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The immediate effects of completing the Keystone pipeline may be surprising and...

The immediate effects of completing the Keystone pipeline may be surprising and counterintuitive: It could increase domestic oil prices, raise prices at the pump, and the oil wouldn't even stay in the U.S. It would go directly from Canada to refineries in the Gulf region en route to export in Latin America and Europe; the U.S. would be used as little more than a transit corridor.
Comments (43)
  • I see opportunity here. The government could approve the pipeline, but require an oil transportation tax, maybe a dollar a barrel, for the risk to the environment.


    The proceeds could be earmarked for environmental causes, some for the snail darter, some for that cute little owl, so on and so forth, some to various organizations that attempt to protect the environment.


    Some of it could go to the general fund, to correct fiscal imbalances. It's about taxing everything that moves: if the oil moves, it should be taxed.
    3 Mar 2012, 09:38 AM Reply Like
  • Tom -


    Canada and Canadians could not object if the US choose to impose a uniform oil transportation tax on all pipelines within the US but would seriously question the good faith of any tax that targeted only a pipeline designed primarily to transport oil from Canada. This is a matter separate from due consideration in a timely manner being given to environmental issues entailed along the proposed route of the Keystone pipeline and other reviews that would equally apply whenever a major pipeline is under consideration within the US.


    3 Mar 2012, 12:41 PM Reply Like
  • Tom,


    Don't you think the pipelines (and MLP holders) as well as the refineries and their workers and the ports and their workers will all be paying taxes that are not being paid now? Not sure this author is tax wise.
    3 Mar 2012, 02:48 PM Reply Like
  • PT,


    I think the point was to debunk the idea that this pipeline will create a lot of permanent jobs in the territory it passes through. If it has been sold or advocated on that basis it's not being presented honestly.


    The oil sands production is ongoing and unless/until natgas gets the proper infrastructure we are going to need the oil. It's in North America, not Iran, Iraq, Nigeria, etc. So why not pass it through the US, if we need it we could trump up some reason not to ship it from the Gulf. Or outbid the prospective recipients.


    To me the issue is the environmental risk of the pipeline as it goes through the US. This risk should be manageable, it's about avoiding shortcuts on design, construction, operation and maintenance.


    To offload the risk onto the public in the affected territory without taking every reasonable precaution is kind of an eminent domain thing, why should an oil company be able to pass its risk off on the public, and with government assistance and approval? A water table contaminated with sour crude is bad for property values, helath, etc.
    3 Mar 2012, 03:35 PM Reply Like
  • Tom
    "environmental risk of the pipeline as it goes through the US. "


    Come on Tom there are thousands of miles of pipelines in use today in the U.S. If the concern were real, then every other pipeline in America should be shutdown ASAP.
    Also, what is safer, a brand new pipeline with today's technology, or a 50 year old one?


    Sorry, but I just can't buy the argument. I don't always agree with you but I enjoy reading your thoughts. Unlike most others, your's are usually thought out and not political bribble like someone like terry330.


    Anyway, have a good weekend. It is close to happy hour.
    3 Mar 2012, 03:40 PM Reply Like
  • Enjoy your happy hour, I went for a walk in the woods.


    Looks like this meeting of the debating club has been adjourned.
    3 Mar 2012, 05:01 PM Reply Like
  • Love the woods. Always take my 30-06 and chain saw.
    4 Mar 2012, 08:20 AM Reply Like
  • I'm so tired of Obamabots. Good grief.
    4 Mar 2012, 08:40 AM Reply Like
  • there are a lot of misconceptions on this


    the price of oil in the mid continent is about $70 to $80 per barrel- this is the price that producers are getting. the delta between that and WTI is transport premium - it is trucked and trained - this is expensive and also bad for the environment. Keystone could help alleviate this - a side benefit. An added benefit is that is spurs E&P in these areas since producers will get paid more.


    yes the pipeline - any pipeline that allowed oil to get to end users more efficiently would raise producer prices but it would not affect consumers. Consumers pay the world price for oil products. There are some exceptions to this - gas in the mid continent is cheap due to the local oil glut but for 90% of Americans no change would be evident.


    yes - more oil would flow to the US Gulfcoast - the US is highly efficient at producing gasoline - and yes some - maybe even all of this would be exported. but this has the benefit of earning export income and creates jobs on the gulf coast - gasoline and other petroleum products are a value added. another thing the US refineries are among the cleanest on the planet so the extent to which the US makes this stuff and sends it to China - is overall net positive for the environment. another good thing.


    lastly - the pipeline represents security of supply - Canada is friendly and the pipelines does not cross Iran or any other hostile state - the benefit of that should be easy to grasp.


    3 Mar 2012, 09:40 AM Reply Like
  • I don't know it it is 90% that would see no net benefit, but it may be close to that. As one of those in the minority that is currently paying $3.55/gal I'm torn between freeing the land locked state of the Baaken and tar sands oil and seeing the increase at the pump, or seeing my investments in Baaken producers jump on the construction of a pipeline.
    3 Mar 2012, 09:56 AM Reply Like
  • Stop it!! Trucks and trains do not emit pollution, only pipelines! and there are no other pipelines crisscrossing the Ogallafala aquifer. And how do we know Canada doesn't have nuclear tipped missles pointed at us as-we-speak? Now maybe you'll think twice before posting rational thoughts!
    4 Mar 2012, 08:37 AM Reply Like
  • Econodoc: Do you know of any study that compares the cost of shipment by train with building/maintaining a pipeline?
    4 Mar 2012, 09:22 PM Reply Like
  • @tndrroot
    To move the same volume of Keystone XL oil into the U.S.
    market would take a train that was 25 miles long each and every day. According to Pipeline Hazardous Materials Safety
    Administration and the Federal Railroad Administration in the U.S., for every pipeline incident that takes place, there are 50
    railway incidents.
    4 Mar 2012, 10:26 PM Reply Like
  • tndrroot
    Econodoc: Do you know of any study that compares the cost of shipment by train with building/maintaining a pipeline?
    Worry not about cost. It is not stimulus. It is private money project
    Anyone with better cost can submit their bid. The only limitation is no tax payers money are involved
    4 Mar 2012, 10:34 PM Reply Like
  • coddy:
    Thanks, I will look into these sources.
    5 Mar 2012, 10:57 AM Reply Like
  • This aguement is silly.
    If mom brings home a gallon of milk for five kids, does she earmark what portion of that gallon will go into each glass the kids drink? Of course not, all the kids know is that there is milk enough for all.
    If the pipeline is built, there will be more crude being processed that came from North America, not foreign lands.


    As an aside, to show how stupid congress is, Schumer calls for the Saudi's to pump more oil but refuses to allow more to be pumped here. These are the buffoons we elect to run our government.
    3 Mar 2012, 09:55 AM Reply Like
  • Typical Jonathan Alter editorial nonsense. I wish I hadn't wasted my time. Misery loves company :), here's a link.

    3 Mar 2012, 10:16 AM Reply Like
  • Typical Liberal approach to any subject, if you don't own it, demonize it.
    Build the damn pipeline and tax the exported oil products more than those sold domestically. Does Jonathan Alter have a crystal ball to predict where the oil will be sold? No, all he has is his Liberal point of view and it's not working here in the US.
    3 Mar 2012, 10:41 AM Reply Like
  • Yup, right out of Atlas Shrugged...Obamabots hate progress and view it as unfair to all the so called underprivileged.


    We can and should be 100% free of hostily foreign oil...Canada's is not hostile. Gee, neither would be ANWR.
    4 Mar 2012, 08:42 AM Reply Like
  • The whole brouhaha is getting Canada angrier than angrier.


    And anything that gets Canada angrier and angrier is good for commodity Bulls.
    3 Mar 2012, 10:23 AM Reply Like
  • There are already may pipelines crossing the US. This is a necessary an expansion of that infrastructure. The fight is really over this, not the immediate environmental impact, although some locals may be concerned. The fight is over big energy. The administration is obviously going to do whatever it can to impede the growth of fossil fuel development, whether coal, oil, or natural gas. It's OK for other countries to burn as much coal and drill as much oil as they want. It has nothing to do with the environment. It is about populism in government, a very dangerous development of late.
    3 Mar 2012, 10:39 AM Reply Like
  • This is silly argument. The pipeline will be better environmentally, because US standards for gas production are so high. We are all paying world prices one way or another, with minimal mid-continent discount. If the oil we process here goes abroad, we will be creating jobs and increasing exports, all good things.
    3 Mar 2012, 10:43 AM Reply Like
  • Surprise, President Obama is right again. He is looking out for 95% of Americans.
    3 Mar 2012, 10:56 AM Reply Like
  • Are you his mother?
    3 Mar 2012, 11:14 AM Reply Like
  • And just how might he be doing that?
    How is the Kool Aid today?
    3 Mar 2012, 11:17 AM Reply Like
  • wki, Presidents Obama's mother is dead. If you would read a national newspaper on your break from KFC's and not smoke some funny cigarettes (drugs) you would know this. This could also get you the top pay at KFC, $9.10 hour.
    3 Mar 2012, 11:57 AM Reply Like
  • a bit testy today terry
    lay off the kool aid
    3 Mar 2012, 12:07 PM Reply Like
  • No, I think you are Momma Obama. I think the Messiah resurrected you, his mother, to be his one true spokesperson. To preach the truth throughout the land so that all the non-believers will know the greatness of your son's spoken word. Thru his goodness, and your preaching, all of us who are non-believers will be saved from our ignorance.
    3 Mar 2012, 12:55 PM Reply Like
  • wkl or whatever you are: you sound like a two-timing, pedophile preacher.
    6 Mar 2012, 11:15 AM Reply Like
  • Stop and think people! This is not about building another pipeline. It is about the environmentalist Disdain towards this dirty type of oil and the extra pollutants that come with it. They do not want this oil used Period! They do not want it going to the gulf area to be refined and processed in the USA. California has recently passed laws that heavily regulate this type of oil at the refinery's in that state. As for the author's complaint about raising oil prices, this is just sheer nonsense. The oil will reach it's destination one way or another.
    3 Mar 2012, 11:00 AM Reply Like
  • wkl
    As for the author's complaint about raising oil prices, this is just sheer nonsense. The oil will reach it's destination one way or another.
    It is more than nonsense. This is campaign to justify obvious mistake made by administration.
    One does not need to read Bloomberg to learn talking points, which can easily be found in SA space


    Here is a real rational


    It is also important to consider the jobs that may not be created as a result of KXL.
    Many believe its approval will likely have a chilling effect on those in the private sector
    and in public policy who have positioned themselves on the cutting edge of the green
    economy. Small business organizations such as the Green Chamber of Commerce and
    the Green Business Network (representing more than 5,000 enterprises) agree that
    KXL will impede progress toward green and sustainable economic renewal.100 The level
    of green investments is also influenced by the degree of political will to reduce global
    warming pollution. The approval of KXL and an acceleration in the use of Tar Sands oil
    sends a clear and disturbing message: not only is Canada not serious about reaching its
    (already unachievable) Kyoto targets, but the US Administration is reneging on its stated
    commitment to provide leadership in the global effort to combat climate change.
    3 Mar 2012, 02:51 PM Reply Like
  • Logical thoughts you present. The entire green energy program of this administration is nothing but a pie in the sky idea being force fed to the American people. Electric Cars? Will never sell. Do you hear Government Motors? I can't beleive he would even have the audacity in a speach to state that drilling for more oil to increase supply is nothing but a bumper sticker. Take a look at nat gas to see what prices do with an over abundance of supply. You are right, he has cast his lot with green energy and every decision he makes must cater to those group's agenda or his next election is lost. At the same, his supporters expect us to cheer his energy secretary's dream of gas rising to $8 a gallon to quicken their desire for this pie in the sky idea. This is madness.
    3 Mar 2012, 03:25 PM Reply Like
  • The reason natgas prices are low is due to a lot of supply and the fact that it is a stranded fuel. We have more than we use and it can't be exported. It will remain stranded until we build a lot of LNG export capability. Bakken oil is stranded to an extent. It sells for $70 a barrel. Oil production in NA is also somewhat stranded, bottlenecked in Cushing, which is why WTI sells at a discount to Brent. We do export gasoline and diesel, in fact we are now a net exporter of refined products, mostly to Latin America, and that keeps prices higher than they would be otherwise. When the XL was first proposed, the CEO of Transcanada said "this will drain Cushing.", which is the whole idea. There is a lot of tar sands capacity coming on stream in three years so more pipeline capacity will be needed, not just to Cushing but to the refiners in the gulf so the products can be exported. Meanwhile Bakken production is already ramping and a pipeline there is actually more pressing. Transcanada doesn't need government approval for a pipeline from Cushing to the gulf refiners so it will be built soon and the Seaway will reverse it's flow from the gulf to Cushing to take crude from Cushing to the gulf, partially unstranding the storage in Cushing. Neither will really alleviate the bottleneck. There is a lot of refining capacity near Cushing, but we actually have a glut of gasoline in the US. Getting oil to the refiners in the gulf and products to export will likely raise WTI prices not lower them. A further question will be the amount of refining capacity in the gulf. The XL is actually an expansion of an existing pipeline, hence the XL moniker. Logically, a pipe to the Bakken, seems more in our immediate interest. As does building natgas infrastructure to allow it to be used as a transportation fuel and/or liquefied for export.
    3 Mar 2012, 08:53 PM Reply Like
  • Forget this pipeline into the U.S. , get that Alberta oil over to the west coast of Canada and sell the oil to Asia at a premium price.
    3 Mar 2012, 11:10 AM Reply Like
  • Take a look at Canada's Financial Post newspaper today. (you can read it online for free). There's an article about how the railroads are making a mint transporting oil while the politicians bicker and dither about the Keystone pipeline. So far, no politicians or Hollywood celebrities chaining themselves to the tracks to block the "dirty" oil! (maybe they prefer coal?) Of course it's more costly to move the oil by rail than by pipeline, but at some price there is a market for everything.
    It's good to be concerned about the environment, but if we want to worry about spills and leaks, shouldn't we be more worried about the pipelines that are 50 years old rather than the brand new, state of the art ones?
    3 Mar 2012, 12:22 PM Reply Like
  • uncle pie
    Warren Buffet owns a railroad. Perhaps that explains a lot.
    3 Mar 2012, 12:36 PM Reply Like
  • In the reality of this administrations war on fossil fuels in all forms, they don't give a crap about the environment. It is being used as a tool to prevent the pipeline from being built. Everyone knows that a new pipeline should be welcomed with open arms, but it doesn't fit into the green energy scheme of forcing gas prices higher to be equal to non-competitive sources of green energy. Phillips Petroleum has been working on algae as a fuel source since way before the Conoco merger. If it was feasible it would already be a reality.
    3 Mar 2012, 12:40 PM Reply Like
  • A lot of valid points made in previous comments ridiculing the simplistic, myopic and outright ludicrous assumptions made with the advent of oil from the oil sands flowing to the gulf coast via the Keystone pipeline. The hard fact is that the US is a huge net importer of overseas oil. The Keystone will displace some of that, but not all. Most Americans are probably not aware to the extent that US-made products and services are used in the oil sands but I can vouch for this fact as I work there. US made steel, vehicles, machinery, software/hardware, engineering and American Oil companies who are profitably involved. In short, it's good for both countries and bad for the despotic, human rights violating 'kingdoms' presently supplying oil to US coastal refineries.
    3 Mar 2012, 03:05 PM Reply Like
  • Good point about replacing crude presently imported from not so friendly suppliers, like Venezuela.
    3 Mar 2012, 08:57 PM Reply Like
  • To assume that not building the pipeline will fundamentally shift market dynamics towards 'green energy' is silly, at best. How about this challenge to green energy community - make your energy reliable and cheap - and no doubt consumers will flock to it by choice. Otherwise, don't block others access to energy sources, even if they are tar sands.
    3 Mar 2012, 05:00 PM Reply Like
  • Jonathan Alter is one of the insular, ignorant, elite that inhabits NYC and is simply unaware of how the real world works, particularly in the fly-over states. We're not a transit corridor. This is about importing raw materials and exporting finished goods. Not all of us can make a living as pompous windbags like Alter and his ilk can. If we're to maintain a modern, 1st-world society some of us have to produce real goods, not hot air. The Keystone XL pipeline will create long-term jobs and provide an on-going boost to the US economy. Jubak has a good article on the US shift to becoming a distillates exporter. This is how we make world oil demand a US asset rather than liability.



    But the shift does mean that more oil profits go to the U.S. economy as a whole. The U.S. trade balance with the rest of the world looks better as a result of this shift and that’s reassuring to overseas investors at a time when they have every right to be nervous about the amounts that the United States owes to the rest of the world. A United States that’s a net refined products exporter too is putting fewer U.S. dollars into circulation in the world at a time when overseas holders of dollars are wondering how many more greenbacks they want to stuff into their investment portfolios. That, like the improvement in the trade balance, helps to strengthen the U.S. dollar. Maybe only marginally, but at a time like this every change at the margin helps. A stronger dollar and a slightly smaller trade deficit lead to slightly lower U.S. interest rates and that’s a boost to U.S. growth.
    5 Mar 2012, 12:06 AM Reply Like
  • There is no mystery on where the oil will go. The owner of the oil being shipped will pay the tariff and direct where it will go. Any non-committed oil will go to the highest value user.
    5 Mar 2012, 12:59 PM Reply Like
  • Would it not be practical to change the Keystone route through South Dakota? Change the proposed eastern part of the proposed line. so that the new line joins the existing line at the South Dakota Nebraska border. This should get Nebraska politicians off Transcanada's back, as the only involvement of Nebraska would be to parallel the exisiting pipeline.
    19 Mar 2012, 10:03 AM Reply Like
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