Why the Keystone Pipeline Will Be Built: 10 reasons
Fver the past two weeks or so, several hundred protesters assembled outside the White House to oppose the proposed Keystone XL pipeline, which is designed to transport bitumen produced from oil sands in Alberta to refineries on the Gulf Coast. During the protest, actor Daryl Hannah, climate scientist James Hansen, and author and activist Bill McKibben were among some 1,200 people who were arrested.
The protesters are hoping that President Obama will block the $7 billion pipeline. Their rationale: The pipeline will result in major increases in carbon-dioxide emissions, and therefore it must be stopped or catastrophic climate change will ensue. Protest as they might, a State Department report found that the pipeline will not have a major environmental impact.
Here are ten reasons why the Keystone pipeline will be built.
1. Canada’s oil production is rising, Mexico’s is falling. For many years, the U.S. has relied most heavily on crude imports from Mexico and Canada. Over the past ten years, Canadian crude production has risen by 600,000 barrels per day while Mexico’s has fallen by about that same amount. I’d rather have a reliable, long-term supply of crude from Canada than rely on overseas suppliers, whether they are part of OPEC or not. How long can we rely on the Canadian oil sands? Probably for decades. The resources there are estimated at over 100 billion barrels.
2. U.S. oil production is rising, but we will still need to import oil, and lots of it. Thanks to the shale revolution, domestic oil production could rise by as much as 2 million barrels per day over the next few years. That’s great news. But that increased production will not cover all of America’s needs. The more oil we can get from North America, the better.
3. Some of the oil moving through the Keystone XL will likely be exported, but that’s no reason to stop it. Critics of the pipeline, including Oil Change International, say that much of the oil in the line will “never reach U.S. drivers’ tanks.” That may be true. But U.S. oil exports are not new. American refineries are now exporting about 2.3 million barrels of refined products per day. Why? U.S. refiners are among the best in the world. They are importing lots of lower-grade crude oil and turning it into diesel and other fuels the world demands. Indeed, over the past six years, U.S. oil exports have more than doubled.
4. The pipeline will help America’s balance of trade. Refining is manufacturing. The U.S. is importing unfinished goods (in the form of Canadian crude), finishing them, and exporting them. That’s a good thing.
5. U.S. oil demand may be relatively flat, but it’s not going away. Opponents of the pipeline claim that there’s no need to build the Keystone XL, because U.S. oil demand is sluggish. That’s true, but the U.S. will continue to need lots of oil for decades to come. Here’s the latest prediction from EIA: “U.S. consumption of liquid fuels, including both fossil fuels and biofuels, rises from about 18.8 million barrels per day in 2009 to 21.9 million barrels per day in 2035.”
6. Like it or not, oil is here to stay. U.S. oil consumption — as a percentage of its total primary energy consumption — now stands at about 37 percent. That’s the exact same percentage as in 1949. Given the amount of money that has been spent over the past six decades on reducing our dependence on oil, the hard fact is that petroleum is a miraculous substance. Nothing else comes close to oil when it comes to energy density, ease of handling, flexibility, convenience, cost, or scale.
7. We should be getting as much oil as we can from as close to home as we can. But we can no longer rely on Mexico. Pemex, the country’s national oil company, is not investing enough money in new drilling projects even though its most important field, Cantarell, is declining rapidly. Nor can Pemex count on getting more money from the Mexican government, which is spending heavily on its war against the drug cartels. Indeed, Mexico may already be a failed state. The cartels are under siege by the federal police and federal soldiers, but the slaughter just a few weeks ago of more than 50 people at a casino in Monterey shows that the narcos are still running wild. Canada, meanwhile, has an ultra-stable government. And given its enormous oil deposits, it’s apparent that Canada can be an essential player in America’s effort to secure reliable energy supplies.
8. The claims about the pipeline being the pivotal project with regard to carbon dioxide are not true. McKibben has claimed that if the Canadian oil sands are developed, “it is essentially game over for the climate.” Think what you like about carbon dioxide. The reality is that the global issue of carbon dioxide is no longer about the United States. Over the past decade, U.S. carbon-dioxide emissions fell by 1.7 percent. During that same time, period global carbon-dioxide emissions rose by a stunning 28.5 percent. Recall that over the past decade, Al Gore and his allies dominated the news media and much of the political discussion both in the U.S. and around the world. And yet during that same time frame, the countries of the world increased their use of energy by about 53 million barrels of oil equivalent per day. Why? Because hundreds of millions of people all around the world are desperate to improve their lives by using more energy. And the cheapest, most abundant, most reliable source of energy is hydrocarbons.
The result: Carbon-dioxide emissions are soaring. The Kyoto agreement failed. Copenhagen failed. Cancun failed. The upcoming climate meeting to be held in Durban in December will fail, too. Why? The developing countries of the world need energy, and lots of it.
9. Demonize oil all you want, but coal is the real issue when it comes to carbon-dioxide emissions. Again, look at the numbers: Over the past decade, global coal use increased by 47 percent to about 71.4 million barrels of oil equivalent per day. During that same time period, oil use increased by 13 percent to about 87.3 million barrels per day. If Hansen, McKibben, and their allies want to protest projects that result in lots of carbon-dioxide emissions, they should be looking for coal mines and coal-fired generators, not oil pipelines. But protesting against coal means protesting against electricity generation, because most coal is used for that purpose. Over the past decade, electricity demand in Asia jumped by a whopping 85 percent. All over the world, people are turning on lights in their homes for the very first time. That trend will continue.
10. Obama can’t afford to hand a major campaign issue to his Republican opponent. Earlier this month, Obama backed down on a proposed rules that would have dramatically tightened standards on ground-level ozone. He will approve the Keystone pipeline. Doing otherwise will hurt his chances of staying in the White House for another four years. And while he knows that some environmentalists won’t be happy, he also knows that few, if any, of them will abandon him for a candidate like Rick Perry.
— Robert Bryce is a senior fellow at the Manhattan Institute. His latest book is Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future. The opinions expressed in this commentary are solely those of the author.