offset imports from unfriendly regimes. Poppycock. Americans will not get this oil in their gas tanks. We are already net exporters of finished petroleum goods and the pipeline is meant to increase that by selling diesel to markets willing to pay more for it. Over two thirds of that petroleum is being exported from the U.S. by Gulf refineries - and that's where Keystone XL is going.

Yet the debunked job numbers and BS about getting us off of foreign oil goes largely unchallenged in favor of imagined political intrigue. Come on folks. We can do better.

Just crack a newspaper---but make sure it’s Canadian if you want the real story.


Pipes5 image of Keystone pipes by andrewottoson via Flickr

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Josh MogermanJan 14 2012 03:55 PM

It has been pointed out to me that the PostMedia story is slightly off for tar sands production numbers. ERCB projects 2.5 million barrels per day by 2015 and 3 million barrels per day by 2018. Other projections peg the increase at 3.85 million bpd by 2020. I don't think it really impacts the narrative in the least, but...

B CosJan 16 2012 05:19 PM

I wonder why you are cherry picking the information you present. I think that the logic presented by some participants in this debate is extremely shortsighted. The pipelines, including the proposed Keystone, are for the future of North America not just the next few years.

Yes Canadas' press does get it right sometimes. We didn't go into Iraq and it seems that not that many Americans were reading and listening to the same information I was in British Columbia. I guess the press in Canada made an effort to present a more complete picture, unlike the American press. It seems that this is happening again with this web site.

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