U.S. Secretary of State Hillary Clinton got the file Monday as the State Department concluded a public comment period on its draft environmental impact statement, and will publish a final one some time this summer, before making a determination as to whether permitting construction of the cross-border TransCanada pipeline would be in the U.S. national interest.

The reality check is about the project called The Keystone Pipeline, that will carry 7-800,000 barrels per day of oil made from Canadian bitumen to the massive U.S. Gulf Coast petroleum hub, where refineries are particularly suited to process the heavy oil made from Canada’s bitumen resource.

Keystone Pipeline by State Map. Click image for the largest view.

The forcing of a mistake is coming from, with no particular surprise, the Environmental Protection Agency and the Department of Energy – which were both critical of the State Department’s initial environmental assessment.

The goal of the Keystone project is to connect the Alberta oil sands with U.S. Gulf Coast refiners who have invested billions of dollars to upgrade their plants so that they can process heavy grades of crude.

Today most of the Canadian crude goes to the U.S. Midwest where by 2015, IHS CERA, a consulting firm based in Cambridge, Mass., in advising the State Department, notes Canadian oil sands exports could exceed the refining capacity in the Midwest.

Add to that oil sands growth and new production from existing conventional oil reserves should drive Canadian crude oil production to about 4.7 million barrels per day by 2025. This is a result of a longer than expected oil price near $100 allowing higher conventional production and the inclusion of some additional in situ projects that were previously put on hold. That’s about 400,000 barrels per day higher than older forecasts.

This oil is going to sell somewhere.

API chief executive officer Jack Gerard said in a letter to Clinton pointing out, “Other nations will aggressively develop this key strategic resource for their future energy needs if we fail to act.”  Warnings are rampant that in the absence of the Keystone pipeline, Canada will build alternative export routes to the West Coast to ship oil sands crude to the booming Chinese market.  One can hardly blame them.

And there goes a great chunk of the U.S. oil energy security.  One wonders if some of the folks in D.C. are Americans or a cynic might wonder if they’re subversives.  That doesn’t even consider the cold, rude shoulder to the Canadians who put up with U.S. shenanigans with very little complaint.  The Canadians have dealt with the U.S with a much better set of ethics than they’ve received in return.

The EPA’s and Energy Department’s comments don’t represent all of us or even very many Americans.  As the age of oil winds down, there is little point in driving the cost of oil higher, increasing the economic risks, and abusing the neighbors.

Just to add damage to the U.S., the consequence of the EPA and Energy Department efforts would force the Gulf Coast refineries to use heavier crudes from Mexico, Venezuela, Brazil, Colombia and Saudi Arabia.  Some of these countries are rather unfriendly to the people of the U.S.  The logic of bureaucrats defies common sense and serves to plunge the U.S. into jilting the best of friends and sending our hard earned cash to those who wish us ill.

Oil products move in a world market from supplies to users.  The market is mostly about price.  But in the hard spots or supply peaks, having a good connection to supplies matters for avoiding shortages or local price extremes.  It much more likely that a serious disruption will occur with ocean going tanker loads than a pipeline.

The disinformation piles up as well. Prominent environmentalist Bill McKibben and NASA climate scientist James Hansen are using over estimated numbers like “the tar sands are estimated to contain the (carbon) equivalent to about 200 ppm CO2.”  To increase CO2 concentration by 200 ppm, you would have to extract, upgrade, refine, and burn about 2.5 trillion barrels of oil sands at today’s emissions intensities.  That’s more than double all the oil used in history so far.  It also assumes that every drop of the oil sands will get burned while as this moment only 10-20 per cent of that is economically extractable, and only a small fraction of these economic reserves are currently under development.

Oddly, the U.S press missed the easy math.  It will take a while to get through all of the oil sands.  At today’s production rate of about 2 million barrels per day, 2,500,000 million barrels/730 million barrels per year = about 3,425 years. Even at 5 million barrels per day it takes 1,362 years.  Well?  And someone is going to use the oil any case.

Is it better to move oil in a pipe buried in the ground a few hundred miles or floating about in ships going halfway around the world?  What seems safer to you?

Taxpayers need to pull the plug on some agencies’ budgets that shoot off their comments without thinking or realizing how stupid they sound, or acting against the interests of the citizens. It’s quite a mistake to even lend the nuts an ear, but other bureaucrats do.  Sometimes it’s a relief that government does move in slow motion.


17 Comments so far

  1. Craig Binns on June 8, 2011 1:19 AM

    “One wonders if some of the folks in D.C. are Americans or a cynic might wonder if they’re subversives.”

    And I thought Joe McCarthy died in 1957!

  2. Al Fin on June 8, 2011 5:58 AM

    Voters will have to decide if this is the hope and change they were waiting for.

    Military service members will have to decide if they believe this is still a government worth fighting and dying for.

    It is a matter of millions of individual choices being made by the little people, every day. Judgment call reactions to the arrogant indifference being showered on them from above.

  3. Craig Binns on June 8, 2011 7:36 AM

    Disagreeing with people’s views on energy policy is not the same thing as believing them to be unpatriotic subversives. As you say yourself, you are a voter, that is, you live in a democracy.

    But calling disagreement “subversive” is what happened under Stalinism or fascism; it is not democratic discourse.

  4. Musson on June 8, 2011 7:36 AM

    What do you do when the government of the United States is so consistently working against the interests of the citizens?

    We have got to vote the Representatives out and get someone in there who will clean house at the EPA.

    To these idiots at the EPA $5 a gallon gas is some kind of moral victory. Nevermind that working class Americans are being bled by it.

  5. Craig Binns on June 8, 2011 8:02 AM

    I hope you mean, vote people out that you don’t agree with, and elect others you do agree with. I hope that’s what “get someone in there” means, rather than waiting for a dictator who’ll see off the week-kneed idiots working against the citizens.

    I live in Glasgow, Scotland, and judging from local price data, the cheapest gallon of petrol (gas) on offer locally costs $8.25, if I’ve calculated litres to US gallons and £ to $ correctly.

    But we can live with this. We drive less and use buses and trains more than you do.

    Don’t allow an economic crisis to subvert your democracy. That’s MUCH worse than having to take a bus to work!

    Democracy collapsed in some European countries as a result of the economic crisis of the 1930s. That cost tens of millions of lives and we don’t want to go through that again in the present crisis. We really don’t!

  6. Brian Westenhaus on June 8, 2011 9:22 AM

    Everyone is ‘collaborating’ on things whether they’re aware or not. Thus, it needs to be made clear that some public policy positions work against the common interest. When government people push the views of a special interest, using the position to include and spread misinformation in the discussion, that is propagandizing.

    One is left with ‘subversion’ as a high quality descriptive term that’s accurate. The government of the US is supposed to be of, by and for the people, as a principle. One cannot accept officials promoting against the common welfare as working for the common good while the talking points and actions destroy the welfare of the public economy.

    The US has been struggling for over 200 years to bring equitable treatment to everyone and will continue to struggle on. But many of us are sickened by government officials behavior. While these people are factually Americans, their behavior certainly is not.

    The standards must be raised. The media won’t do it, which leaves the independents on the internet.

    Your humble writer does wonder if many government officials act as Americans in their official capacity. Those people need to be called out, or the propaganda won’t be challenged. One only needs to study history back a century to see where not challenging propaganda takes a society. One best challenge both the behavior of propagandizing and the misinformation of propaganda – or take risks in blood and treasure.

    It seems to me that tolerance is to blame ahead of the stupid commentary propaganda. Say what you like, just willing to justify the behavior, back it up with verifiable facts – or keep quiet.

    Some would say its embarrassing to have behavior challenged – it should be. Pfft, but, its embarrassing to have to make the challenge – as if government people are juveniles and we are the adults. Its pathetic these people are noticed, embarrassing to call them out, and a giant waste of time.


  7. Craig Binns on June 8, 2011 11:51 AM


    I must say I am surprised by this. You’re talking about a disagreement over oil transportation and pricing policy. Different opinions on such questions are perfectly commonplace, and can easily be accommodated and resolved within a democratic political culture.

    But to elevate this into a cosmic struggle over whether or not there should even be Representatives, or whether soldiers should continue to obey the government, seems to me like a preposterous exaggeration of the nature of the issues at stake, and a complete departure from any reasonable method of resolving them.

  8. Al Fin on June 8, 2011 1:17 PM


    Craig is clearly a lowlands Scot, thus little better than an Englishman. He should thus be ignored on any issues of political philosophy or economics. 😉

    On technical issues he may well be worth listening to, however, but as a lowlands Scot he would have to prove himself before being taken seriously.

  9. Neil Taylor on June 8, 2011 2:38 PM

    I thought ALL oil was an international commodity and no matter where it comes from or who processes the oil – it and its pricing is a part of that international commodity. So, where does most of the oil go that is currently produced in Alaska? Where is it processed? You may not like the answers….

  10. Al Fin on June 8, 2011 4:01 PM

    Neil, there are many grades of oil, and the price of oil varies widely depending upon the source, grade, transport costs etc. Needless to say, local pipeline transport is relatively cheap.

    Meanwhile, the idiots of Germany have decided to close their nuclear plants in favour of the biggest numbskull fantasy of them all — big wind turbines! Talk about a true sucker’s play!

    They used to say that a sucker was born every minute, but it seems like lately the rate of sucker births has gone up, particularly around the capitals of western Europe.

  11. Craig Binns on June 8, 2011 5:22 PM

    Al Fin:

    “Craig is clearly a lowlands Scot, thus little better than an Englishman. He should thus be ignored on any issues of political philosophy or economics.”

    The ghosts of Adam Smith and David Hume will rise from their tombs to haunt you for that remark!!

  12. Al Fin on June 9, 2011 7:09 AM


    They already haunt me on a regular basis. Perhaps the “smiley face” attached to the original comment will help?

  13. Craig Binns on June 9, 2011 9:23 AM


    Well understood. Mine should be adorned with a smiley too!

  14. Craig Binns on June 9, 2011 11:31 AM


    In fact I don’t believe that David Hume’s even GOT a ghost, having read in
    Section X of his “Enquiry concerning Human Understanding” (1748):

    “Nothing is esteemed a miracle, if it ever happen in the common course of nature. It is no miracle that a man, seemingly in good health, should die on a sudden: because such a kind of death, though more unusual than any other, has yet been frequently observed to happen. But it is a miracle, that a dead man should come to life; because that has never been observed in any age or country.”

  15. Al Fin on June 10, 2011 10:55 AM


    Pardon me, but I believe that here Hume is asserting a lack of belief in zombies and resurrected persons, rather than ghosts.

    Rather than being miraculous, ghosts are merely non-physical remnants of entities which no longer exist in physical form. We are constantly surrounded by ghosts of all kinds. In fact, most of us carry multitudes of ghosts inside of us.

  16. Craig Binns on June 10, 2011 6:29 PM

    Well, if you mean that I have memories of my dead parents, or of a close friend who died two nights ago in his sleep, and that’s what is meant by “ghosts” then yes, you’re right

  17. Al Fin on June 11, 2011 5:34 PM

    Some ghosts are sad or bittersweet almost-tangible traces of people we loved. Other ghosts ride well below the level of consciousness, and we are typically unaware that we carry them.

    They haunt and influence us all the same.

    My condolences on your recent loss.

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