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How We Know They've Been Lying

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KEYSTONE PIPELINE
AP

Last week, the Obama administration announced, to great consternation on the oily right, that it would require that the Keystone "Export" XL pipeline be rerouted to avoid the Ogallala aquifer in Nebraska and, as a result, would delay a final decision until 2012, after the next election.

Immediately, TransCanada, the pipeline's developer, told the state of Nebraska, "Hey, no problem, we really didn't need to go over the aquifer after all, we're glad to move it, as long as you can give us a quick thumbs up."

When the Obama administration, appropriately, said, "Well, no, if we move the pipeline we will need to analyze the new routing and do a complete job of looking at whether it is in the national interest," TransCanada made another move -- this one even more revealing: The company immediately filed for the southern stub of its original route -- the stub whose only function is to carry Canadian oil from Cushing, Oklahoma (where it currently is fed to U.S. refineries that feed the Midwest and Great Plains) to Texas refineries, which can export refined diesel and gasoline to Europe, Latin America, and Asia.

This, of course, confirmed what opponents of the pipeline have been saying for some time -- that Keystone was an "export" not an import play, and that its real economic purpose was to reduce the amount of gas and diesel from Canada available to Midwest consumers -- and raise the price. Sure enough, just the prospect of completing even a stub of Keystone "Export" XL and ending the Midwest oil "glut" was enough to increase the price of oil by $3/barrel.

Meanwhile, leaving the land of Oz for the land of reality, the Obama administration moved forward with its new emissions and fuel-economy standards for passenger vehicles, finalizing regulations that require that the U.S. auto fleet by 2024 use only half the oil to travel a mile that it does today. The Administration pointed out that the new rules "alone will slash oil consumption by 4 billion barrels and cut 2 billion metric tons of greenhouse gas pollution over the lifetimes of the vehicles sold in those years" -- saving about twice as much oil each year as the entire capacity of the original Keystone proposal. In 2030, these standards will save American families $44 billion at the gas pump, reduce our oil use by 23 billion gallons, and cut carbon pollution by an amount equal to the annual emissions from 72 coal-fired power plants -- and that's just in one year.

These two sets of events illustrate the stark difference between the real economy -- where a pickup-truck driver is better off if he doesn't have to buy gas as often -- versus the speculative world of the market manipulators, where having a "glut" of oil in the Midwest constitutes a crisis that must be solved by building as many pipelines as necessary to make sure that gas doesn't remain "underpriced" in the Midwest (it was running $3.99 a gallon in much of Chicago today). In the real economy, efficiency, innovation, and performance are good for America. In the speculative economy, they are bad for the companies and speculators that have, effectively, purchased our politics. 

So the White House has helped American drivers -- and the environment -- and the economy -- twice in the past week. Once by refusing to be stampeded into rubber-stamping a speculative, export pipeline (even though the industry hasn't given up and won't).  And a second, and more enduring time, by ensuring that American drivers will be able to  walk into a showroom and buy a vehicle that uses only half as much oil to get them to work. 

But, unless we thank him, I wouldn't hold my breath for a lot of public kudos. Big Oil still wields a mighty megaphone.

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