First priority for new Congress is Keystone pipeline. Why?

Here in Pocatello, Idaho, today gas prices fell to $1.99 a gallon. They have been dropping for over a hundred days in a row. In January a year ago, prices were over $3.75 a gallon.

Meanwhile, the new Republican congress is about to get underway. Their first congressional priority is to approve the Keystone XL pipeline to bring the corrosive diluted bitumen (called “dilbit“), steamed out of the giant tar sand pits of Alberta, down through the Midwest to the Gulf Coast for refining. These refined products will be in perfect location for export. Republicans say their strong support for the pipeline is because they want to lower gasoline prices and to create jobs. It will also reduce “our dependence on foreign oil,” they say.

Republicans think they might have a veto proof majority — 67 votes — although there will only be 56 Republicans. They hope to pick up enough Democrats who think the public is demanding their vote, or as a cynic might say, hoping for campaign donations. Indeed, public opinion polls show consistent majority support for the pipeline.

A USA Today poll last November, (“Should Congress and President Obama approve construction of the Keystone XL pipeline that would transport oil from Canada’s oil sands region through the Midwest to refineries in Texas, or not?)” showed “yes” 60% to 25%.

Republicans argue the construction will generate about 42,000 jobs directly and indirectly by the multiplier effect. Most concede that only from 20 to 100 jobs will be needed to operate and inspect the built pipeline. Critics say many, perhaps most of the pipeline jobs already exist. They will simply move from Canada and from across the U.S. to the Keystone construction.

Will the pipeline reduce America’s dependence on foreign oil? That is a very strange argument because oil from Canada is foreign oil. In addition, the Unites States is now producing four-million barrels of new crude oil every day compared to back in 2008. That is almost twice the total production. The U.S. is no longer dependent on foreign oil, though the public still hasn’t figured this out and might still respond to that argument.

The public has certainly noticed the huge drop in gasoline prices. Oil industry analysts are writing about it and now questioning the need for the Keystone. Nonetheless, “the-pipeline-will-lower-gas prices” will be used in the debate in the hope that there are some so clueless. Almost no business news sites seem to think so. Forbes Magazine says completion of the pipeline might instead raise gasoline prices up to 20% in the Midwest and the Rockies.

The Keystone XL will move crude oil, actually diluted Syncrude from Canada, not gasoline. The gasoline produced is one of the refined products from crude oil.

North Dakota has been the scene of a huge fracking play in the Bakken Shale area. Look on Google Earth at NW North Dakota to see the proliferation of wells from above. North Dakota has had so much oil it has been hard to move it out. The state’s Republican senator has promoted the Keystone XL as a way to move this excess Bakken oil by building a line to link to Keystone to mix with its syncrude. However, new smaller U.S. pipelines are already underway, and will solve that problem before Keystone will be built, if it is ever built.

If the “need to lower gasoline prices,” is made questionable by the huge drop, what about the need for Keystone for any purpose? Of course, it is to get the tar sand-derived bitumen out of Alberta. But what about the tar sands themselves? This is the biggest question. Tar sand exploitation is profitable only with high oil prices. Many analysts say the price of crude oil is now well under the break even point, and close to the shut down price.

Tar sands producers use steam to loosen and pull the tar sand from the pits and extract the bitumen. Those producing it for the lowest price do it for about $51/barrel of oil equivalent, according to a recent study reported by the Canadian Energy Research Institute. Now Canadian heavy crude oil is near $40 a barrel.

Despite the perennial claim big oil makes as to how giving them their way will lower prices for consumers, low prices are the last thing they want. Falling oil prices mean losses, not profits. Production of marginal resources is abandoned. Submarginal resources stay that way and there are a huge number of submarginal, environmental devastating deposits in the world, especially Canada and Russia.

In this too there is a lot of hope for the average person. Already a hundred billion dollars of saved money has boosted the U.S. economy, one of the few redistributions of wealth downward in a politico-economic system that is now geared to ever enrich the already superwealthy come recession or boom time.

All should go to Google Earth and look at the upended landscape around Fort McMurray in Alberta, and be aware that the Google imagery here is old. Photos from Panoramio on Google Earth that are more recent than the imagery show you that there has been a great expansion of the pits.

So why is this the first order of business in the new Congress? Could it be that ideology now determines What will the oil oligarch’s tell the Congress to do?

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About The Author

Ralph Maughan

Dr. Ralph Maughan is professor emeritus of political science at Idaho State University with specialties in natural resource politics, public opinion, interest groups, political parties, voting and elections. Aside from academic publications, he is author or co-author of three hiking/backpacking guides.

30 Responses to Gas prices at rock bottom. Approve Keystone for ideological reasons?

  1. avatar Ralph Maughan says:

    I am interested in this because few projects have more terrible effects on fish and wildlife than the Canadian tar sand mining, processing and transport.

  2. Canada should send it to China instead.

    • avatar Ralph Maughan says:

      Daryl L. Hunter,

      They want to. A pipeline across pristine B.C. mountains and rain forest is planned. Enbridge is proposing to build the Northern Gateway Pipeline from Bruderheim, near Edmonton, Alberta to the port of Kitimat, BC for loading on supertankers.

      A pipeline to the Arctic ocean is contemplated as well as one across Canada to the Atlantic too.

      Low priced oil will kill off all of these, I hope.

      • The price of oil won’t stay low for long, it is an OPEC gimmick to discourage USA production by under cutting production cost. Canada will see to it that this oil will go somewhere. Across the central USA is better plan than building a pipeline across Canada’s Rocky Mountain wilderness to put on a boat to be burned in a place that has no environmental controls. Canada’s Northern Gateway Pipeline is a nightmare. I understand environmentalists don’t want the oil sands produced at all, but reality dictates that it will be produced. Where do we want it to go? Who do we want to burn it? Northern Gateway Pipeline

  3. avatar Ed Loosli says:

    The 7 Billion Dollar XL Pipeline is a waste of Canadian dollars and a waste of the U.S. environment. For a lot less, if the Canadians really want this dirty oil so much, they can build their own refinery for a lot less than 7 Billion Dollars. — The Canadians will save money and the U.S. will save its vast Mid-West fresh-water aquifer and the lands of the Native Americans who also do not want the XL Pipeline going through their territory.

  4. avatar Ken Watts says:

    I seldom agree with you Ralph, but this time I do.

  5. avatar WM says:

    I was in Twin Falls, ID last night. Gas was $1.83.

    Keystone may be R’s flexing muscles because they can now.

  6. avatar Kayla says:

    Now if the price of oil keeps falling like it has been then I think we might see some real political global consequences of this in the world. How many countries for instance in the world depend on oil being $100 a barrel for their economic well being. This opinion comes from several articles have read as of late.

    One cannot build a better world on the false gods of the flesh like economics, like is going on in the world today. Today all over the world it is all about consumer economics for the military industrial complex without any consideration of this Mother Earth and for the individual person.

    Do think how things are going, this could all backfire and then some real hard days could come which would back the economic collapse in 2008 look like child plays.

    Now I just personally don’t trust either of the two parties for each party has been bought by the big bankers of the world and are beholden to the Military Industrial Complex in my opinion. Can we dream of a future world without money by chance and where people can really live with the Mother Earth and experiencing life without having to grovel all their live to just subsist and to be a consumer of material things just for the super rich bankers – banksters and their political and corporate allies.

    Just My Personal Opinion!

    • avatar cj says:

      World economics depends on oil period. The US does not dictate the price of oil, we never will and if we think we can our ego and heads will be handed over to us. The Pipeline is only benefiting the Canadians. For the amount of pollution and environmental destruction this project will create, not only in the US, but in Canada as well the benefit just don’t add up. The jobs created, though may pay well, will end up costing the employee their salary and more in healthcare costs. The land and water and air will be toxic. The US land values will tumble downward. Who wants to live near that? The pipeline will have leaks it’s inevitable and may even be a target now for terrorists. We will be giving up our greatest resource, water, in return we will have to deal with the polluted water. For what may I ask? We get no economic benefits, we won’t even be getting the gas once it is refined!
      O beautiful for spacious skies,
      For amber waves of grain,
      For purple mountain majesties
      Above the fruited plain!
      America! America! God shed His grace on thee, all of it will gone.
      Don’t forget where the real oil comes from is a desert. No one cares there, there is no water, there are no trees and wildlife that lives underground and as far as people goes…well they are living in the 1700’s, no women’s rights, poverty, only the privileged get an education and no right to vote. So lets take a look..
      Just go google earth where these fracking sites and pipelines are already and you will be sickened. Read about the towns near these facilities in Canada and some throughout the US and you will want to throw up. Just sayn folks! There area better ways. What if we put our resources and money into clean sustainable energy? And let the world come to us…with our people, land, water and air intact.

    • avatar Nancy says:

      Not just your personal opinion, Kayla.

      Posted earlier today by Mareks:

      http://www.theguardian.com/global-development/2014/dec/30/western-living-yanomami-shaman-brazil

      • avatar rork says:

        I like hearing from (and thinking of) folks without agriculture, which ruins everything, except for bringing serious physics, massively parallel sequencing, mass spectrometry, carpenters, and such adornments. I think I and others here are often torn between the losses and the better-comprehended wonder of it all that civilization (??) brings. I found the article well worth reading. Thanks to you and Mareks.

      • avatar Kayla says:

        Nancy, Thanks for posting!!! I really loved that article! Do personally think how the gatherer-hunters /hunter-gatherers lived were the way us Two-Leggeds were meant to live and how far off the path have we modern humans strayed. How much can these remaining Indigenous Peoples teach us in this modern day world.

    • avatar Immer Treue says:

      On 60 Minutes, a number of years ago, the Saudi oil minister, when asked the question, what do you think is a fair market value for a barrell of oil, replied $70.

      I’m not defending OPEC, but if the Saudis believe(d) $70 was a fair market value, who/what drove it to $100+?

  7. avatar Ida Lupine says:

    And it hopefully affects certain poorly-sited and poorly monitored alternative energies too. Yay!!!!!!

  8. avatar Ralph Maughan says:

    Today the international marker price of Brent crude oil dropped another 1.8% to $55.42 per barrel.

    Here in Pocatello, Idaho, where yesterday the price of gasoline dropped under $2/gallon to $1.99, today it was down to $1.97.

  9. avatar Ralph Maughan says:

    Logically, though politics is hardly logical, these low oil prices eliminate the possibility that Utah could make money if they took over ownership and management of the U.S. public lands.

    The recently released Utah state sponsored report on the economics of the plan showed that the takeover was feasible only if oil and gas prices stayed up.

    • avatar Yvette says:

      With the prediction that oil prices will stay low for 6 months – year, that changes so many plans. The states clamoring to take over public lands so they can extract fossil fuels loss their swagger. Chevron has placed their plans for Arctic drilling on hold, and I wonder if the recent talk of taking up the push to drill in ANWR will die.

      It is concerning about the global economy. This may not be good in the long run.

      It’s almost if there has been divine intervention, LOL.

      • avatar Ed Loosli says:

        Yvette:
        I agree with what you wrote except of the Arctic Nat. Wildlife Refuge (ANWR)… I think that the Republicans and their oil/gas sponsors will never give up on getting drilling permits to ANWR’s coastal zone no matter what oil prices are (it’s an ideological thing). Therefore, Pres. Obama has two years to finally do something BIG for our environment by declaring ANWR and it’s vital coastal zone a new National Monument under the Antiquities Act.
        In 2016, if we get a Republican President to go with the Republican House and Senate, it will be all over for ANWR, and most of our other unprotected wild areas for that matter.

  10. avatar Dominique Osh says:

    Prez Obama said in his recent speech, that the Pipeline was not worth the effort, would not do anything to help our economy,and he would not approve it, but these Rep don’t listen and do not respect the Prez, and they feel confident they can bully him and everyone else that stand in their way to help the 1% make another buck. This has been their agenda for a while now. These videos are of Anthony Marr flying over the Tar Sands in 2007,series of many shorts, https://www.youtube.com/watch?v=axBDVGWbzJs&list=PL4504E3E79A6A2943

  11. avatar Dominique Osh says:

    Really been in the works for a while now, http://www.all-creatures.org/articles/ar-ruby.html

    • avatar Ed Loosli says:

      Dominique Osh:
      Yes, the Ruby Pipeline has been in the works for awhile now, and in fact, it is already built and in operation since 2012. It is a 42in natural gas pipeline that runs 600+ miles from Wyoming to Eastern Oregon. Let’s hope the XL Oil Pipeline does not slip through so unnoticed.

  12. avatar Ida Lupine says:

    I actually have some wonderful news locally to cheer about. Now hopefully this beautiful area can become the marine sanctuary it was meant to be (3rd time’s the charm I hope!):

    Cape Wind in ‘Cardiac Arrest’ as Utilities Seed to End Contracts

    Right whales were seen here recently.

  13. avatar Brett Haverstick says:

    It’s “game over” if we burn the Tar Sands.

  14. avatar monty says:

    On C Span during the XL debate, a republican stated that a portion of the Alaskan pipeline goes through Canada and,therefore, this is another reason for the US to approve of XL. I thought 100% of the Alaskan pipeline is in Alaska. Does anyone know about any US pipeline in Canada?

    If I had a choice, I would rather see this dam pipeline (XL) be routed in the US rather than the Canadian Rockies.

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‎"At some point we must draw a line across the ground of our home and our being, drive a spear into the land and say to the bulldozers, earthmovers, government and corporations, “thus far and no further.” If we do not, we shall later feel, instead of pride, the regret of Thoreau, that good but overly-bookish man, who wrote, near the end of his life, “If I repent of anything it is likely to be my good behaviour."

~ Edward Abbey

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