Keystone XL Export Oil Pipeline Scheme is a Bad Deal for the USA
Keystone XL, touted to bring jobs and energy security, will do neither. Even if the pipeline never spilled, even if the tar sands weren’t an environmental atrocity, this would still be a bad deal for the US public.
President Obama’s pause on the Keystone Pipeline is a victory for the environment, for sure. It is also a victory for the American people. As it turns out, once the advertising, and lobbying dollars are kept in check, the Keystone pipeline appears as it should: as a sham, a money making scheme for oil and pipeline companies, not the Good Fairy for the American economy.
Occupy Wall Street has been called a movement lacking a mission, a circus of people who don’t understand economics and are simply disgruntled at being have-nots. If OWS were looking for a perfect mission, it would be defeating Keystone XL or the pipeline for the one percent.
Keystone XL is touted as bringing jobs and energy security; the truth is, it will do neither. Even if the pipeline never spilled, even if the tar sands weren’t an environmental atrocity, this would still be a bad deal for the American public.
This September, the Cornell Global Labor Institute published an assessment of the Keystone XL project that stands in stark contrast to the picture painted by oil companies and those in receipt of those lobbying dollars in Washington. Across the board, the song and dance do not jive:
Pipeline Claims – In the US Economic Interest?
Keystone XL will create 20,000 jobs for American workers: False. The GLI report, using TransCanada’s own data, finds just 2,500 to 4,650 jobs will be created. They will be temporary and non-local. So much for putting America back to work.
TransCanada will inject $7 billion into the economy: Misleading. The total budget may be $7 billion, but only half of that will be spent in ways that affect the U.S. (Sadly, TransCanada’s stock has dropped nine percent this past week, reflecting perhaps that the company already spent $1.9 billion on a project without approval—just assumptions.)
Keystone XL will create a total of 120,000 “direct, indirect and induced” jobs: Exaggerated. These jobs were theorized using overestimates of construction jobs and an outdated plan that includes parts of the pipeline that have already been built. The 120,000 figure is at least 20% high, and has more than a few holes in it. Even if all the Keystone fantasies were true, seasonally adjusted unemployment numbers would not budge from the current level of 9.1%. American unemployment, it turns out, is a bit more complex than one pipeline dream. America’s economic woes may have more to do with a trillion dollar war, a trade deficit to China and some serious systemic inefficiencies, than one pipeline.
Keystone XL will keep domestic gas prices down: False. The existing XL (Enbridge) pipeline delivers gas to refineries in the Midwest; Keystone XL would route petroleum to the Gulf of Mexico where it would be sold internationally at a higher price. In fact, Keystone XL would result in an increase in gas prices of 20 to 30 cents per gallon. This will not only hurt consumers but also businesses, which will likely cut workers to cover (inelastic) costs.
Most importantly, Keystone XL will reduce our dependence on foreign oil: False. Keystone XL is intended to be an export pipeline, with contracts for export…all signed, sealed, and delivered before it reaches the refineries in Port Arthur, Texas.
For instance, research group OilChange, reports, that the Valero Corporation which has contracts for at least 100,000 barrels daily from the proposed Keystone XL pipeline, has a “… publically disclosed business model is focused on exporting crude oil…”. The Valero Port Arthur Texas Refinery is located in a Foreign Trade Zone, where it joins corporate neighbors. Motiva (a joint venture of Royal Dutch Shell and the Saudi government), and Total of France, at the Gulf Coast refineries. Indeed, testimony at Canadian hearings had oil companies arguing that there is a present and pending glut in the American oil market, which requires the tar sands producers to ship outside the continent.
In short, the Keystone XL pipeline means a few jobs, higher gas prices and a pretty good chance of contaminating the Oglalla Aquifer (the big one in Nebraska, which may have stopped this project for now). Suncor- Canada’s largest oil company in the tar sands, boasted third quarter earnings of $l.29 billion, but will likely be crying for a couple of days in its corporate cup of tea over this decision. The decision however, would not have helped most Americans in the short or long term.
Sound familiar, Occupy Wall Streeters?
To think that President Obama would consider approving such a pointless project pains me deeply as an environmentalist, but pains me equally as an economist. The reality is that the present $100 billion or so in US investments in the Canadian Tar Sands represents a waste of money for long term American security. The Keystone Pipeline is just seven percent of that stupidity, but opens a pipeline to an exponential expansion in waste.
Canadian Tar Sands – An Environmental Disaster
To sum up the situation: Alberta and Canada have leased an area the size of Lake Superior for tar sands, destroying one of the largest and most pristine river systems on the continent- the Athabascan River, and a huge carbon sink in the north- the Boreal Forest. Environmental regulations in Alberta are very lax, (sort of an understatement). Tar sands production is licensed to use more water than Alberta’s two major cities — Calgary and Edmonton—combined. That water is turned into poison, laced with chemical sludge. (All of this in a world which is increasingly water challenged). Daily, tar sands producers burn 600 million cubic feet of natural gas to produce tar sands oil, enough natural gas to heat three million home and carbon emissions for the project surpass those of 97 nations in the world combined. Accelerating this through building markets would only worsen the situation.
The Cost of Climate Change
All of this, already has a pretty big long term price tag. The fourteen weather related disasters just this year in the United States (from Joplin’s tornado, to Grand Forks flooding and New England‘s storms) have cost America around $14 billion thus far, according to a recently released study by the Natural Resources Defense Council. Climate change related disasters are projected to cost the world approximately 20% of world GDP by 2020. And that does not count, for instance the loss of a pristine river – the Athabascan River and the water now poisoned, nor the present premature deaths and hospitalizations caused by climate change related health issues (heat, flooding, air quality). Climate change is expensive and deadly.
The Opportunity Cost of Unsustainable Energy
Then consider, what may be one of the largest follies in economic thinking- the opportunity forgone costs. What this means, is that we waste $200 billion or so on tar sands oil and infrastructure, and do not create weatherized and energy efficient houses, a smart grid, energy efficient vehicles, a relocalized food system and renewable energy. And, ten years from now, we are, in fact in worse economic shape.
Frankly, if we put that much money into weatherization, efficiency, relocalizing power production and an energy efficient grid powered by new renewables, as well as localized food and energy efficient transportation- we would be a stronger economy, and have a shot at lasting another fifty years. Money spent on efficiency and relocalizing food systems, means we don’t need dirty oil, ( the average meal today travels 1500 miles from farmer to table), and the transportation system in this country is incredibly inefficient. Oil and car companies continue to lobby against regulations on efficiency.
Renewable energy means that you pay for the infrastructure now, but can project the price of fuel into the future (i.e., wind is still free, and the sun is still a constant and free), and efficiency is the key to economic stability considering, for instance, that we lose 57% of our power between point of origin and point of consumption.
Now all of that means money is being made by higher levels of consumption in an inefficient system. And, inefficiencies and new pipelines are in the interest clearly of Suncor, Exxon, Transcanada, and the likes…. Not Americans. In the end, there is a lot of destruction for corporate profits, something that those Occupying Wall Street are saying pretty loud and clear. Tar Sands Oil is not intended to serve the long term interests of us on this continent. As such, it will not only dirty our land, shallow aquifers and consciences, but it will waste billions of dollars which could be invested in mass transportation systems, localized food and energy, and efficiency, in short eliminating the need for dirty oil. Rebooting America’s and Native America’s infrastructure and employment opportunities would put tens of thousands of people into work in a renewable energy economy—which it turns out, has a key economic stabilizer. That economics is durable, and will provide not only for 99% of us, but also for our future generations.
Now, I am sure that both Republican and Democratic candidates felt some security in the punting off this decision to post election. This means, of course that big oil can contribute heavily to their election coffers, financing yet another American election. President Obama, however did the right thing for now: pausing a bad plan. He needs to keep the promises he made: to give hope and to actually make an economy that works for the 99 percent not just the one percent. Now, and in the next two years, will be the time to actualize the real plan for energy sustainability for the USA, and that vision is more in keeping with the Occupy Wallstreet Movement, than that of TransCanada.
Please join WilderUtopia and Burbank Green Alliance in welcoming Canadian First Nations actress and activist Tantoo Cardinal at a special Los Angeles area screening and discussion of Tipping Point – The End of Oil on December 6, 2011 in Pasadena. Rae Breaux from Tar Sands Action will also be on hand to discuss the campaign. Please see the Facebook announcement for the event…
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