Tar Sands Oil: You Can Stall It, But I Doubt You Can Stop It

May 27th, 2013 at 9:57 am

Update: Nice point by Dean Baker on this–making it more expensive to get tar sands oil to market, e.g., by blocking Keystone, is analogous to a carbon tax.  And that is a good thing.

 

In a recent New Yorker piece, Elizabeth Kolbert argues that President Obama should reject the Keystone pipeline to “put a brake on the process” of extracting this highly polluting energy source from Alberta’s tar sands.

It’s a timely argument because approval of the pipeline’s construction is at the top of the Republican’s wish list, and they’ll continue hammering on it until they get it (it’s their main jobs program, though it will only create a few thousand temporary construction jobs).  If the President doesn’t approve it in time for the debt ceiling debate, I’ll bet you a metric ton of CO2 that it’s a Republican condition for raising the ceiling.

However, while her argument is timely, it’s not very strong.  Here’s the problem:

“It’s overwhelmingly likely the oil would find another way to market,” USA Today observed in a recent editorial. For instance, a pipeline could be built to British Columbia, and the oil shipped from there to China, though there are many political and logistic barriers to such a plan—among them the Canadian Rockies.

Sure, the Canadians and everyone else in the energy-supply chain business would rather move this goop south through the relatively unencumbered American Midwest, on through our southern ports and onto the world market.  But if they can’t do that, as long as they can sell it for more than it costs to extract and move it—and by “costs,” I’m decidedly not including the heavily discounted environmental costs—then extract and move it they will.

In this regard, the only compelling reason to “put on the brakes” would be if there was some hope of keeping this stuff in the ground.  The fact that tar sands extraction releases “significantly more carbon dioxide” than the ordinary stuff won’t do it.  No one in power is saying “keep it in the ground.”  Though what we should be arguing about is the cost/benefit ratio of extracting oil from tar sands, instead we’re arguing about whether its delivery mechanism–the pipeline–is up to code.  Once again, we’re missing the endangered forest for the trees.

Fundamentally, the problem is with the President’s “all of the above” energy strategy, specifically the “all” part.  It’s a smart political strategy, because it diffuses the opposition’s drill3 position while giving Obama the space to simultaneously pursue renewables.  But it means you don’t get to say, “sorry…‘all’ doesn’t include this stuff.”

Making it harder to get tar sand oil on the world market might gain the air and the oceans a few years, which ain’t nothing.  But it’s not much either.

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11 comments in reply to "Tar Sands Oil: You Can Stall It, But I Doubt You Can Stop It"

  1. Bob Wyman says:

    You are probably right that the oil sands exploitation cannot be stopped. The same is probably true of fracking for oil and gas in most of the country. Thus, it seems that environmentalists might be better served by working to reduce the demand for fossil fuels rather than fighting its production.

    Here in New York City, studies show that up to 800,000 of the city’s buildings (mostly outside Manhattan) could be heated and cooled using ground source heat pumps (GeoExchange) thus eliminating the need for massive amounts of fossil fuel burning. When coupled with renewable energy sources like wind and solar, GeoExchange systems are emissions-free. In many cases, use of GeoExchange would dramatically reduce operating costs and result in a nice ROI — even though the upfront capital expense would be substantial.

    The question isn’t “if” we’ll exploit GeoExchange in the future, rather it is “when” will we get started on the project in earnest. While some might argue about the time line, we know that fossil fuel prices will eventually become prohibitive and we know that because of the cumulative effect of fossil fuel pollution, eventually the people and government will require that we stop burning fossil fuels for heat and power. Given the available technologies, GeoExchange and heat pumps in general present the only prospect for heating and cooling buildings at acceptable costs and with acceptable, zero-emissions.

    Working to eliminate the demand for fossil fuels might, in fact, be the most effective way to reduce the pressure to develop new sources of the stuff. We know that we will eventually, have a fossil-fuel-free-future. What we don’t know is when that will happen. It’s time we got started on making it happen.


  2. grunculus says:

    It’s not a slam dunk that BC will allow a larger pipeline to move the tar sands oil to port. There’s a lot of opposition to moving the oil that way. http://en.wikipedia.org/wiki/Enbridge_Northern_Gateway_Pipelines But it may not matter all that much…

    I expect that Obama will approve the KXL pipeline through the US. But, though it has been pooh-poohed, http://www.nytimes.com/2013/05/09/business/energy-environment/a-call-for-quid-pro-quo-on-keystone-pipeline-approval.html?pagewanted=all , I expect that when he does so he will simultaneously have the EPA tighten standards to try to reduce carbon emissions in other ways, or try to get something else meaningful out of the Republicans in the process.

    We’ll see.

    My $0.02.

    Cheers,
    Scott.


  3. Tenney Naumer says:

    Clearly the main reasons for not approving the Keystone XL are psychological and political, and these two reasons outweigh the fact that the oil will get to market by other means.

    In no case has the oil and gas industry been stymied by the administration, while we know that we must invest in renewables like wind and solar on a grand scale or two bad things are going to happen: (1) China will eat our lunch, and (2) the planet’s climate will become unlivable that much faster.

    Obama cannot both lead on climate and approve the Keystone XL.

    If he approves the Keystone XL, the backlash will be severe and sustained. It will not be this week’s news and then people will move on to something else.


  4. The Raven says:

    You’re forgetting how dirty pipelines and tar sands oil refining can be. So, if Canada wants the revenues, let Canada accept the pollution. And who knows? Maybe Canada won’t accept the pollution. Meantime, the more we delay, the more opportunity we have to deploy an alternative.

    Kraw, kraw, can’t eat poisoned flesh, kraw.


    • Kevin Rica says:

      There is no need to panic.

      Petroleum coke has been around for a long time.

      http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCKRPUS1&f=M

      http://www.eia.gov/todayinenergy/detail.cfm?id=6430

      I know that it scares a lot of people who aren’t familiar with the oil industry, but after the first energy crisis of the 1970s, oil was too valuable to be used anymore as boiler fuel or for electrical generation. So the U.S. refining industry spent the money and developed new techniques to use the heavier (bigger molecules) portions of the oil barrel and break them down into small the molecules that make up gasoline, diesel, jet fuel etc.

      One of those techniques is called coking. Because the big molecules have too high a proportion of carbon, this carbon residue is left over as pet coke.

      Having it there is like having a big pile of coal. For the most part, it is chemically inert. It is ugly and a minor environmental problem. The fact that it is there shows you that the Koch brothers (pronounced “coke”) are dumb, arrogant jerks.

      However, it is not something new and unique to tar sands. It is also produced from the refining of other heavy crudes, as from Mexico, Ecuador, Venezuela, and California. This is where gasoline and heating oil come from.


  5. Kevin Rica says:

    The environment is not the only thing (no matter how important) that matters.
    The real reason that the Canadian want Keystone is because it will bring really heavy crude to the U.S. Gulf Coast refinery complex. That is where the refineries best able to process the oil is. Also, pipeline is the cheapest and, contrary to popular rumor (or meme), safest way of transporting oil.

    When it does reach the Gulf, it’s mostly going to back out Venezuelan crude (which is in decline due to abnormal stupidity and is also being set half way around the world for exceptionally stupid reasons and to pay back Chinese loans) and maybe some Mexican (which is in decline for a combination of political and normal geological reasons).

    So when this happens:

    http://www.google.com/hostednews/afp/article/ALeqM5jrGKZdai9HKrGB2QH5ozmTSn4ZdQ?docId=CNG.c68171d74f240ae3053cd1bf5505ede2.61

    Canada will keep on digging. Energy security.


  6. Ross Hammond says:

    I’m sorry, but citing a USA Today editorial as proof that the oil will somehow makes it way to market anyways so we might as well just accept it just does not cut it. It’s just not so — aside from the physical issue of the Rockies, Canada has to deal with First Nations in British Columbia which have way more rights than Native Americans in the US and who are dead set opposed. Going east is not a viable option either. And remember, not just any old refinery can process this stuff — Gulf coast refineries have seen massive investments in recent years to make sure they can process This is why oil industry analysts and Canadian officials — not just environmentalists — are unanimous in their belief Keystone is critical to further development of the tar sands. It’s also why the Canadian government is spending millions of dollars on a sophisticated lobbying campaign to ensure that smart people like you swallow their deceptions. Look into the issues around Keystone a little harder — you’ll be surprised what you find.


  7. Dave says:

    If people were thinking strategically about our resources, they’d be thinking not so much about keeping that oil in the ground as thinking of a better long-term use for it. When oil runs dry as a source of energy, clearly we will be using something else. But the cost of producing things like plastic and other hydrocarbon derivative products will skyrocket, and it would make a better strategic policy to try to keep some of that oil for those purposes rather than burning it.


  8. Kevin Rica says:

    Stopping the Keystone pipeline is in no way analogous to a carbon tax. A carbon tax would be applied equally to all sources of carbon, not just oil from a specific source (only from Canada, not from Saudi Arabia or Venezuela).

    And unlike a tax, stopping Keystone will produce no government revenues although it will reduce real incomes and, in fact, is quite regressive in the U.S.

    And I hate to break this to people, but carbon taxes are overrated.

    At the beginning of the last decade, OPEC was struggling to maintain crude prices at $20/bbl, after the bubble burst at $35 in late 2000.

    During 2013, Brent blend, now the global benchmark, has been fluctuating between $100 and $120.

    Call it $100. The $80 difference between 2001 and today is the equivalent of a $160/MT carbon tax (burning one barrel oil produces 1/2 MT of CO2). And U.S. oil consumption has now fallen 10% below its peak. A carbon tax does little. Stopping Keystone just raises royalties for the owners of mineral rights.

    OPEC’s job is to keep prices high by constraining consumption. Now, they have others to do their labors for them.

    11 of the last 12 recessions were preceded by oil price spikes.

    Let’s hope that next year’s fall political fashions involve something new besides stopping Keystone.


  9. Mike McCracken says:

    If heavy oil does not reach a market then there will be a loss of revenue to the owner of the resource. This is the Government of Alberta and to a lesser extent the Canadian federal government through reduced corporate income taxes.

    These losses will be made up by some combination of tax increases and expenditure reductions in Canada.

    It would appear to make more sense to upgrade the heavy oil in Canada to light crude and to fill in the holes with the waste petroleum coke, all without transporting the material all over North America. Light crude or oil products are relatively more benign to handle. The cost of upgrading in Canada would be offset to some degree by lower transport costs on a smaller volume of oil products.



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