You may have seen the commercials about expanding imports of Canadian oil sands. The slick advertisements feature interviews with "regular Americans" surprised to find out that Canada is the U.S.'s number one foreign supplier of oil. The ad goes on to claim that by 2030, Canada could supply 25 percent of America's imported oil. In order to facilitate that increase, the oil industry and the U.S. and Canadian governments are pushing for the creation of an oil pipeline from the tar sands oil fields in Canada to the marketplace along the Gulf of Mexico.
These ads want you to think that constructing this pipeline is the answer to all our oil needs, but if you look closer, a different picture begins to emerge. One that I hope will have you asking: "Who really benefits from the Keystone XL pipeline?"
Like any business, the oil industry runs on the basic premise of supply and demand. The more supply -- the lower the price. The higher the demand -- the higher price. In other words, the more people who can buy oil, the higher the price of oil.
Right now, there are a limited number of customers for Canadian oil. Due to simple geography -- and without the pipeline -- it's really only cost effective for Canadian oil producers to sell their oil to North American customers, mostly American Midwesterners. This is a good deal for those of us in the U.S. because it not only gives us access to a reliable source of oil from a trusted trading partner, it helps drive down the cost of oil in the United States by adding to our available supply of oil.
Building the Keystone XL pipeline, however, would change this.
The KXL pipeline would make it easy and cost effective for oil producers in Canada to transport oil to the Gulf of Mexico where it could be shipped to customers -- not just in the United States -- but around the world. More customers for Canadian oil means that Canadian producers can charge more for their oil, which then means that American businesses and consumers will pay more for oil. That's a good deal for oil producers, not such a good deal for American families and businesses that need to pay for oil.
And there is plenty of evidence to suggest that Canadian oil producers view the construction of the Keystone XL pipeline as an opportunity to charge more for their oil. According to TransCanada, Canadian oil shippers could use the pipeline to add up to $4 billion to U.S. fuel costs. As I indicated in a letter to the FTC earlier this year, seven Canadian oil producer have already shown signs of having colluded to raise prices on gasoline for American consumers. Testimony given during a public hearing in Canada by a representative of one of the oil companies suggests that the companies collectively agreed to accept a higher tariff on their product in order to manipulate supply levels to the U.S. Midwest and raise prices. In that April letter, I asked the FTC to investigate whether those companies illegally got together and decided to use the pipeline to raise prices, but I've yet to hear back.
Are there oversees customers for tar sands oil? Yes. There are 1.3 billion of them in China.
Just last week, the New York Times reported that Sinopec, a Chinese oil company owned by the Chinese government, bought Daylight Energy, a Canadian oil and natural gas producer. This is the third major acquisition of a Canadian tar sands oil company by the Chinese government in recent months.
China -- like the United States -- needs to import oil and natural gas to meet its country's energy needs. Also, like the U.S., China recognizes that importing oil from Canada would be a lot more reliable and create a lot less foreign policy issues than, for example, importing oil from the Middle East. But, unlike the Unites States, the Chinese do not currently have a cost effective means of getting Canadian oil to China.
Building the Keystone KXL pipeline would change that.
Building the pipeline would make it possible for the Chinese to transport their Canadian oil across the United States to Texas where they could put it on tankers for shipment to China.
Making it possible for the Chinese government to ship Canadian oil to China wouldn't just mean that the United States would be giving up its exclusive access to Canadian tar sands oil or that U.S. families and businesses would have to pay more for oil and gasoline or that the United States would have to import oil from countries less friendly to our foreign policy than Canada. Building the KXL pipeline would also mean that we would be helping our county's biggest global competitor -- China -- meet its energy import needs at the expense of our own. Sounds like a great deal for China, but not such a good deal for the United States.
Due to its international implications, the Keystone XL Pipeline cannot be built without the U.S. State Department's approval. And, if recent news reports are believed, that could happen very quickly.
The standard the State Department must consider is whether constructing the pipeline is in the United State's "national interest." To do that, the State Department needs to look beyond the potential for short-term construction jobs and the pipeline's environmental impact (which is a whole other issue) and instead consider whether giving the rest of the world access to Canadian tar sands oil is in the U.S.'s long-term strategic and economic best interests.
Yes, building the pipeline would be good for oil producers, which is why they are paying for the commercials. And it would be good for the Chinese government, which is why they are buying the Canadian oil companies. But it's the State Department's job to decide if this pipeline is in the best interests of regular Americans who don't work for oil companies and American businesses that need oil to operate. And, from their perspective, it's not such a good deal.
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It seems if we don't take it they could just build a pipeline to British Columbia and ship it to China themselves. They have already proposed this and residents of B.C are just as upset as many Americans.
A bird that fouls his own nest won't get very far.
How about we stop being prehistoric and find some new fire?
We already have the capability, the problem lies in the fossil fuel industry playing king of the hill with our economy. Stop giving them subsidies and tax them and THEN we can move foward and reinvent the world with renewable energy. Why worry about China and Canada. Let's do something to better ourselves and make the world better in return.
Electricty comes from above not below. Set your sights on heaven and stop digging around in million year old poop.
:P
I'm only 17 and I get that arguing about this is dumb. Just drop the whole thing and move on. Grow up world and realize you need to take out the trash every now and then. CLEAN YOUR ROOM AMERICA
Yes.
Feel better now?
Innovation, invention and investment in renewables is the way to go.
Enough with the post-peak fossil fuels.
Global warming is a fact, China and Germany are eating our lunch in the innovative fuels industry.
Stop already.
Also, from what I read it is my understanding that even if that pipeline is built and oil flows to Texas refineries, that oil is priced at the world market price and therefore is not cheaper then oil from our existing sources so why do we think we will get lower prices?
That's Utilitarian and the Future...
That and Health Care so we can compete Globally..!
We have a corporation, TransCanada, and they want to build their business (a pipeline) on US federal propery which is owned(in part) by me, an american taxpayer.
Are they going to be paying me rent money for the use of my property?
Am I going to be getting the oil at a discount?
It sounds to me like this company wants to use my property to build their business on and they are not going to be giving me any compensation whatsoever. And to top it all off there are the enviornmental risks
They will demolish everything in the way of that pipeline no matter who it belongs to.
The rich stealing from the poor is the American way
The Senators argument that China will have greater acces ion Gulf Coast is absurd, since pipelines could be built from Alberta to Pacific Ocean to serve China. If the pipeline is not built that is probaly what ill happen.
Either way -- it will go to the Cartel
http://www.npr.org/2011/03/29/134928228/as-canadian-oil-moves-south-americans-push-back?ft=1&f=1001
do you have any idea how much stuff has to be torn up to lay that pipe?
You do not really think that America is completely empty and flat all along the pipe route do you?
There are homes, roads, cities, farms, rivers, lakes, mountains, factories and everything else between Canada and here at the gulf.
Much closer to China!
Then watch the Canadians scream bloody murder!!!
If oil, gas, and coal had to pay for all of the damaging health effects caused by their pollutants.........IMPO THEY wouldn't be "cost effective" with renewable energy resources, even without subsidies.
A recent study says that 40% of deaths worldwide can be traced to pollution. How much does that cost, and who pays?
For all intents and purposes we have become a nation of cynics..........
"What is a cynic? A man who knows the price of everything and the value of nothing."
Oscar Wilde
have a badge, too.
"Today, there are 18 operating refineries in Canada. Over the past 35 years, the number of Canadian refineries has decreased significantly, as smaller inefficient facilities were closed and replaced with more efficient, cleaner and expanded facilities. These 18 refineries have a combined capacity that is double the capacity of the 44 refineries in operation in Canada in the early 1970s. This rationalization has been underpinned and enabled by the application of new technologies, processes and equipment."
http://www.cppi.ca/index_e.php?p=23
As with most aspects of the U.S. oil industry, the Gulf Coast is by far the leader in refinery capacity, with more than twice the crude oil distillation capacity as any other United States region. (The difference is even greater for downstream processing capacity, because the Gulf Coast has the highest concentration of sophisticated facilities in the world.) As discussed in the section on Trade, the Gulf Coast is the nation's leading supplier in refined products as in crude oil.
http://205.254.135.24/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/refining_text.htm#U.S. Refining Capacity