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Iran's oil bluff shows energy security is found in freedom from oil, not in Keystone XL tar sands pipeline

Susan Casey-Lefkowitz

Posted December 29, 2011

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The current threat from Iran to block oil movements through the Strait of Hormuz has some Republicans calling for approval of the Keystone XL pipeline that would bring tar sands oil from Canada to the U.S. Gulf Coast refineries. Energy security is important and the Keystone XL tar sands pipeline is not the way to get there. Our economic and national security lies in clean energy, not in deepening our dependence on ever more expensive, dirtier and riskier forms of oil such as tar sands.  Dependence on oil (from anywhere) is what makes us vulnerable to price spikes or supply disruptions. So the more fuel-efficient we get, the less we are beholden to foreign sources of oil - whether Iranian or Canadian. This is one of many reasons why the Keystone XL tar sands pipeline is not in the national interest.

Tar sands oil interests claim that Canadian tar sands are the only way for America to avoid the messy international politics of Middle Eastern oil. But Iran's current bluff underscores the point that many in the defense and intelligence communities are also making:  we have to work harder to break our dependence on oil. All oil. The bluster of Canadian tar sands doesn’t change the dynamics of the world oil market. Here is why.

The threat of a oil crisis if Iran blocks the Strait of Hormuz is immediate and will not be alleviated by Canadian tar sands oil. Tar sands does not have spare production capacity. Tar sands bitumen is strip mined or melted from deep under the Boreal forest. You cannot turn the tap on high and have more come out. Unlike with conventional oil, it takes a long time to bring new tar sands production online. In fact, America already has more pipeline capacity than tar sands oil to fill it and that is likely to be the case for another 15 years or more. Tar sands doesn’t help in times of oil shortage due to conflict or natural disaster because it carries no spare capacity.

In fact, the primary purpose of the Keystone XL tar sands pipeline is to bring Canadian oil to the Gulf Coast where Valero and other refineries have said that much of it will be turned into diesel and exported. This is not a path to energy security for America.

But even if Keystone XL’s tar sands oil were to stay in the United States, this would only deepen and prolong U.S. dependence on oil. Dependence on oil (from anywhere) is what makes America vulnerable.

The bottom line is that even if we get more oil from Canada, we are still at the mercy of price spikes when some other part of the world oil market blows up. True energy security lies in kicking our addiction to oil and moving ahead more quickly with clean energy that does not tie us to a dependence on the Middle East and other conflict areas.

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ChadDec 29 2011 08:45 PM

But will having a supply from Canada hurt???

BobDec 29 2011 09:03 PM

@Chad: the dirty oil that will travel across American aquifers, rivers, farmland, and communities to oil refineries on the Gulf Coast may or may not end up in your gas tank Oil is a worldwide commodity and is not guaranteed for one country. The oil and gas industry is "for profit", and therefore will sell to the highest bidder.

FredDec 29 2011 11:15 PM

Your hyperbole has nothing to do with the microeconomics.

More supply of petroleum to the gulf coast will result in cheaper refined products in Gulf coast states and via shipment, on the eastern seaboard of the the united states. The crude will always be sold in a market to the highest bidder, but the overall increase in supply in those markets will decrease the price.

This can be seen now in the spread between WTI in Cushing, OK, the southern current terminus for the Canadian crude, and the world price reflected in the Brent market. It this pipeline is built, there will be a drop of about $8 per barrel on the gulf coast, and around $5 per barrel on the East coast. There are 42 gallons in a barrel, so we are talking about 20 cents per gallon for gasoline in the gulf coast states, and about 8 cents per gallon on the East coast.

If the oil sands are ramped up further, or if there is an interruption in world supply (i.e. Iran), this price savings could be significantly larger.

Tom RobinsonDec 30 2011 01:34 AM

@Bob: I have 3 questions for you. First, how is it ecologically better to send oil from the Middle East around Cape Horn to the southern and east coasts of the U.S. rather than getting it from Canada, even if it does come from oil sands.

Please explain to me how it would be better for Canada to build a pipeline across Canada (including the Columbia River drainage) through the coastal mountain ranges of BC to a salt water oil terminal in the seismically and biologically sensitive lands of the Pacific Coast to be loaded on to tankers for export.

The main theme of the article above seems to be that we need to use less oil. I agree. But to use that as an argument against this pipeline is just ineffective. Oil does get more subsidies in our economy that nuclear. Nuclear does get more subsidies that alternative fuels. But even without the subsidies, oil is still cheaper (today) for transportation. And YOU may be able to buy a car that runs entirely on electricity for yourself and someone else, but if I carpool 4 3 year olds to preschool, I need a minivan, and right now, it's going to run on gasoline. America's economy transports most things in semi trucks and they run on diesel. You have to address these things if you want people to use less oil. Just being against a pipeline because the U.S. should use less oil comes across as a religious argument.

SunwynDec 30 2011 05:41 AM

They cannot build the pipeline to the coast of BC because the people in BC are too smart to let them. They want to build it to Texas because they think Americans are too dumb to stop them.

If we let them, they are right.

RobertDec 30 2011 05:52 AM

The sun is still shining and the rivers still run. Solar and hydroelectric are the way to go. We don't need Iranian crude or Canadian Tar sand.

Bob HenryDec 30 2011 07:26 AM

Fred - impressive economics lesson; delete 8 CENTS/gallon!
You should have been around in the 70's when gas "rocketed" to $2,00/gal. AND 2 1/2 hour "gas lines'- but ODD/EVEN solved that! (right).
What happens WHEN, not IF, there is an earthquake in the midwest? "Oh, we're very sturdy and secure for THAT" ... DUH?

We must stop digging up dead dinosaures for our energy. (think of the total process to get IT in your tank)

Robert Lee has it correct - The Sun is Free and Clean.

BTW - WHEN we have an earthquake with a solar farm, all we have is a buncha broken black windows in a field!

Let's exchange the Black Helmets for Yellow Helmets.

Buck SmithDec 30 2011 10:01 AM

The more oil we move by pipeline the less comes in on ships. The biggest risk of oil spills is transport on water so building the pipeline reduces the risk of oil spills.

John WarnerDec 30 2011 10:37 AM

What is about oil that is hated so much? It is in so many products, especially health care related, if its made from plastic, it has refined oil products in it. And I just don't understand this thing about burning our food to make fuel (ethanol) and getting less bang for the buck per gallon.

Mark WendmanDec 30 2011 10:57 AM

Hmm.... an educated attorney misinterpreting a situation for some unspoken motive? Nah could not happen. Never.

Iran's bluster does not support the hypothesis claimed here ( mistakenly ).

The world ( and the USA ) needs oil till electric vehicles are more universally practical and cost effective ( enough to compete with IC cars today fueled by OIL ) and have low GHG grid scale power for EV recharging at scale.

And what about trucks and trains and buses? ( train and buses are easy to convert to low GHG operation, commercial trucks not so easy ) I think UPS is doing small scale testing of med/ long haul even some delivery trucks - conversion to natural gas, but that still is an emitter of GHG, just cleaner burning and cheaper overall. And natural gas really does not have large enough distribution for practical vehicle fueling yet ...

Till broader conversion to low GHG EV happens ( without coal fired electricity ), not everyone around the world will bicycle to work ( it is good to cycle or take public transportation, but makes for fewer $ that attract attorneys looking for causes to litigate )

NRDC is better off helping to lower the GHG and pollution footprint at the Alberta Tar Sands, by INVESTING in research to cost effectively reduce GHG and pollution with NEW processes. Once Keystone XL is greenlighted soon ( Nebraska state legislature already provided proposed rights of way off the Ogalla aquifer - faster than NRDC can rustle up a campaign based on exaggeration and misinformation curiously worthy of Karl Rove antics.)

NRDC also might directly research and invest in advanced battery R&D for EV, and attempts at breakthrough research, not tiny incremental technical improvements. You know the hard work that scientists do to try to make EV's more practical and cost effective???

In the end your ineffective almost worthless strategy and trumped up nonsense might make for a good topic for case study at Harvard Business School where some of NRDCs attorneys come from. A case study of how not to waste time with ineffective strategies of scorched oil??? Sometimes market forces with the right technical and cost improvements to oil alternatives can do more than media campaigns based on hype and falsehoods.

Iran is likely to go nuts in the coming year as pressure is placed upon them by many countries wishing for them to not build nuclear weapons. Since Iran's government is characterized by nutcases of Mullahs and leaders wishing to destroy the west, and annihilate Israel ( they call it wiping Israel and the Jews OFF THE MAP and they do so incessantly especially in native language arabic press ), Iran likely will "hit back" by trying to block the strait of Hormuz when they begin to feel the pressure exerted by western nations wishing for Iran to peacefully stop their nuclear weapons program.

Iran boasts blocking the Strait of Hormuz is easy to do. If Iran does impede transport of 1/6 of the worlds petroleum through the waterway, Iran might well suffer the consequences that are pretty onerous. Obama is a sensible guy and strong in focused efforts in military matters ( who'd have thought this from his opponents, but Obama is pretty sensible, give him plenty of credit due him that few properly acknowledge - He is wise and sensible in many matters even despite his relative youth and inexperience. All the respect to the president the fine person he is, despite the meanspirited naysayers )

Will possible instability in oil transport through the Strait of Hormuz and consequent spiking of the commodity price for a barrel of oil that inevitably ensues, cause some folks to conclude that "energy security is found in freedom from oil, not Keystone XL"

I seriously doubt any sane person will reach the claimed conclusion ( hypothesis ) if examining the facts of the situation and the sources of energy used in homes and commercial activities presently.

Give my regards to Karl Rove, you seem to be relatives ? sowing FUD to boost weak arguments, and trying to scare folks needlessly. Your ?tactics are fairly transparent, and the rationale is obviously weak.

I look forward to the KXL pipeline being built sooner than the western pacific terminal for China's use of the oil, with KXL properly and sensibly rerouted away from sensitive aquifers, and that both construction and refinery jobs grow ( even for oil export where we might improve balance of trade from export of refinery products )

NRDC should be choosing and supporting sensible safety improvements in civilian nuclear power, even specific regulations to mitigate the latent risks with present light water reactors, and replacement of the present unsafe reactor inventory, and promoting safest nuclear power reactors designs, possibly demanding and forcing of regulations that NRDC should formulate and lobby for. And vigorously promoting MSCSP molten salt concentrating solar thermal electrical power generation for similar reasons

That might actually build the safe and sensible foundation of clean low GHG power with a safer profile than present reactors and lower GHG than coal fired power generation. But such a strategy is hard to convince actors and entertainment industry figures to support since it is more complicated, less catchy for lay folks to comprehend. Safe Nuclear ( it must be impossible ! ..... NOT )

And please try to dissuade folks from using CdTe solar panels near residences, and even for large scale power projects. It is ironic that legislation on regulating heavy metals exposure has recently passed ( good work done by NRDC and others, ) yet the Solar Rooftops program of Sierra Club implicitly is seemingly at present promoting CdTe residential solar panels ( without saying so explicitly - this is via SC's partner Sungevity that seems to not tell the consumer that they are getting CdTe, nor do they explain in depth the health risks of CdTe panels - heavy metals of the worst kind ).

Get behind KXL but help mitigate the more substantive concerns NRDC really ought to focus on and succeed in doing.

Vain silly protests are mostly that. Real substantive environmental work is harder than what seems to be trumped up propaganda in this NRDC campaign. And yes reducing GHG is important, very important.

R. L. Hails Sr. P. E.Dec 30 2011 02:12 PM

We live in a world of nutty people. Whoever believes that a few guys in rubber dinghies can fight the US Navy suffers mental disorders. Within hours of the first bullet fired in international waters, at US interests, Iran would not longer have boats, planes, subs, airplanes, or a hydrocarbon infrastructure. Oil prices would spike then decline. Iranians would starve; oil is their sole means of earning a livelihood.
In spite of decades of wishing, oil will power the US for the foreseeable future. Fossil fuels, in solid, liquid or gaseous phases, plus uranium are the only fuels that can supply cheap energy. If we drive these costs up, we will suffer poverty. All green energies cost too much, and will for decades, or centuries. These are the facts of life.
I spent forty years engineering energy, and billions of dollars on things that work.

Mark WendmanDec 30 2011 02:23 PM

Here is a great zero GHG power project, done well in every conceivable metric, and perfectly suited for 10's of GW deployment.

It is well worthwhile to develop 30+ or more GW of power capacity of Molten Salt Concentrating Solar Thermal ( with molten salt power storage ) for buildout in the Nevada Southern California and nearby deserts that have high solar insolation, with large multiGW powerline buildouts to major population centers ( using >=750KV DC lines ), concurrent with the project developments

It would be wonderful for the proper greening of the grid to displace coal and gas fired power plants, and complement efforts to develop and buildout safest / safer nuclear power ( that is not yet presently deployed on any large scale in many parts of the world )

Mark WendmanDec 30 2011 04:22 PM

RL -

My sincere compliments to you for your thoughtful sensible writing ( here and elsewhere ). Quite rare by others. You are one heck of a great, sensible engineer.

I do think some energy sources in solar are significantly being cost reduced over prior assumptions recently, for various reasons. But largely what you say is quite true even if ignored by many on all sides.

The curious part about costs for solar photovoltaics, is the preponderance of costs are presently found in the ancillary things to the actual panels / solar cells. Installation, racking, electronics, wiring etc.

The most creative solutions I saw in residential solar were in the novel racking that used modified panel frames as the actual rack, resting the panels largely on the roof, bolted to one another with special simple edge brackets. Cut install labor and parts considerably for residential roof mounting. There are two firms that have related products.

The other related innovation is being driven by GE a Sr. solar manager has taken it upon himself to work with install contractors & residential project housing developers, to devise dirt cheap standardized hard point installs to be included in new home builds, that would permit installing panels ( attachment to the roof ) via snapping them in to the already included hard point roof mounts waiting for panels ( or appropriate design ).

Despite the huge effort to cost reduce solar cells ( even if properly using $/watt metrics ) successfully, there has been little headway in BOS balance of system cost reductions, that tend to dominate most residential installs.

Power Resellers ( versus panel sellers ) who buy panels, install on your roof and sell you power, help considerably in reducing solar costs, since install costs are not a profit center ( as for typical solar roof installers jobbers ), but are a cost center, and in a vertical power producer firm are costs meant to be mercilessly reduced to the bone ( reducing the BOS install costs ).

The other photovoltaic innovation not yet completed, has a decent chance of succeeding is the effort by Alta Devices ( a silicon valley startup ) that is intended to drive manufacturing costs to the bone ( lower hugely ) of hopefully triple junction highest efficiency cells they intend for purportedly 1 sun solar panel applications. ( there are reasons they might find similar success in high concentrating cells, but I will ignore that for the moment )

The technical drivers are reduction of expensive substrate costs in Gallium Arsenide high efficiency cells initially a single junction ~27?%, and hoped for later mid 30's% triple junction cell - where the actual very thin cells are all peeled from the initial growth substrate - hopefully permitting reuse of an expensive gallium arsenide substrate ( there are alternate schemes for lowest cost substrates.. they presently are not examining, but are obvious to some steeped in semiconductor processing )

Their key advance is attempting development of a large multizone very fast linear conveyorized MOCVD metal organic growth system. They hope their valveless linear multizone MOCVD will enable unprecedented growth rates in Gallium Arsenide highest efficiency cells. Initially they will build single junction ~28% and later mid to high 30's% or more in triple junction cells. The cell growths are hoped to be at deposition rates presently unthinkable with conventional single chamber MOCVD growth systems that require slow gas and process temperature switching, to gain multi layer growths, versus Alta's large linear multizone conveyor fed system they intend to build.

If successful at highest efficiency and highest production throughput, Alta Devices might revolutionize a huge reduction in $/watt figure of merits in photovoltaics ( highest efficiencies with high production throughputs ). I wish it were not using arsenic compounds, but it still might prove worthwhile.

Gerald D. PinkardDec 30 2011 06:11 PM

Dear Mark,

Is this really your job? to blog about solar cells all day without ever really coming upon a point for your readers to take home? Do you like the sound of the words you write as you read them or is there an underlining opinion I just missed. The jury is out.

What will we blog about tomorrow?? tough call

Jason FlauausDec 30 2011 06:33 PM

Big Oil needs to be a thing of the past. It feels like we as a country have been in the slow lane with so many other flying by. Innovation and creative solutions will throw us back into the forefront. I don't want to get rid of Big Oil, but rather would like to see them change the face of the industry here in America. The Tar sands project is a modern marvel, but if we shifted our thoughts away from prolonging the oil age and focused it on the next generation. We could be leaders again and in that would be freedom ensured.

Rich JorgensenDec 31 2011 12:17 AM

Iran is not relevant to this conversation. Nuclear power is. Nuclear is available 24/7/365. Solar is only avail ave 12 hours a day so every solar plant has a gas turbine and burns fossil fuel (gas) at night. And/or it has batteries made of toxic heavy metals. Solar will never be as cheap as nuclear, unless you burden nuclear with the political costs that NRDC and allies impose by trying to block it, by scare-mongering. It's unethical, immoral, and bad for the planet, but they do it anyways. So when they get all holier than thou about tar sands, I see more scare-mongering. Tar sands are not a good choice, especially when safe, cheap nuclear energy is an alternative. And that would help us move towards an electric fleet of cars and trucks. It's simple really.

Stan MatfordDec 31 2011 02:06 AM

While the Greenpeacers are burning oil traveling from protest to protest, they are wasting valuable time. Time that could be spent unlocking the mystery of running large trucks, industrial and agricultural equipment on puppy dog kisses and that new baby smell.

GaryDec 31 2011 08:43 AM

It's all very simple. The current state of technology for wind, solar, electric vehicles, etc. does not work. Does. Not. Work. Companies involved in these technologies collapse as soon as government life-support is withdrawn.

Heavy research into those areas should continue until the day one of them actually does work. Until then, it's an oil-powered world we live in and no amount of wishing or government interference in the market will change that.

Tim WhiteDec 31 2011 04:11 PM

After reading all of the comments, the first one (Gary) is the one that best states the problem. Engineers have for more than 100 years tried to make an electric car viable, and at the current state of things all we've got is a Chevy Volt that tends to catch fire (even with a $250,000 per vehicle sold government subsidy) and a high priced Finnish alternative (once again, recalled because of fire danger after being subsidized by OUR government). This, combined with the fact that electricity is not a raw energy source, but an energy product that must rely on some other source of primary energy to be usable (such as [OH MY GOODNESS!] coal, natural gas, oil [ARGGH!], or [HEAVEN FORBID!] nuclear energy reminds us that technologically "the bridge has not yet been crossed" that will move some of these alternative energy vehicles from the playground of the intellectual (but pragmatically bankrupt) left-wing ideologues and/or those who do not care about the true limited resources of the poor (despite their lofty verbiage). The not-so-hidden agenda of the Energy Department is to make oil so expensive that we will be "driven" to other sources. The only problem with that is who suffers most? The working class poor, who have to cut expenses to pay for fuel our wealthy ideologues never even dream about. My paid-off old (1984)station wagon that runs clean and gets 18-20 MPG on the road is still (currently) a better deal than the $35,000 electric car I can't afford. I believe in, and make regular use of mass transit options, and economically viable energy-efficient vehicles, but short of developments that are not really yet on the horizon, and are thus still fantasy, we need to develop ALL the energy resources we can that will not be dependent on untrustworthy and unreliable sources.

Miles HessionDec 31 2011 07:22 PM

I am trying to think how to say you are so wrong without being rude, it is very hard to do. You don't seem to have any idea of how the real world works. I am sure you were one of the "we only have 2% of the world's oil, we have to find other sources" people. That oh so small group that seems to have nothing better to do that ruin the vast majorities' lives. You claim to care for the earth and the "middle class"-whoever that is. Oil, coal and natural gas are the lifeblood of the world. Learn to live with it. You are lucky to have a president who believes the same crap you do. He, like you, have really done a wonderful job of putting people out of work, putting more people on food stamps and made the US the laughing stock of the world. Your very small crowd of people have caused the limited amount of money that the government has to be wasted on your foolish ideas. I would ask that you wake up and see what a mess you have made of the US. If you don't like the US move to Europe, your ideas will resonate with people there, but NOT here.

GreyJan 1 2012 04:18 PM

Interesting comments. But all should note that THREE (3) environmental studies have been submitted and approved by the State Dept. and go ahead on pipeline has been given awaiting Sec. of State H. Clinton to sign off on and then pick up shovels and go to work, then politics really came in and things mired down thanks to Obama and trying to please his base.

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