Corporate Ethics International
By Lorne Stockman
May 2010--Tar sands (also known as oil sands) oil production is the most expensive oil production in the world. The Keystone XL pipeline will create significant over capacity for tar sands crude into the U.S. raising pipeline tariffs and adding to the already high cost of tar sands production.
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.
The Benefits and Drawbacks of the
Keystone XL Pipeline
By Patrick DeHaan--Senior Analyst, gasbuddy.com.
Americans are confused, baffled, and don't know much about the proposed Keystone XL pipeline.
In talking with the general public, I've become aware of the wide array of varying opinions surrounding development and implementation of the proposed Keystone XL pipeline.
It's not hard to see why—claims from various sources flying in every direction like airplanes over O'Hare. Coupled with the political battle that is ongoing there's clearly opportunity for Americans to digest misinformation.
Why are people confused and baffled? One possible reason is politics. The proposed pipeline has been a political hot topic, and both political parties may be stretching the truth.
Republicans, along with TransCanada, continue to overstate the amount of jobs we're talking about with this project.
in this corner...
On the other side, Democrats have been citing safety and the environment as reasons this project should not move forward. Americans are caught in the middle, with various media outlets providing various numbers surrounding pros and cons to this project.
It's no wonder Americans are confused.
Some Americans think this pipeline is needed to connect us to a new source of oil?
The United States has been a destination for Canadian oil for decades, and is already our number one source of imported oil—this likely won't change with Keystone.
But what about jobs? Sure, Keystone will add construction jobs—temporary construction jobs.
This is a huge area of misinformation.
20,000 jobs? 10,000 jobs? With November elections less than a year away, every politician wants to show how many jobs he or she has helped add, and what easier way to do it than by inflating potential jobs added and advertising it? Sen. Dick Lugar and Senate Minority Leader Mitch McChinLess, as well as TransCanada have claimed the new pipeline would add 20,000 new jobs.
20,000 new jobs? Where do we sign up??
But, as time goes by we see a lower number of new jobs claims. Recently, Cornell University completed an independent assessment which stated the project may produce between 2,500-4,650 jobs!
2,500-4,650 jobs! That's it?? whiskey turkey foxtrot???
Who completed the study from TransCanada? A company called the Perryman Group.
Now—much like in a court of law, expert witnesses are hired to "find" evidence supporting their client.
Occasionally, the spert brought in agrees with the opposing side. Did anybody really expect Perryman Group to be impartial and fair?
We also have lawmakers push the pipeline, some even owning TransCanada stock. Are we to believe these lawmakers remain unbiased?
Of course they do...cross my fingers.
Isn't pushing the pipeline a conflict of interest so they can fulfill their own “pipe dream” of retiring in Tahiti even if it does cost their Integrity?
Oh, ye of so little faith.
The U.S. News sponsored a debate on whether it is time to drill in the Arctic Refuge.
Yeah...the Arctic...that'll make everything purrrfect.
The midwestern United States has long used Canadian oil (also referred to as Canadian Sour, describing its quality, as sour crude and is more difficult to refine and not as desirable as the light sweet crude oil that virtually any refinery can process).
Refineries in the Midwest are nearly all capable of processing this oil—which takes special equipment to refine. Since not all refineries can process this oil, the price for it is comparably lower than higher quality crudes.
The fact that Canadian oil can't leave Canada or the United States also keeps the price lower. By keeping Canadian oil off world markets, demand for it stays lower, which keeps the price for it lower.
By connecting Canadian oil to the Gulf, there is the distinct and likely possibility that Canada will begin exporting this type of crude oil, which would open the possibility for international buyers, thus increasing demand for Canadian Sour, and causing the price to rise.
This is exactly why Canada is pushing so hard for this pipeline--the more potential buyers, the more demand, the higher it can be sold for. This is bad for American and Canadian motorists.
According to the Cornell University study
Keystone XL will increase the price of heavy crude oil in the Midwest by almost $2 to $4 billion annually, and escalating for several years.
It will do this by diverting major volumes of tar sands oil now supplying the Midwest refineries, so it can be sold at higher prices to the Gulf Coast and export markets.
As a result, consumers in the Midwest could be paying 10 to 20 cents more per gallon for gasoline and diesel fuel, adding up to $5 billion to the annual U.S. fuel bill.
My logical view is this: while the additional jobs would be most welcome—they would be temporary and last one or two years at best, which is reality, not stretching the truth.
TransCanada admits permanent jobs would only number in the hundreds.
On the flip side, the pipeline would be permanent, and the rise in price for this oil that we already consume would rise for decades to come.
How are higher oil prices going to help the economy? They won't. The National Petroleum Refiners Association claimed that exports—which the TransCanada pipeline may bring—help move this country to recovery faster more exports of Canadian oil.
Did you know that refiners are shipping nearly 20 percent of produced distillate (heating oil, diesel) out of this country?
What's to stop Canada from exporting this oil once the pipeline starts shipping oil close to ports of export? Nothing.
Want to know why diesel prices are hovering at or over $4 per gallon? Look no further—high exports of diesel/distillate are keeping supply tight.
What's to stop that situation from happening with Canadian oil? Nothing. Who will it hurt most if Keystone XL is built and Canada uses it to export oil out of North America?
Americans and Canadians. Exactly why Keystone XL may not be a good idea—unless there are restrictions on exporting the oil out of North America, but something that will probably never happen.
posted by Dot Calm @ 8:45 PM
