...that and more about TransCanada's Keystone XL Pipeline below.
Via U.S. News and World Report (September 22, 2015) Breaking a longstanding silence, Hillary Clinton now says she opposes building the Keystone XL pipeline. She said the project has been "a distraction" — and that she doesn't believe it's in the best interest of "what we need to do to combat climate change."
But it was just a few weeks ago (when she was asked about her support for the pipeline) — when she waffled and said that if the issue was still undecided when she becomes president, then would she answer that question. What made her changer her mind since then? Was it Bernie Sanders' rise in the polls — who's now beating her in Iowa and New Hampshire? Is she just pandering for votes to fulfill her ambition of becoming President? Sanders has always been against this pipeline.
Let's look at what's happening here...
Via Reuters: Last July Speaker John Boehner expressed his support for repealing the 40-year-old ban on domestic crude oil exports, saying repealing the U.S. ban would create 1 million jobs and help bring down gasoline prices for consumers. U.S. oil producers had hoped that Congress will repeal the trade restriction, which they said had led to an oil glut that threatens to choke the drilling boom.
But wasn't the whole point of "Drill, Baby, Drill!" and fracking was to make America more "energy independent". If a "glut" brings down the cost of energy and gasoline, isn't that supposed to be a "good thing" for American consumers?
Via the Wall Street Journal (January 2015) "World’s Largest Traders use Offshore Supertankers to Store Oil: Companies are Buying Oil Now to Sell Later When Prices Rise"
The opportunity to stockpile oil in such large quantities has come from the dramatic shift in the market for the commodity in recent months. Since June, prices have collapsed, tumbling by more than 50% amid soaring production from the U.S. and unwavering output from the Organization of the Petroleum Exporting Countries, at a time when global economic growth—the main determinant of demand—is slowing.
And more recently via Energy and Capital (September 18, 2015):
The oil and gas rig count continues to stagnate and the oil price hasn't seen $50 in more than a month. It's been a hard market for oil companies all year, and the ongoing glut doesn't seem to be easing as quickly as anyone would like. But, as they are prone to do, versatile oil companies have found a way to profit off the lows. Oil traders Glencore Plc and Vitol Group this month have taken advantage of a phenomenon called a contango: a time when a commodity's future price is higher than its current price. No matter the current state of the oil market, the price is expected to rise again eventually. This week, in fact, OPEC asserted that U.S. production will soon slow and that oil prices would see $80 again by 2020. But the contango may offer producers a way to keep producing. You see, if oil companies can find a profitable way to store excess oil supply, then there is little reason to cut back. Understand, U.S. shale oil drillers have only recently begun lowering production. Many companies have been able to keep break-even prices low, and thus stay profitable. Being able to store and sell supply later at a higher price than the current cash price is just another way for companies to stay cost-effective in the harsh market we have now.
This reminds me of when Goldman Sachs, Morgan Stanley and JP Morgan Chase were being accused of deliberately manipulating the prices of oil and other commodity prices. The Sarbanes-Oxley law was supposed to act as a deterrent to these kinds of practices, but apparently it has been about as ineffective in reining in Wall Street as Dodd-Frank. See this MSNBC report at YouTube.
It's been reported that the Koch brothers would profit from the most from oil sands, whereas Warren Buffett might profit more without the pipeline because he owns the railroads. But regardless, here are some of the pros and cons of the pipeline via Hutchnews.com in Hutchinson, Kansas: "Keystone Pipeline Debate Rages On" (September 20, 2015 by Julie Doll of Wichita)
Seven years ago this month, TransCanada Corp. filed an application with the U.S. government for a pipeline that would transport oil from Canada across the United States. Seven years … and TransCanada is still waiting for an answer from President Barack Obama.
When it comes to the things that frustrate and irk Americans about government, the Keystone XL pipeline decision stands as a poster child.
Hundreds of lawyers and lobbyists have enriched themselves as TransCanada and opponents of the Keystone XL have battled in court, regulators’ offices and Congress over the proposal. A similar number of environmental experts and energy consultants also have profited from the controversy.
But Obama so far has refused to issue a decision in the inexcusably long debate, apparently because he doesn’t want to anger environmentalists or voters in states where Democrats are something of an endangered species.
While seven years of lawsuits and studies undoubtedly have kept many suits and government workers gainfully employed, they have not served the country well.
When it was proposed, the Keystone XL appeared nothing out of the ordinary. It was similar to – and would connect with – another pipeline already operated by TransCanada.
Pipelines crisscross virtually every part of the U.S. They carry natural gas, oil and other products. In Nebraska alone – where environmentalists made their most successful political and legal stand against the Keystone project – there are more than 20,000 miles of pipeline carrying hazardous liquids and natural gas, according to the Nebraska Pipeline Association, an industry group.
The proposed XL pipeline would transport oil from Canadian fields to the existing Keystone pipeline in Nebraska, before heading south through existing lines in Kansas and into Oklahoma. From Oklahoma, the XL pipeline continues south, delivering oil to a port or ports along the Gulf in Texas.
Pipelines offer a safer means of transporting fuel than do trains or trucks. That’s not to say that pipelines are free of problems. The history of leaks and explosions makes clear that no means of transport is absolutely safe. But when it comes to protecting the public’s health and safety, pipelines offer a superior record than either highways or railroads.
But the Keystone debate isn’t about safety, it’s about the environment, and it has become a political rallying cry for environmental groups coast to coast.
In the beginning, environmental groups opposed the pipeline on the grounds that it endangered the Nebraska Sandhills ecosystem. When TransCanada moved the proposed pipeline to address those concerns, environmental groups modified their argument. It’s now a battle over mining and climate change.
Environmental groups don’t want production of oil from what are known as the Canadian tar sands, from which oil that would move through the Keystone XL would come. Oil production from tar sands is different from the oil wells that dot parts of Kansas. It’s more like mining, including the moving of surface soil and rock and the removal of vegetation.
Environmentalists object to the mining of the tar sands, of course. But that opposition alone doesn’t offer much legal standing for opposing the pipeline because it doesn’t address the impact of the project on the United States, which is what the U.S. State Department supposedly is assessing.
So the opponents’ legal and public relations campaigns have turned to how the pipeline would facilitate the mining of the tar sands oil and thereby worsen the carbon emissions that contribute to climate change. And because climate change is bad for the United States, the argument goes, anything that contributes to it must be culled or killed.
But as TransCanada and many others in Canada and the U.S. have pointed out, stopping the pipeline won’t stop the mining of the tar sands for oil.
With crude oil prices where they are these days, the financial viability of tar sands production becomes a real issue. As oil prices drop, the profits from production evaporate. But as long as companies see the production as feasible, they will continue to get oil from the tar sands – in Canada and elsewhere.
And if they continue, only so many options exist for moving the oil. With their fight against the pipeline, opponents are pressing for less safe methods for transport. Their opposition means that they prefer that trains and trucks, which pose greater risks to the public, should be used to haul the hundreds of thousands of barrels of oil each day across the country.
The Keystone foes will argue that is not their stance at all, that they are fighting to stop not just the pipeline but also the tar sands oil production. But after seven years, their fighting has not stopped production. TransCanada has made plain that it will find other means to produce and move the oil if the pipeline is rejected.
And if Obama denies the permit, TransCanada could challenge the decision under the trade agreements that exist between the United States and Canada. Several trade experts think the U.S. likely would lose such a challenge.
That would mean a whole new venue for the lawyers, and, who knows, the argument could drag on another seven years.
* Personally, I don't think America's natural resources should be monopolized by a few corporations, and that natural commodities (such as crude oil, drinking water and the air we breath) should all be nationalized and owned by THE PEOPLE — and/or that royalties for oil should be paid to the citizens.
Keystone Pipeline: Who Owns the Oil, and Why?
Canada Seizes American Property for Oil Pipeline