Category — Keystone XL Pipeline

Last month, a group of 15 climate scientists (included the now disgraced Peter Gleick) sent a letter to Congress expressing their displeasure over the proposed Keystone XL Pipeline. President Obama has weighed in against approval, but Congress wants a green light to allow construction of the 1,700-mile, $7 billion project. Most recently, Bill Clinton weighed in for the pipeline, indicating just how deep the positives of the project are for the U.S. and world oil market.

So why are physical scientists getting political about a market-friendly pipeline to deliver oil from the Athabascan oil sands in Alberta, Canada, to various refinery locations in the Midwestern U.S. and ultimately the Gulf Coast?

The letter (reprinted at the end of this post) states that in addition to the local environmental impacts of oil sand mining (see here and here for a first-person account from Reason magazine’s Ron Bailey of the operation), burning such oil “on top of conventional fossil fuels will leave our children and grandchildren a climate system with consequences that are out of their control.”

The 15 climate scientists added:

When other huge oil fields or coal mines were opened in the past, we knew much less about the damage that the carbon they contained would do to the earth’s climate and its oceans. Now that we do know, it’s imperative that we move quickly to alternate forms of energy—and that we leave the tar sands in the ground.

What Is the Climate Impact of the Keystone XL Pipeline?

As a climate scientist myself, I can profess to knowing the same thing that the 15 signatories know about what the impact that carbon contained in fossil fuel reserves will have on the climate. And I can (as can they) calculate how much of an effect the Keystone XL pipeline will probably have on global temperatures. For some reason (hmm?) the 15 climate scientists chose not to include that information in their letter to Congress.

But here it is: The rise in global temperatures resulting from extracting and burning the oil delivered by Keystone XL at full capacity is about 0.0001°C/yr. [Read more →]

“[T]here is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”

- Henry Hazlitt, Economics in One Lesson. quoted here.

At Cafe Hayek, economist Donald Boudreaux, Professor of Economics at George Mason University, wrote an open letter to Fox News host Bill O’Reilly’s opposition to exporting U.S. oil to other countries. O”Reilly has a populist streak, and he is prone to seeing the seen and not the unseen when it comes to economics, a sin indeed to economics as a science.

Professor Boudreaux is a master educator and prolific letter writer on behalf of common-sense economics. Read his explanation about why the namesake of the O’Reilly Factor 1) gets his economics wrong and 2) fails to see the implication of his own argument to himself as exporting his services

Dear Mr. O’Reilly:

You’re all lathered up because U.S. oil companies are exporting much of their refined gasoline and heating oil to other countries and thereby putting upward pressure on fuel prices here in America.  You conclude that these companies have a moral obligation not to export so much….

Economics

First some economics.  Selling in the global market encourages firms to build larger factories and refineries that, in turn, enable outputs to be produced at lower costs per unit.  So while in the short-run rising exports of oil products can cause fuel prices here to spike, the long-run effect might well be lower prices because of larger, more-efficient scales of operation.  [Read more →]

Today and tomorrow, the House Energy and Commerce Committee will mark up H.R. 3548, the “North American Energy Access Act,” Rep. Lee Terry’s (R-Neb.) bill to nullify President Obama’s rejection of the Keystone XL Pipeline. The bill requires the Federal Energy Regulatory Commission (FERC) to issue a permit for the pipeline within 30 days of receiving an application. If FERC fails to act on the application within the 30-day period, the bill deems the permit to have been granted.

Waxman and Markey: From Cap-and-Trade to Ban-the-Trade

Committee Democrats lack the votes to defeat the bill, but they hope to use the markup to turn the rhetorical tables on Republicans, who claim Keystone XL will enhance U.S. energy security by reducing our dependence on Middle East oil.

Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) will offer an amendment barring exports from the USA of any Canadian oil shipped via the pipeline and requiring all petroleum products made from Keystone crude to be sold in U.S. domestic markets.

Waxman and Markey know full well that such restrictions would impair the profitability and competitiveness of U.S. refiners, potentially causing them to back out of the long-term sales contracts they negotiated with pipeline builder-operator TransCanada Corp. They know, in other words, that the amendment could scuttle the Keystone XL project and, therefore, that Republicans will vote against it.

But that’s the point. By forcing Republicans to vote no, Waxman and Markey hope to ”expose” Keystone XL as an “export pipeline” and, thus, supposedly, as an energy security “scam.” The question they’re likely to pose again and again: If you Republicans really believe the pipeline will reduce U.S. oil imports from unstable, undemocratic, or unfriendly countries, then why won’t you guarantee in law what you say is going to happen anyway? [Read more →]