A decision due early next year from the US Department of State forces the world's largest oil-consuming country to look at energy with uncharacteristic realism. The decision concerns the Keystone XL pipeline project, which would connect the oil sands and heavy-oil producing region of Alberta with refineries on the Texas Gulf Coast.
That the project faces controversy defies logic. The US frets obsessively about dependence on oil from the Middle East. When a large supply becomes available from a friendly neighbor, however, it balks.
Antioil campaign
The contradiction grows out of an eternal campaign against oil woven into the coarse fabric of environmental extremism. The campaign has a familiar pattern: demonization of oil coupled with demands for ever-more conservation and energy from alternative sources. The driving supposition is that the US can shed its need for oil simply by exercising political will. This is ludicrous.
Opposition to the Keystone XL project follows the design. A November report by the Natural Resources Defense Council, for example, says the pipeline would carry "toxic bitumen" to the Gulf Coast, "effectively transporting pollution from Canada to the United States." The project would "generate a massive expansion of the destructive tar sands oil operations in Canada," threaten to pollute water supplies, and "increase emissions in already-polluted communities of the Gulf Coast," NRDC says. "The United States should instead implement a comprehensive oil savings plan to reduce oil consumption by increasing fuel efficiency standards, hybrid cars, renewable energy, environmentally sustainable biofuels, and smart growth to meet our transportation needs."
The US should, in other words, displace some unspecified volume of commercial oil with noncommercial alternatives. Yet it can do so only with mandates and subsidies, which are very costly. Even if applied aggressively—and expensively—they would only nibble at the margin of oil use and never abolish oil's advantages of form and scale. The US still would need large amounts of oil, including imported oil. If the US lets the extremist pattern block Keystone XL, it will just commit large sums of money to small amounts of energy—relative to cost and need—from alternative sources. And the oil it would have imported by pipeline from Canada it will import by tanker from somewhere else.
The extremist campaign, based as it is on unrealistic hope for a sharply diminished share of oil in total energy supply, has led the US into too many policy mistakes—and, therefore, too much cost. In its handling of controversy over the Keystone XL project, the government has a chance to adapt its approach to conservation and alternative energy, both worth measured support, to a realistic set of assumptions about markets and energy.
With its XL project, TransCanada Keystone Pipeline LC proposes to create a pipeline system with nominal capacity to deliver 900,000 b/d crude oil to refineries near Houston and Port Arthur. The expanded access to heavy feedstocks would help high-conversion facilities in those areas, which recently have been hurt by diminishing supplies of heavy crude from Mexico and Venezuela and shrinking margins between heavy and light oils. The XL project would link with the existing Keystone pipeline between Alberta and the Upper Midwest and incorporate an extension under construction between southern Nebraska and Cushing, Okla. It also would be able to carry oil produced in the Bakken play of the Williston basin to Gulf Coast refineries. It would not extraordinarily threaten transit areas.
Efficiency and security
The project would enhance the efficiency of oil logistics and security of energy supply in the US. It would provide firm markets for Canadian producers of heavy oil. It would in no way detract from energy conservation or development of renewable energy. And it would not impose environmental costs out of proportion to benefits manifest in what it contributed to the secure supply of economic energy.
The State Department should approve the project. And when extremists whine about "dirty oil," it should respond, "Get real."
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