Reality Check: New Keystone XL Report Blows Up Steven Chu's "Energy Security" Claim

Fri, 2011-09-02 14:16Ben Jervey
Ben Jervey's picture

Reality Check: New Keystone XL Report Blows Up Steven Chu's "Energy Security" Claim

Earlier this week, in an interview with EnergyNow!, U.S. Energy Secretary Steven Chu hinted that the administration would likely approve the Keystone XL tar sands pipeline. The controversial pipeline, which would carry filthy diluted bitumen (or DilBit) crude 1,700 miles across six Great Plains states, 1,904 waterways, and the nation’s largest freshwater aquifer, needs State Department approval to cross the international border. Opposition to the pipeline is fierce – over the past two weeks over 1,000 activists have been arrested at the White House in a massive act of civil disobedience – as environmentalists, Great Plains landowners, scientists, and public health activists alike warn of the inevitable oil spills and immense carbon pollution that would result from Keystone XL’s construction.
 
Proponents of the pipeline have been pushing the claim that building this pipeline will improve our energy security and reduce our dependence on oil from Venezuela and the Middle East. Companies like TransCanada, the Canadian energy company hoping to build the pipeline, and Valero, the Texas-based refinery company that stands to profit the most from the DilBit crude that it would deliver – have been more than happy to help perpetuate that myth, even if their internal discussions and the economics of the oil industry don’t back it up.  

Unfortunately, Secretary Chu’s interview on Wednesday revealed that the administration is going to use this false claim as political cover if (or, more realistically, when) they approve the construction of Keystone XL. Here’s the interview:




This is terribly cynical politics, as surely Secretary Chu – a Nobel-winning physicist and truly one of the world’s premier energy experts – knows the folly of this “energy security” argument.

A report released earlier this week by Oil Change International highlights just how wrong the claim is. In “Exporting Energy Security: Keystone XL Exposed” (pdf), the authors look at Energy Information Administration data, corporate disclosures from TransCanada and Valero Energy, and oil market analyst reports, and conclude that “the idea that Keystone XL will decrease America’s dependence on foreign oil is demonstrably false.”

The report, which is worth reading in full, draws three stark conclusions:
 
  1. The Keystone XL pipeline is an export pipeline.  The Gulf Coast refiners at the end of the pipeline’s route are focused on expanding  exports, and the nature of the tar sands crude Keystone XL delivers enhances their capacity to do so.
  2. Valero, the top beneficiary of the Keystone XL pipeline, has recently explicitly detailed an export strategy to its investors.  The nation’s top refiner has locked in at least 20 percent of the pipeline’s capacity, and, because its refinery in Port Arthur is within a Foreign Trade Zone, the company will accomplish its export strategy tax free.
  3. The oil market has changed markedly in the last several years, with U.S. demand decreasing, and U.S. production increasing for the first time in 40 years. Higher fuel economy standards and slow economic growth have led to a decline in U.S. gasoline demand, while technological advances have opened up new sources in the U.S. Increasingly, U.S. refiners are turning to export.

Earlier this week, Glenn Hurowitz, senior fellow at the Center for International Policy, made a similar, tangential case. Hurowitz argued, in fact, that “Drilling in North America is the single greatest threat to our nation’s energy security.”

He continues:
Here’s the reality: Protecting the United States’ energy security means keeping our continent’s oil in the ground for when we need it in an emergency. The United States and Canada combined hold less than 5 percent of the world’s proven oil reserves. Thanks in part to expanded domestic drilling during the Obama administration, we’re depleting those reserves at a high rate. That means we have far less oil to fall back on in the event of true emergency, like an oil embargo or a major war when access to foreign oil supplies becomes difficult or even impossible. If we’re really concerned about security, tar-sands oil should be a last-gap, man-the-barricades option – something we as a society hope we never have to use….

It’s important to contrast this depletion reality with the old canard that the oil industry and its backers continue to push: that drilling domestically somehow reduces the flow of money to the Middle East and other unstable oil suppliers. In practice, basic oil-industry economics show the opposite. Because Middle Eastern and Venezuelan oil is so much cheaper to produce and more plentiful than remaining domestic oil reserves, those countries can almost always outcompete domestic U.S. competitors and still maintain their enormous profit margins and high levels of production. Saudi and Iraqi oil, for instance, costs just $4-$6 per barrel to produce with another $2-$3 tacked on for transportation costs (costs are similar for Iranian oil). Production costs for tar-sands oil clock in at a minimum of $30 per barrel; costs for other domestic sources are similar

DeSmogBlog has been all over the Keystone XL story. For some background, check out this post on how the State Department’s Environmental Impact Statement was woefully incomplete, this post on the many problems with tar sands pipelines, and this great infographic on how TransCanada’s Keystone pipelines are “built to spill.” Also, this Keystone XL Tar Sands Pipeline Action page has links to just about every resource you could ever possibly hope to find.
 

Comments

“Here’s the reality: Protecting the United States’ energy security means keeping our continent’s oil in the ground for when we need it in an emergency.”

Exactly. The USA & every other country has the opportunity to use renewables NOW, which WILL ensure energy security & prevent dependence on external sources for energy. It’s ludicrous.

We might as well use renewables while we can. Our planet, whether it’s via natural causes or human induced, will in all likelihood dish up inhospitable future climates & weather. If we need those fossil fuels for energy as a populous for survival in an emergency & they are depleted, we are screwed.




 

Btw, I gather techs are still working on the site changes, but blockquoting doesn’t seem to work.

Testing the link tool:

http://www.nap.edu/openbook.php?record_id=13111&page=142

Hmmm, creates a clickable hyperlink when you create the link, but when you save, it goes back to non clickable.


 

Anonymous/PhilM, knowing that you are my name impersonating dopelganger , I could only imagine that clicking on that clink will lead to either a PC infection, or some right wing propaganda out of context progaganda piece.

 

Haha! I actually agree with the real Phil on this one. I’m very reluctant to click on any link from tinyurl these days.

**edit**

Ok, curiosity got the best of me and I actually visited the link. It’s a video from a site called the “Daily Caller” and they’ve picked on a few of the pipeline protesters in a funny, ‘Jay Leno meets the public’ style of interview. It’s harmless, but demeaning to the ‘movement’ I guess.

http://dailycaller.com/2011/09/01/protesters-explain-why-tar-sands-are-evil-video/

Obama halts controversial EPA regulation

http://news.yahoo.com/obama-halts-controversial-epa-regulation-143731156.html

WASHINGTON (AP) — President Barack Obama on Friday scrapped his administration’s controversial plans to tighten smog rules, bowing to the demands of congressional Republicans and some business leaders.

Obama overruled the Environmental Protection Agency — and the unanimous opinion of its independent panel of scientific advisers — and directed administrator Lisa Jackson to withdraw the proposed regulation to reduce concentrations of ground-level ozone, smog’s main ingredient. The decision rests in part on reducing regulatory burdens and uncertainty for businesses at a time of rampant uncertainty about an unsteady economy.”

I thought Obama and Chu were the planet healers.

If you’ve lost them, where can you turn? nowhere  - anyone replacing them is going to be more industry and pipeline friendly than they are.

It seems clear that there will be no grand green revolution in the foreseeable future.

“If you’ve lost them, where can you turn? nowhere  - anyone replacing them is going to be more industry and pipeline friendly than they are.”

Out of interest Rick, for you being a Republican. Which one of the Republican front runners would you like to see win if they do happen to tip Obama?

The  ultra Christian Rick Perry? Or the nutter that makes Sarah Palin look smart, Michelle Bachman?

Obviously if any Republican was going to win, Democrats would probably prefer either Jon Hunstman or Ron Paul.  First preference would be Jon Huntsman who appears more center-right than the other far right candidates. He is also pro science.  Despite winning most popularity polls Ron Paul has his own party & right wing media against him. Any government he would lead would be extremely hostile towards him & wouldn’t play ball. But while Ron Paul hasn’t been totaly pro science & supportive like Hunstman, he has said some encouraging things:

http://www.ronpaul.com/on-the-issues/global-warming/

Ron Paul:

The question is: how much? Rather than taking a “sky is falling” approach, I think there are common-sense steps we can take to cut emissions and preserve our environment. I am, after all, a conservative and seek to conserve not just American traditions and our Constitution, but our natural resources as well.

We should start by ending subsidies for oil companies. And we should never, ever go to war to protect our perceived oil interests. If oil were allowed to rise to its natural price, there would be tremendous market incentives to find alternate sources of energy. At the same time, I can’t support government “investment” in alternative sources either, for this is not investment at all.”

Not so good ending renewable subsidies, but ending oil subsidies…good.

I’ve mentioned here a few times what Ron Paul mentions about conservatives, that if they are truly conservatives….then why don’t they want to conserve the environment or even their own natural resources?

On biofuels & the stupid trend of using our staple food crops as biofuels.

“Congress decided that we needed more biofuels, and the best choice was ethanol from corn. So we subsidized corn farmers at the expense of others, and investment in other types of renewables was crowded out. Now it turns out that corn ethanol is inefficient, and it actually takes more energy to produce the fuel than you get when you burn it. The most efficient ethanol may come from hemp, but hemp production is illegal and there has been little progress on hemp ethanol.”

We are going to have even more food supply issues in the future & fuel companies want to use our food for fuel? Why not hemp? It’s fast growing & you can get a couple of crops a year, which wouldn’t impact on our staple foods. People need to distinguish the difference between the plant that has high THC & the one (HEMP) that has low THC. Although, there is also huge resistance from the cotton industry against hemp.

“It seems clear that there will be no grand green revolution in the foreseeable future.”

Well, not in the USA anyway, there are other countries on the planet you do realise? There is a lot of cleantech being adopted in the USA, but legislation from both parties are sure to kill it off in the near future.













 

No - I’m not a republican Im more of an equal opportunity critic.

Part of my thinking is that anyone who gains power (and it won’t be Ron Paul) will be so beholden to and intensely pressured by all sides that he or she will be quite ineffective.

The most success he could hope for is personal fame and fortune.
Making a discernible lasting positive difference in the world? doubt it.

I expect Palin to endorse Perry and Perry probably wins.

Palin takes a position in the administration - secretary of state - and then in about 12 years she might run and win.

But you know, it’s all for personal ambition of self centered ego driven individuals. No planets will be saved by any of them

Ok conservative then. If you don’t live in the USA, republican is meaningless outside of there.

But you get what I mean. You are obviously a conservative voter, as you have rather a militant stance against environmentalists, greenies & progressives etc. You never mention a bad word about right wingers & defend them at every opportunity.

It’s funny when you encounter people who have a long history of very obvious ideology, to hear them when asked, say that they are a swinging voter, or don’t take sides….or “equal opportunity critic”.

“Palin takes a position in the administration - secretary of state - and then in about 12 years she might run and win.”

That would be a sadder day for America than GWB.




 

It’s an understandable misinterpretation.

Desmog takes a liberal, environmental approach to things. That’s fine but as a critic I tend to draw attention to the other side of the coin. For example you say Palin becoming president would be a sad day, so I would argue that none of the other candidates are going to accomplish anything beyond personal fame and fortune either. That doesn’t mean I’m pro Palin. It means I’m questioning your assumptions about Obama or whoever else you might put forward. None of these individuals will turn out to be saviors.

If desmog was conservative in nature, you might perceive me as a liberal. I’d be telling you that Palin is all about Palin. She’s totally invested in her own perceptions and in her self image. She will probably start some regrettable wars and do lasting damage.

You can feel free to substitute Obama in for Palin in that last paragraph. It works both ways.

It’s an understandable misinterpretation.

Desmog takes a liberal, environmental approach to things. That’s fine but as a critic I tend to draw attention to the other side of the coin.”

Cmon Rick, there is no need to be coy. You have said nothing on this blog to indicate you have a balanced view or are bipartisan. Your posts are pro fosssil fuel, AGW denialst, pro conservative. Please show where you have been bipartisan or criticized the right, like you have the left?

Rick:

“If there seems to be a drift to the right, its all about improving economic conditions.”

Become ONLY the right can deliver this naturally.

Rick:

“Wealth and energy must be stopped. There is a serious danger of prosperity.”

Classic conservative class warfare propaganda messaging. Or your troll comment ( which was deleted) on the xstrata post where you said we could irrigate Texas with environmentalists tears?

Oh yeah……..so bipartisan. Please point to a right leaning blog where you have had an opposing stance to theirs, or stance where it just appears like you oppose them because you are being balanced.








 

Well I’m trying to be neutral. I may not always be entirely successful.
I’ll see what I can do.

It’s all Bushs fault. How am I doing so far?

httphttp://www.greatfallstribune.com/article/20110903/NEWS01/109030305/Report-Keystone-XL-being-used-exports-misleading-refinery-says?odyssey=mod%7Cnewswell%7Ctext%7CFrontpage%7Cs

://www.publicbroadcasting.net/netradio/news.newsmain/article/0/0/1782795/Nebraska.News/Gult.Coast.refiners.could.pass.on.discount.from.Canadian.crude

Here is the other side of the story, regarding exports and pricing.  The idea that a large fraction of this flow would go to exports seems far fetched.  But if the pipeline is not built, the Canadians will definitely find a way to get it to their east coast or west coast and export most of it.  The price of oil is going up.  World demand is too high, and supplies from most oil producing nations have peaked. 

I am not commenting on the potential spill risk.  My background is in economics, not engineering or hydrology.

[x]

Last December, the first full train carrying tar sands crude left the Canexus Bruderheim terminal outside of Edmonton, Alberta, bound for an unloading terminal somewhere in the United States.

Canadian heavy crude, as the tar sands is labeled for market purposes, had ridden the rails in very limited capacity in years previous — loaded into tank cars and bundled with other products as part of so-called “manifest” shipments. But to the best of industry analysts’ knowledge, never before had...

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