This is a guest post by Gus Van Harten, professor at the Osgoode Hall Law School and author of Sold Down the Yangtze: Canada's Lopsided Investment Deal with China. This post originally...
There are four days left to submit a public comment to the State Department on the Keystone XL pipeline. As we’ve reported time and time again here on DeSmogBlog, the proposed Keystone XL tar sands pipeline would not improve America’s energy security as proponents of the pipeline insist. Nor would completion of the pipeline reduce gas prices here in America, another common claim.
Over a year ago, when the State Department was turning down TransCanada’s first bid, we took a look at why and how Keystone XL wouldn’t reduce gas prices here in the U.S.
This week, Public Citizen released a report that piles on a whole lot more evidence to support this fact. In fact, it makes a rock solid economic case that construction of the pipeline would almost certainly result in an increase in gas prices in the American Midwest. An increase.
For the report, titled “America Can’t Afford the Keystone Pipeline” (PDF download here), Public Citizen analyzed an abundance of data and found that average U.S. gas prices over the past year would have been as much as 3.5-percent lower had there not been any exports of oil. Because Keystone XL would primarily be an export pipeline (as we’ve reported again and again, and as Canadian Energy Minister Ken Hughes has recently admitted), all evidence points to the fact that construction of the pipeline would actually increase gas prices.
Here’s a quick rundown of the report’s main takeaways.
After many weeks of silence, Republican politicians and the dirty energy industry have re-launched their attacks on President Obama and Democrats over the price of gasoline. The silence from these groups was the result of a price drop for most of the summer, but a price increase over the last few weeks has once again caused the old familiar, and debunked, talking points about Obama raising gas prices to resurface.
Leading the charge is the National Republican Congressional Committee (NRCC), which this week issued a press release claiming that “Democrats aren’t working” for America because gas prices are at an all-time high. Their solution? Immediately approve the Keystone XL pipeline.
Another Spring, another round of totally uninformed and illogical arguments about gas prices.
You could be forgiven if you’re feeling some deja vu. As conservatives and Congressional Republicans scramble to blame the president for rising gas prices, you might have the feeling that we’ve been here before.
Oh, that’s right. It was just last year (almost exactly a year ago, actually) that prices were pushing towards $4 per gallon, and everyone from Sarah Palin (in a ludicrously misguided and ill-informed Facebook rant) to Speaker Boehner were misplacing blame for pump prices.
Anyone who takes the time to actually look into it can pretty easily learn that the president alone can’t do much about rising gas prices, through expanded drilling or approving pipelines or whatever else.
The AP just ran a definitive piece that looked at 36 years of data, and found “no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.”
And here are twenty experts from across the political spectrum (including the staunchly conservative American Enterprise Institute and the Cato Institute) stating clearly that domestic drilling has no real effect on gas prices.
A full 92% of economists surveyed replied that gas prices are set by external market forces, and not domestic policies. Even Fox News reported in 2008 that “no President has the power to increase or to lower gas prices.”
Still, the disinformation flies, and so I’ll throw another fact-based argument in the mix. You want more proof that we can’t drill or pipeline our way to lower gas prices? Look north, to Canada.
Since at least last summer, conservatives have been parroting the oil industry talking point that President Obama is somehow the one responsible for the spike in gasoline and oil prices. As we have pointed out, they base this on their assertion that the President has been “hostile” towards the dirty energy industry by prohibiting drilling and denying the passage of the Keystone XL Pipeline proposal. While the Keystone deal is currently on hold (although not even close to being off the table,) the assertion that the president has been hostile to the oil industry is beyond false.
Furthermore, the claim that Obama is responsible for the rise in gasoline prices is untrue on all premises. Just this week, the Associated Press released a report explaining the numerous ways in which gasoline prices are far beyond the control of the President, regardless of his actions or policies that he puts in place regarding oil exploration. Here are some highlights from the new report:
American Free Enterprise, a front group of the U.S. Chamber of Commerce, held a complaint session on Facebook on Tuesday afternoon to let Americans vent about “who is to blame” for rising gas prices. Unfortunately for the group, few people attended their virtual party.
The pity party was an attempt to get Americans riled up at President Obama for allegedly being an enemy of the oil industry – a claim that conservatives have falsely been throwing around since he took office. But the lack of enthusiasm was evident by the low participation.
Here is the comment thread from the “discussion,” which I captured yesterday. Names and pictures have been covered:
Considering the rate at which natural gas resources are being developed, and the sudden push from industry to export the product, it might come as a surprise that the Senate’s Energy Committee hadn’t had a hearing on liquified natural gas (LNG) since 2005.
Last Tuesday, for the first time in six years, Senators brought the issue back to the Capitol spotlight, as they considered the impact of exporting LNG on domestic prices.
In order to export or import natural gas, companies can either transport it through pipelines, or ship it as liquefied natural gas (LNG). LNG is natural gas cooled to -260 degrees Fahrenheit, at which point the gas becomes a liquid. Back in 2006, LNG imports far outstripped exports, and industry used that trade deficit to push for a massive expansion of domestic drilling, relying heavily on the argument for American “energy security.”
Now that that expansion is well-underway, with the infamous Utica and Marcellus shales the frontier of rapid development, utilizing controversial fracking and horizontal drilling techniques, the industry is eager to start exporting LNG to international markets where the fuel fetches a much heftier price.
The Koch-funded Americans for Prosperity (AFP) is taking their misinformation machine on the road in an attempt to convince American consumers that President Obama is causing the spike in gasoline prices. AFP is claiming that the president is intentionally keeping gas prices high because he refuses to allow oil companies to drill for oil in protected areas of the United States.
The tour is necessary for the AFP, as Americans do not believe that President Obama should be blamed for high gasoline prices. A staggering 61% of Americans say that the blame lies on the shoulders of the energy companies, and 59% say that some of the blame lies with the oil speculators. These numbers are not sitting well with the oil industry, and the AFP tour is just one of many oil industry tactics to try to shift public opinion using misinformation.
AFP’s “Running on Empty” campaign has scheduled stops in Virginia, Michigan, and Ohio in the upcoming days, to “teach” Americans about the numerous ways in which President Obama is making them pay higher prices at the pump.
AFP conveniently ignores the fact that gas prices were north of $4 a gallon during the Bush administration, when they peaked at $4.12, as pointed out by protesters who showed up at one of AFP’s early gas tour events in Nebraska. But in the alternate reality that AFP is creating to enable Koch’s further oil profits, it’s somehow all Obama’s fault.
49 weeks have passed since the Deepwater Horizon oil rig exploded and sank into the Gulf of Mexico, resulting in millions of barrels of oil leaking into the Gulf, and yet the same fatal flaws that doomed that rig are still present in most offshore oil rigs in the Gulf of Mexico.
The reason that BP’s Macondo well managed to leak oil into the Gulf was because the blowout preventer on the Deepwater Horizon rig malfunctioned, meaning that the preventer could not blow up and seal off the well. But the Deepwater Horizon is not the only rig that contained a malfunctioning blowout preventer. According to new reports, blowout preventers on rigs throughout the Gulf have not been properly inspected or maintained, meaning that another rig explosion could result in more oil in the Gulf.
On news of the massive profits reported by ExxonMobil today, ABC News crunched the numbers and has found that the combined revenue of the top 5 US oil companies was $1.5 trillion last year.
The news report points out that this is more that the total GDP of Canada, at $1.43 trillion last year.