Posted in: Opinion,
by Patrick DeHaan on Mar 6, 2014 11:00 AM
The Keystone XL pipeline has been a hot topic for years for motorists, for environmentalists, for big oil, for politicians. Yet, I continue to see people blindly take one side with no fact or basis for doing such. Nor do I hope to sway your opinion while I give you mine- I simply hope to provoke your thinking process- to question your beliefs- so that you come away more solid in your thinking, or to re-think why you support/don't support this project.
To be completely transparent, my first thought was how we shouldn't build it, almost solely on the thought that it may raise the price of Canadian oil and in turn lead to higher gasoline prices (more demand for Canadian oil, higher prices for said oil, makes sense Canada is pushing so hard for this), but then I asked myself: are we really seeing lower prices because of the cheaper Canadian oil prices we've long enjoyed? The more I look at that question, the more I believe that we really haven't seen a huge benefit.
With oil refineries around the U.S. consuming varying amounts of cheaper Canadian crude, gasoline prices really don't reflect the cheaper crude cost as much as they could have. For example- the Great Lakes region gets a significant portion of it's oil from Canadian sources, but the gut feel is that gasoline prices haven't really reflected that advantage much. So let's say that the price of cheap Canadian crude isn't really realized at the pump.
Having thrown the thought that we're benefiting from cheap Canadian oil out, what are my other thoughts? Well, what would happen if Canadian oil that predominately flows to the Great Lakes and Rockies starts flowing to the Gulf Coast, the East Coast, and the West Coast? How could that impact gasoline prices? Well, so far, since Keystone XL isn't operational, we have actually seen rail shipments start doing just that- and so far we've seen a few instances where those trains have derailed. So with this on the table- that the coastal areas are already getting Canadian crude- what's safer? Trains or crude pipelines?
Well, the answer there is easily crude pipelines. Certainly, they have their problems too, but we're just seeing the tip of the iceberg with train shipments. If there's no pipeline, there will likely be dozens upon dozens more daily trains carrying a significant amount of crude oil. You can't stop refineries from receiving this oil now- they'll get it via train, which eats into the pricing advantage of Canadian crude, but they're still doing it... so from a motorists view, wouldn't it be better and safer to allow the Keystone XL so that there's a lower risk of environmental disaster? Lobbyists with several big environmental groups seem to favor shipping millions of barrels via rail, something I just can't find any logic in. It seems more about winning against pipelines than using your brain and going with the less risky environmental proposition.
However, with more demand for Canadian oil that would likely come with the Keystone XL, will that somehow affect prices? Well, I see it this way: perhaps we should already limit the amount of products we allow to be exported to keep prices in check here. The U.S. is becoming a refinery superpower- so much so that refineries in Europe are closing because refineries in the U.S. are so well positioned, they can't compete. However, that may mean that more products are exported to more expensive and/or more lucrative markets, and that surely could keep pressure on gas prices here in the USA.
In the end, taking politics out of it, but wanting to pick the better option for the environment, and wanting to keep gasoline prices affordable, I believe the Keystone XL is a better option than what's out there now- rail shipments. It's the lesser of two evils. And my wallet wishes that soon down the road we may limit exports to keep gasoline prices in check here in the USA, but who knows that will ever happen.
In the end, after generally believing Keystone XL was a bad idea, I believe logic supports it. I am highly skeptical that the pipeline itself will lead to lower gasoline prices (as I said we need to limit products being exported!) I don't believe it will add many jobs at all (maybe in a pipeline control room where the pipeline vitals are monitored), but I do believe in my own reasoning that it should be built, and I encourage each and every one of you to step outside the box you may be standing in, and to evaluate your own thinking, and own questions. Don't blindly believe anyone- statistics can be fabricated, stories can be enhanced, and facts can be spun. And perhaps that thinking may help you to see something in this issue that you hadn't before.