The Key to Keystone

December 27th, 2011 at 9:37 am

I’ve found much of the Keystone Pipeline analysis to be lacking.

One of the main arguments against it—the potential damage caused by leaks of the particularly dense goop extracted from the Canadian tar sands—is of course perfectly sound, especially given the environmental sensitivity of the planned route.  But a) they’ll just change the route (as TransCanada, the potential builder, has already announced), and b) this is kind of a NIMBY argument anyway.  Why should we feel better is this stuff mucks up Vancouver, BC instead of Nebraska?

The more convincing arguments are those of climate scientists who warn that based on the magnitude of Canada’s tar sands deposits and the energy needed to extract oil from them, this stuff will dangerously accelerate global warming.   Here, the work of the reliably correct James Hansen is…um…sobering, to put it mildly.

But there’s a fundamental problem with this argument as well, and it’s not with the science, it’s with the politics.  As long as this stuff a) exists in known deposits, b) is in demand, c) can be profitably extracted, and d) is not viewed as a global hazard for which there are safe, economic alternatives, then extracted it will be.

This piece by the NYT usefully covers these issues.   It quotes Canada’s PM thusly:

“I am very serious about selling our oil off this continent, selling our energy products off to China,”

And while the piece importantly notes that the Obama administration will likely not be jammed by the payroll tax/UI deal that insisted on a quick decision (i.e., the President won’t approve it), it also points out that:

..experts in oil economics say that the oil is coming out of the ground in any event because of steadily growing global demand and the heavy investment in infrastructure already made in Alberta.

That sounds right to me, and in this regard, the most important comment in the piece is by activist Bill McKibbon:

“Stopping Keystone will buy time,” he said, “and hopefully that time will be used for the planet to come to its senses around climate change.”

If that doesn’t occur soon, then oil from the tar sands will flow, and it will keep flowing until we put a price on carbon or come to our senses, whichever comes first.


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8 comments in reply to "The Key to Keystone"

  1. Nick says:

    Suzie Madrak @ C&L has other points “Keystone XL would be Canada’s first step in diversifying its energy market. The pipeline would divert large volumes of Canadian oil from the Midwest to the Gulf Coast, where it would be available for the first time to buyers on the world market. To sweeten the deal, many of the refineries on the Gulf Coast happen to be located in foreign trade zones, where they can export Canadian oil to the world market without paying U.S. taxes.” See – – for the rest of the story.

  2. Michael says:

    Vancouver BC already rejected this plan. So it’s not NIMBY, it’s just shutting down the idea.

  3. davesnyd says:

    I thought the route objection was because it through a critical ground water supply region? If so, that’s less NIMBY than a whole lot of people’s backyards (i.e., more regional/global than local).

    You’re the economist– aren’t you supposed to conclude this piece by suggesting that given the externality of the problem (global warming), the right way to handle this is to allow it to proceed but make sure that the appropriate carbon taxes are in place to mitigate the damage?

    • Michael says:

      The appropriate carbon taxes are punitive, and an economist says that an untrustworthy entity like TransCanada shouldn’t get any of our business.

  4. markg8 says:

    Currently at least some of this oil goes down the Great Lakes to refineries like the BP plant in Whiting IN for the Chicago and other Midwest markets. There may be more to the politics involved when conservative Canadians and Texan oil barons want to ship a big chunk of the Midwest’s oil supply where there is political rebellion to GOP rule (recalls of Walker in WI, Kasich’s union bill, a possible recall of Snyder in MI, and a Democratic governor and assembly in IL) instead to China and/or Gulf ports where the products can be exported tax free. It may be paranoid but that doesn’t mean the powers that be aren’t out to punish the Upper Midwest for the temerity of opposing their plans. And in 5 or 10 years when high energy prices drive business to red states or red countries who is going to remember the real cause and fix the blame where it belongs if no one even recognizes it as it’s happening?

  5. Tom Cantlon says:

    Thanks for articulating my vague problem with objections to this pipeline. I’m an environmental supporter and concerned about climate change but this seems like a poor expenditure of political capital. The thing is as long as their is demand for fossil fuel we will mine it, drill it, get it someway and one way is not much better than another. Stop tar sands here and it will be deep sea drilled there. By whichever method is economically most feasible. It’s kind of a side issue to green energy. Get green energy going so well that, A: it’s cheaper than tar sands, or B: it’s so close to the same that the environmental concerns easily veto a small difference in cost, and poof, tar sands and coal mining and deep sea drilling all get solved. Until then Obama is getting demonized by environmentalists, and progressives are expending political capital on it, using what political chips they have to cash in on this instead of other progress, and giving conservatives something to say the environmentalists are not practical, are just purists who damage the economy.

    • Michael says:

      Meh, Obama’s a lousy President, so progressives don’t need to “demonize” him. He’s the one that tried to make 9% unemployment the New Normal.

  6. Jake Lopata says:

    I agree, we need the oil because of our dependence on it:

    If you would like more analysis on this topic, James Hamilton (there is a link) often comments on the Keystone XL pipeline with great detail. Must read.