Sunday, January 4, 2015

Obama Knowingly Perpetuates the Falsehoods About the Canadian Keystone XL Pipeline

by Robert Janicki

In President Obama's last press conference of 2014, he once again misstated the elements of the Keystone XL Pipeline Project. Obama continued the canard that the project would only create a nominal number of American jobs, when median estimates are that 20,000 high paying jobs would be created in the two plus years of the construction phase of the pipeline.  Additional tens of thousands of permanent jobs would be created in the refineries and the oil by products market for further manufacturing and consumer end use.  It's estimated that close to a million jobs throughout the economy could be created as a result of the crude oil flowing into the United States through the XL Pipeline.  

Obama then further pushed the prevarication that the tar sands oil from Canada would simply pass through America to the Gulf Coast, only to be exported to the world market and thus would have no impact on gasoline prices in America.  That is an absolute lie and Obama knows it.  For forty years it has been illegal to export crude oil.  Now, that is not to say that refined products can't be exported.  However, the State Department analysis indicated that the results of the Keystone pipeline will not affect the export trend for refined oil products.   It is estimated that less than 10% of the thousands or so oil based products refined along the Gulf Coast will be for export, which is consistent with current export practices.

TransCanada (TC), the builder/operator of the proposed Keystone XL Pipeline is an oil pipeline transportation business.   TC has no financial ownership in anything, but the pipeline, as owner/operators.  TC does not own any of the tar sands oil to be shipped through its pipeline to the Gulf Coast.  The tar sands oil is going to be sold to the Gulf Coast refineries in Texas and Louisiana by the Canadian oil producers.  Valero, in Port Arthur, Texas, is the largest refinery along the Gulf Coast, along with many others, and the company is the world's largest independent refiner with other refineries in the United States, Canada and the UK.  

Valero currently processes approximately 3 million barrels of crude oil per day.  Valero is also one of the largest retailers of gasoline in the United States along with selling to independent gasoline retailers.  The TC pipeline will expand Valero's access to the crude oil supply in greater volumes economically unachievable by importing with ocean going oil tankers.  This is also true with the other oil refineries along the Gulf Coast, which will be purchasing the tar sands crude oil from the Canadian oil producing companies.

President Obama either has no idea how the world oil market works or how it is related to the ultimate price of gasoline in the United States.  The Canadian tar sands oil will be principally processed into gasoline and refined into its many byproducts, by the many oil refineries around the Gulf Coast.  It is yet to be determined where these finished products will find their end use, but the estimates are that the gasoline will enter the domestic American market along with the majority of byproducts.

In the final analysis all the Canadian tar sand oil products produced in the Gulf Coast refineries will contribute to the global market supply and will be priced according to global consumer demand.  The more oil products that are produced, including gasoline, will increase the global supply and thus reduce the global market price relative to the shrinking global demand.  As we have seen at the gas pump, the world oil products markets are currently experiencing an oversupply relative to demand, thus bringing down the price to the consumer, wherever that consumer is located.  Cheap and abundant fossil fuels are what made America the great industrial dynamo that it is today.  If America expects to maintain that same position in the world economy, it must continue to produce adequate supplies of crude oil and natural gas to match the demands placed upon our industrial base.

So, why is Obama doing everything possible to see to it that the XL Pipeline project never sees approval?  The answer is simple.  It does not fit the liberal model of control of as much of the economy as possible.  Warren Buffett, wealthy supporter of the Obama administration and other things liberal, will stand to lose money with his ownership interest in the BNSF railroad, which currently is the primary transportation means for the trickle of Canadian oil entering the U.S. refining.  

The other liberal constituencies that oppose the XL Pipeline Project, are a collective assortment of enviro-Nazis groups that oppose all forms of fossil fuels and the evil producers they consider are working against Mother Earth. These groups are major financial supporters of the Democrat Party and have a lot of power in the Obama administration.

Every analysis and assessment that has been made on the pipeline project has indicated no significant adverse affects on the environment, while indicating the economic benefits could be substantial.  Obama knows this, but has chosen to deny the facts in order to satisfy a very powerful Democrat constituency that funds Democrat candidates.
Rob Janicki is a retired educator, strong supporter of the 2nd amendment and all around good guy, as well as owner/operator of the website Wired Right  and owes me 20 bucks.