New tar sands pipeline means high gas prices, over-capacity, and losing supply to Europe
Posted May 10, 2010
Several new reports came out today all with a common message: tar sands is not the right choice for our energy future. These reports are especially timely since the United States is considering a proposal to build yet another tar sands pipeline. This newest TransCanada Keystone XL tar sands pipeline would bring tar sands oil to the U.S. Gulf across the states that are home to the fragile Ogallala Aquifer. The question is whether America should pay the high environmental costs of tar sands oil to our aquifers, water, air, climate and health. The answer is that we should not. Tar sands oil is not worth it. As we see in the most recent analysis, tar sands oil is dirty, dangerous, expensive and doesn’t meet our energy security needs.
Plains Justice reports that the TransCanada Keystone XL pipeline is not needed as it will be too expensive and as we have better solutions. The policy brief finds that past development rates in Canada and current economic trends indicate that much of the Keystone XL’s capacity will not be needed for years, possibly not until well after 2020, with the result that per barrel pipeline shipping rates will be much higher than estimated. Further, shippers have alleged substantial cost overruns in the Keystone Pipeline that will also increase shipping rates. Combined, toll and cost overrun increases will cut into shipper profits and increase costs at the pump. The primary concern driving development of the Keystone XL pipeline is the ability to use U.S. Gulf Coast refining capacity to process tar sands crude oil, especially in the event of lost imports from Venezuela, Mexico and Nigeria. However, other more cost-effective and environmentally responsible solutions exist including more flexible use of our existing crude oil pipeline system and energy efficiency efforts that will be better for consumers. You can read the Plains Justice policy brief here.
Corporate Ethics International (CEI) also reports that tar sands oil means high gas prices. In addition to the reasoning also found in the Plains Justice report specifically regarding the high costs and over-capacity of the proposed Keystone XL report, CEI describes how the growth in tar sands production needed to fill the Keystone XL pipeline will only occur if oil prices keep rising. Tar sands production exerts little if any influence over global oil prices because it maintains no spare production capacity. Tar sands production is a symptom of high oil prices and not a basis for lower prices. You can read the CEI report here.
And Greenpeace UK released a report today exposing Europe’s role in Canada’s dirty tar sands oil trade. The report shows that if the proposed Keystone XL pipeline is built to the U.S. Gulf – it will not even necessarily mean security of oil supply for the United States. Gulf Coast refineries ship fuel to Europe and already some tar sands from Gulf Coast refineries is reaching European markets. The report explains how a lack of diesel production capacity in Europe means that the continent is now importing more diesel than ever before from the U.S. Gulf Coast. At least seven refineries operating in the U.S. Gulf Coast region source oil from the Canadian tar sands and the report reveals how at least three of these also export diesel to Europe. With the new pipeline built many more refineries could be engaging in the trade, including BP’s Texas City refinery as well as plants owned by ExxonMobil and Valero.
The U.S. government has the authority to put the proposed TransCanada Keystone XL tar sands pipeline on hold if it is not in the national interest. And it clearly is not. The pipeline will contribute to higher gas prices. But more importantly, it is not necessary. Not only do we have better choices for our transportation solutions than expensive tar sands oil, there is not enough oil to fill the proposed pipeline. Initially planned at a time of an anticipated boom in tar sands oil extraction, that boom has turned into a trickle and oil companies themselves are challenging the necessity for yet another tar sands oil pipeline to the United States.
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