A Free-Market Energy Blog

Carter-Obama Energy Policy: From Gasoline Lines to Pipeline Obstructionism

By -- April 25, 2014

“The Nobels assert that, ‘The myth that tar sands development is inevitable and will find its way to market by rail if not pipeline is a red herring.’ But alternate delivery via rail is not a myth; it’s a massive and growing reality. Maybe before writing to Secy. Kerry, the Nobels should read the State Department’s Final Supplemental Environmental Impact Statement (FSEIS) on the KXL, especially Chapter 4: Market Analysis.”

It is the common tale of two presidents who both declared war on fossil fuels. In the 1970s, President Jimmy Carter’s petroleum price and allocation regulations, premised on the belief that we were running out of supply, put America in the gasoline lines. Thirty-five years later, depletion fears refuted, Carter champions a letter to President Obama urging rejection of the Keystone XL pipeline segment (the last of four legs) on easily refutable arguments, discussed below. And Obama obliged.

Obama’s Easter (non) Surprise

Last week the Obama administration again punted a final decision on the Keystone XL pipeline. On April 18, the State Department, the agency responsible for determining whether the pipeline is the U.S. national interest, said it would wait until the Nebraska Supreme Court reviews a lower court decision that struck down a law expediting approval of a new route for the pipeline through the State. The Court is not expected to decide the case until after the November elections.

How convenient for the waffler-in-chief! Even the Washington Post editorial board let him have it.

The administration’s latest decision is not responsible; it is embarrassing. The United States continues to insult its Canadian allies by holding up what should have been a routine permitting decision amid a funhouse-mirror environmental debate that got way out of hand. The president should end this national psychodrama now, bow to reason, approve the pipeline and go do something more productive for the climate.

Artificial Controversy

The Keystone XL controversy should have been settled long ago, because the KXL is obviously consistent with the national interest.

Do modern commerce and transport chiefly run on petroleum-based products? Yes. Are pipelines the most economical and safe way to transport large volumes of petroleum? Yes. Is Canada our staunch ally and biggest trading partner? Yes. Is Canada already the largest single source of U.S. petroleum imports? Yes. Would the KXL enhance the efficiency of oil transport from Canada to U.S. markets? Yes. Would the KXL support tens of thousands of American jobs and add billions to the GDP during the construction period? Yes. Would all the financing be private and not cost taxpayers a dime? Yes.

So how could building the KXL not be in U.S. national interest?

In 2012, TransCanada sought permission to build the “Gulf Coast Project” (the green line in this map), the southern leg of the 1,700 mile pipeline it originally proposed to build from Hardisty, Canada to Port Arthur, Texas. State environmental agencies and the U.S. Army Corps of Engineers granted all necessary permits for the Gulf Coast Project by August 2012.

Construction began immediately and the project commenced commercial service in January 2014. The earth did not shake, the sky didn’t fall, no one felt a “disturbance in the Force . . . as if millions of voices suddenly cried out in terror and were suddenly silenced.”

Something like 2.5 million miles of oil and gas pipelines already crisscross the lower forty-eight. Can anyone explain how adding another 875 miles (the orange line in this map) would push the 2.5-million-mile pipeline system over some kind of national interest ‘tipping point,’ endangering the economy or ecology of the U.S.?

The State Department is the lead agency in determining whether to approve or reject the KXL for one reason only — the pipeline originates in a foreign country, making it an issue of international relations. But since that country is Canada, rejection of the pipeline risks damaging relations with our staunch ally. How could that serve the national interest?

The KXL is subject to a “national interest determination” only because it would cross the U.S.-Canada border. Brian Ballantyne, an advisor with the U.S.-Canadian International Boundary Commission, aptly describes the boundary as “an impossibly thin membrane, phenomenal in length and height, but with no width.” By what occult power does crossing that “impossibly thin” line transmute otherwise mundane pipe into an ominous threat to the national interest? The Left’s demonization of the KXL smacks of magical thinking.

KXL and Climate Change

Keystone foes will say I’m missing the point: the pipeline’s (alleged) multiplier effect on climate change – the gravest peril of the 21st century, in their view.

President Jimmy Carter and nine other Nobel Peace Prize winners rang the climate alarm bell last week in an open letter urging President Barack Obama and Secy. of State John Kerry to reject the pipeline.

Asserting that Obama and Kerry’s stand on the KXL will “define” their “legacy” on climate change, the Nobels claim that rejection of the pipeline would

(1) “have meaningful and significant impacts in reducing carbon pollution,”

(2) “pivot our societies away from fossil fuels and towards smarter, safer and cleaner energy,” and

(3) “signal a new course for the world’s largest economy.”

This is wrong on all counts. As Cato Institute scientist Chip Knappenberger shows, using an EPA climate model, even assuming a totally unrealistic scenario where all Keystone crude is additional petroleum that would otherwise remain in the ground, running the pipeline at full capacity for 1,000 years would add less than 1/10th of a degree Celsius to global warming. Climatologically, Keystone XL is irrelevant.

The Nobels might reply that the pipeline’s emissions are not the issue. According to them, Keystone XL is the “linchpin for tar sands [oil] expansion,” hence approving the pipeline would commit the world to a “dangerous” development path while rejecting it would move the world towards a new, cleaner path. Okay, time for a restatement of the obvious.

The U.S. economy is in the midst of a revolution in unconventional oil and gas, and the global appetite for fossil fuels is growing by leaps and bounds. These trends are determined by basic economic and technological realities and do not hinge on a political decision about one infrastructure project. The Nobels’ conceit that the KXL can “pivot” the global economy and, thus, the climate system is another instance of magical thinking.

The Nobels assert that, “The myth that tar sands development is inevitable and will find its way to market by rail if not pipeline is a red herring.” But alternate delivery via rail is not a myth; it’s a massive and growing reality. Maybe before writing to Secy. Kerry, the Nobels should read the State Department’s Final Supplemental Environmental Impact Statement (FSEIS) on the KXL, especially Chapter 4: Market Analysis.

As in the 2011 Final EIS and 2013 Draft Supplemental EIS, State again concludes that “the proposed Project is unlikely to significantly affect the rate of extraction in oil sands areas (based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios).” A big difference, though, is that whereas the 2011 and 2013 reports “discussed the transportation of Canadian crude by rail as a future possibility,” the FSEIS finds that transport of Canadian crude by rail “is already occurring in substantial volumes.” Indeed, from January 2011 through November 2013, rail transport of Canadian crude to U.S. refineries increased from practically zero barrels per day (bpd) to 180,000 bpd. See this chart.

The completed Keystone XL Pipeline is estimated to have a capacity to deliver 830,000 bpd of crude oil. According to the FSEIS, rail-loading facilities in the Western Canadian Sedimentary Basin (WCSB) are already “estimated to have a capacity of approximately 700,000 bpd of crude oil, and by the end of 2014, this will likely increase to more than 1.1 million bpd.”

A “red herring” is an irrelevancy that diverts attention from the real issue. Look at the FSEIS maps comparing rail infrastructure for oil delivery in Dec. 2010 and Dec. 2013. Do you see a distracting irrelevancy, or visible proof that rejecting the KXL would not affect the basic economics of North American energy development?

Predictably, the Nobels have no conception of unintended consequences. The FSEIS finds that the KXL will actually reduce net carbon dioxide (CO2) emissions associated with U.S. refining of Canadian crude. If permission to build the KXL is denied, U.S. refiners will still import almost as much Canadian oil, they’ll just get it by less efficient modes of delivery: rail, barge, and smaller pipelines. Total annual emissions associated with those alternative modes are 28% to 42% higher than those associated with Keystone XL.

KXL and Oil Spill Risk

Some activists talk as if oil spill risk should be the litmus test for determining whether the KXL is in the national interest. Here too the pipeline passes with flying colors. According to the FSEIS, spills along the full route (Canada to Gulf Coast) of the proposed project are estimated to total 518 barrels per year – much less than the 1,227 to 4,633 barrels per year estimated for the alternative scenarios.

Again, the choice facing the State Department is not between importing and not importing Canadian oil but between delivery by pipeline and delivery by alternative means, chiefly rail. Delivery by pipeline is not only cleaner, it’s also safer. Train wrecks happen. As the Washington Post reported earlier this year:

In July [2013], an [oil train] accident in Lac-Megantic, Quebec, killed 47 people. On Dec. 30, an oil train spilled 400,000 gallons and caught fire after hitting a derailed train near Casselton, N.D. And on Jan. 7, a derailment in the Canadian province of New Brunswick near Maine triggered a fire and forced the evacuation of about 150 residents.

So the Nobels get everything wrong:

  • The KXL is climatologically irrelevant, not some make-or-break pivot or linchpin in the development of Canada’s oil resources.
  • The real red herring is the bogus climate crisis, which diverts public attention from the KXL’s manifest benefits: an estimated 42,100 new jobs and $2.3 billion in additional GDP during the 2-year construction period, enhanced integration of North American energy markets, stronger (rather than strained) U.S.-Canadian relations, and – compared to alternate delivery modes – lower risk of oil spills and lethal accidents.
  • Rejection of the pipeline would not “have meaningful and significant impacts in reducing carbon pollution” but would instead increase transport by other  modes that are more carbon intensive.

Biting the Hand That Feeds

The lifestyles of Nobel Laureates like Al Gore and Jimmy Carter and anti-Keystone crusaders like Bill McKibben are among the most oil-fueled in the world. Their actions mock their words, as comedian Stephen Colbert intimated when interviewing McKibben during an anti-Keystone rally in Washington, D.C.:

You’re from Vermont? Did you ride your bicycle down here? Did you ride ox cart? How did you get down here? Or do you have a vehicle that runs on hypocrisy?

McKibben had no response to this jab. Let’s unpack the implications. If even professional preachers of the eco-apocalypse need oil, then ordinary folks do too. And if oil is an essential commodity, it should be brought to market by the safest and most efficient means. In the case of Canadian crude, that best delivery option is the KXL.

The Nobels can’t wrap their heads around that simple logic. Neither can scores of NGO leaders and ‘progressive’ politicians. They are blinded by irrational hatred of oil and oil companies.


  1. Tom Tanton  

    Well done Marlo. I’d not say POTUS “punted” in this instance though, more like ‘clipping’


  2. Peter Z Grossman  

    Good piece. I hadn’t heard the line about a vehicle that runs on hypocrisy. I will probably quote it myself one of these days.


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