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Keystone XL & $5.00 Gasoline


An email from 350.org warns that the Keystone XL pipeline project is already being revived. You can sign a petition against that action here. While we follow the unfortunate death of Whitney Houston or the trial from the unfortunate death of Yeardley Love, or even the GOP Primary follies, oil interests are trying to pull a fast one:

Senate Trying To Sneak The Keystone XL Pipeline Onto Obama's Desk Through An Unrelated Bill

After last month's decision by the Obama administration to reject the 1,700-mile-route of the Keystone XL Pipeline, Republican lawmakers are trying to revive the controversial project by attaching it to transportation legislation.

Another email, from the Association for the Study of Peak Oil and natural gas (ASPO), invites me to attend a debate in Madison WI tonight (can't make it, sorry) between an ASPO VP and a former president of Shell Oil who now heads Citizens for Affordable Energy a foundation that supports pragmatic solutions towards cleaner energy. At a cursory glance, CAE's featured news items slam a wind farm for killing golden eagles, but endorse leases for offshore drilling in the Atlantic, so I get the feeling that pragmatic is code for using fossil fuels instead of some thorough evaluation of energy vs environment.

Former Shell Prez John Hofmeister's contention is that increasing oil demand in Chindia and dwindling oil supply from OPEC will lead inexorably to $5.00 a gallon gas, therefore we must exploit local resources to increase domestic supply. ASPO VP and Petroleum Engineering Chair at UT Austin Tad Patzek counters that "no realistic U.S. increase will offset declining yields from other nations."

[ASPO posted a one-hour video of the debate.]

US Gasoline prices have risen to around $3.50 per gallon. Admitting all the uncertainties with Israel vs Iran and Greek austerity, Tom Whipple suspects that Americans may be looking at another 60 cents a gallon by May, which would put the US price around $4.10 per gallon—slightly above the $3.97 that GasBuddy charts showed for last summer.

But here is Hofmeister, a former oil exec, waving around a flaming $5.00/gallon price just as the Senate is trying to revive Keystone XL. As if Keystone is going to lower US gasoline prices. Keystone is all about selling Canadian synthetic oil on the world market at the higher Brent price, instead of to the US at the lower WTI price.

And the risk to the Ogallala aquifer—just a nuisance to be glossed over by a compliant government.
 

I am late to the subject but after reading and studying the graphic my first question was if and how the pipeline fits into strategic reserve planning, ergo military / foreign policies.  Did not really find an answer about the reserve per se but was surprised to learn that the rejection of the pipeline really pissed off Canada ...and Joe Nocera.  

Also found something from an energy industry investment analyst predicting that not only will Keystone be built but another one named Northern Gateway  will be as well.  His sounds very confident.

The real story here is being buried by political spin...

It isn't about whether the United States or China gets Canadian oil. It isn't about environmentalism. It isn't about Obama.

The real story here is a veritable North American oil rush.

We're just fighting over where it will go and who will make the most money.

As I told you in my last update on this pipeline situation, oil is a global market. A fight over where a pipeline should reside doesn't change the amount of the stuff in the ground.

Sure, the political angle will play a supporting role in this year's U.S. election. And yes, the environmental crowd may get a “victory” by tying both pipelines up in court for a few years.

But at the end of the day, I believe both pipelines will be built.

The oil sands in Canada and the shale in the U.S. will both be fully developed.

To think otherwise is naïve.

And to get caught up in the trivialities of politics and environmentalism surrounding this development is to seriously take your eye off the ball.

 

I note that a NYT commenter compares Nocera to David Brooks. Of course we will use all the oil we can, but does that mean we must do it as stupidly as possible, benefiting only the rich, just so the Kochs can make more money for Romney's campaign?

We're all going to die, but should we eat good food, exercise and have regular checkups, or just abuse our bodies, die quickly and reduce the surplus population?

Also found this but not sure if plans have changed again:

TransCanada Will Reroute Keystone XL Pipeline Away From Nebraska's Sandhills And Ogallala Aquifier - Business Insider: 

 

Canadian pipeline developer TransCanada will shift the route of its planned oil pipeline out of the environmentally sensitive Sandhills area of Nebraska, two company officials announced Monday night.

Speaking at a news conference at the Nebraska Capitol, the officials said TransCanada would agree to the new route, a move the company previously claimed wasn't possible, as part of an effort to push through the proposed $7 billion project. They expressed confidence the project would ultimately be approved.
 

 

I get it and I have been thinking about this a long time.

What we need is an environmental statement telling us what kind of pipe we would need and what bonds must be signed by the capitalists.

We do not need to shut down the project.

That makes us look like tree hugging bastards who would give our allegiances to puppies over people.

Hell.

We shall have a full pipeline(s) whether we like it or not.

Make the project labor rich, make the project environmentally sane (rather than radical) and then push the project paradigm right up the capitalist's ass.

the end

Over 600,000 Say No to KXL

In an amazing show of strength against the KXL, the goal of 500,000 signatures was reached just before 7 pm last night. It currently stands at over 600,000 signatures.

These will be delivered later today to the offices of Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.). Gene Karpinsky, who heads the League of Conservation Voters, told ENS Newswire that handing over 50 giant boxes each holding 10,000 signatures would be a “unified show of our power: our voices against the dollars of Big Oil.”

Donal, stupid question. Why can't the refining be done in Canada? Obviously, there are existing refineries on the Gulf Coast that they wish to use. But many of those are old structures. Is sea water necessary for cooling? 

I think there are a zillion questions which haven't been asked. The industry is just doing what it knows how to do rather than look at overall solutions.

 
In the first place, this is new technology, the pipes will have hot sludge under enormous pressure. What about piping sea water to new refineries in Canada? Using a vastly smaller footprint up there and only producing extremely high end expensive and specialty chemicals? The market value for a smaller amount might be equivalent. Of course, the Canadians would never put up with it.

I own some country property near the Oklahoma border. Looks like the plan in Texas is to skirt major reservoirs like Lake Texoma. But I should really look into it. 

This thing is a disaster waiting to happen.

That's a very good question. A Canadian OpEd piece I posted a while back also asked why refining can't be done locally, thus earning more profit. I suspect it is because refineries are tremendously expensive to build, which is quite a risk in a dwindling market. Tom Whipple wrote an article in January noting that the US is slowly shutting down refineries:

Here is one more thing for those of us who live in the northeastern U.S. to start worrying about - the refineries that make our gasoline, diesel, heating oil, etc. are dropping like flies.

In today's economy, these refineries are simply losing so much money that their owners who are not major oil companies that make billions from oil production are having put them up for sale or close them down. In recent years we lost refineries in Westville, NJ, and Yorktown, Va. A large refinery in southeastern Pennsylvania was shut down in December as was one in New Jersey. A third large Philadelphia refinery is up for sale and will be closed in July if no buyer can be found.

But Whipple didn't completely explain why refineries were shutting down. Part of the problem is declining demand for gasoline and heating oil due to the recession. Part may be that these existing refineries were built to handle light, sweet crude, while available oil is increasingly heavy and sour—or is synthetic crude from the tar sands.

This is part of what Daniel Lerch calls Energy Uncertainty: it is more expensive to keep adapting to changing realities.

As for the pipeline, why not follow the existing pipeline route that doesn't cut across the shallowest parts of the aquifer? It probably costs more, but presumably the infrastructure, rights-of-way, etc. are in place. It has to be easier to monitor two parallel pipelines than two that are hundreds of miles apart.

Thanks. It just looks like a "last ditch" effort to maximize profits. There's a Texas Water office nearby who are purchasing right of way for a reservoir, I'm going to stop in there and get the skinny. 

I think the price differential between specialty chemicals and gas products is enormous and it seems that smaller specialty plants making these would produce equivalent profits. Some of the stuff I see around costs upwards of $20 a gallon.

Industry has not scratched the surface reclaiming petroleum based products. But nobody is calculating the tradeoff between the environmental impact of a pipeline vs. more intelligent local reclamation of what is now being burned as cheap fuel in cement kilns, and even shipped overseas.  

All of you guys are ignoring the fact that the process of turning tar sand into something that can be piped is terrifically bad for the environment itself, never mind what happens when the pipe leaks, which it invariably will.

 

Canada could easily build a pipeline to their West coast, but there's no chance that will happen. There's a reason they only want to pipe it across the US and it's not because we have refineries on the Gulf.

 

Bloomberg: "The most vulnerable “are inefficient refineries with high operating costs, high fuel costs. The East Coast refineries probably carry the biggest risk because they compete with the rest of the world.”"

 

OK so, why again do the Gulf refineries need more oil? They are already running at full capacity and low prices for their product is cutting into their profits. Someone explain to me how this pipeline to the Gulf is going to help them in any way. It's not.

 

This pipeline actually makes no economic sense whatsoever. Our refineries have no shortage of oil now and none is projected far into the future. Meanwhile, inefficient polluting refineries will go back on-line as soon as heating oil prices go back up or will stay shut down as they should.

Thanks, Zantrails. I agree, I'd rather drop the whole thing. We need to conserve and revamp our energy and infrastructure. I'm actually looking for a rationale to slow it down for a while till the other ducks can line up. If not that, to reduce the scale. 

Well, I'm sure it makes economic sense for some people… devil

And they're all either in Canada or Texas, or in Congress.

Keep up the good fight, Donal.

Sadly nobody is going to leave a trillion dollars in the ground, and the longer its delayed the more valuable it will become. But I am with you. 

Had a pair of links I wanted to send your way: 

Good one on big picture sustainability:

http://www.scientificamerican.com/article.cfm?id=smart-way-to-play-god-with-limited-land

 
 
"It was inevitable that a utilitarian society would generate a utilitarian environmentalism." One no longer driven by an emotional connection to nature; rather by a quest for "sustainability".
Its a little slow to start but interesting personal history about the shift from conservation for nature's sake to anti-carbonism, the solution to the later threatens the former,  Environmentalist is distressed and ostracized by his former comrades. 

 

Best,

Thanks, both are very well-written, and the complaints are very familiar. I know Lynas from his writings against unfettered wind turbines. I disagree with his enthusiastic support of nukes, but as Kingsworth explains, there are no easy answers.

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