KXL Protest

KXL Protest

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Keystone XL Pipeline Extension Proposal: Economic and Environmental Consequences



The United States is facing a crossroads in its energy policy: will we commit to reducing our carbon emissions and turn to renewable fuel sources, or will we continue our addiction to fossil fuels? The answer to this question will have a significant impact on our future and on any claim we might have to being a global leader and a responsible superpower. A large step toward answering this question will be taken soon, as President Obama and the State Department consider the Keystone XL (KXL) pipeline extension proposal.



The Canadian company TransCanada applied to the U.S. State Department (DOS) for a permit to construct Keystone XL in September 2008 (Congressional Digest, 2011, p. 291). This extension would run from Alberta’s tar soils to refineries in the Texas Gulf Coast, connecting to TransCanada’s current Keystone pipeline, which runs from Alberta to refineries in Illinois and Oklahoma (2011, p. 291). For it to go through, KXL requires that the DOS issue a presidential permit that determines it to be in the national interest (2011, p. 291). Given the magnitude of the project, KXL has resulted in an extensive approval process involving DOS environmental impact statements and public hearings. KXL has also become a lightning rod for political debate, with Congress passing an ultimatum in December 2011 that forced Obama to make a determination on KXL within 60 days. In January Obama denied TransCanada a permit for KXL, reasoning that the 60-day timeframe granted him was insufficient for the Department of State to fully weigh the pipeline’s environmental ramifications (Jones, 2012). Proponents of the pipeline bristled at this suggestion, pointing to the long process KXL has already undergone while seeking approval, outraged that a new application would now be required.



While the objections to Keystone XL have for the most part been environmental, its proponents’ arguments are primarily economic—an interest made all the more forceful by the dire economic times facing the United States. Thus, the opposing camps appear to be out of stasis, at least in terms of their priorities: those who are against KXL are already arguing about the severity of its environmental consequences, while its proponents often reject this as a legitimate issue and instead focus on the magnitude of the pipeline’s potential dollar value. Nonetheless, it is possible to engage this argument both in economic and environmental terms in order to demonstrate that Keystone XL is not in the national interest in any reasonable sense of the term. Its environmental risks are substantial, its economic benefits have been greatly exaggerated, and its impact on energy security and oil independence are in fact negative: KXL is an export pipeline designed to benefit oil companies and not average Americans. Bound to KXL’s profits for the oil industry are losses for the environment and the future of renewable domestic energy—ultimately, then, the environmental and economic aspects of this argument are inextricable, and KXL is a loss for both.



When examining the arguments being waged on either side of this issue, it becomes clear that there is a tension between economics and the environment in the ways different groups define the national interest. Both are important concerns, yet money is a renewable resource—one whose availability fluctuates and that can be produced by alternative means—whereas the environment, and particularly the Earth’s climate, can be permanently and irrevocably damaged. Thus, I will attend to the environmental concerns revolving around KXL before specifically addressing its merits as a job creator. If it can be shown to be environmentally sound, an economic justification would still be needed for KXL to make practical sense. This is a tall order, and one that Keystone XL is unable to fill at either stage.



According to one pro-KXL editorial, “there's nothing to fear about CO2” (Investor’s Business Daily, 2011). This must be the case if we are to conscientiously consent to the construction of Keystone XL, as the tar sands it will carry are energy-inefficient CO2 producers whose extraction will become increasingly difficult over the lifetime of the project, emitting yet more CO2 (Department of State, 2011, p. 15). James Hansen, pioneering climate scientist and head of the Goddard Institute for Space Studies, likens tar sands oil to “burning coal in your automobile,” as “the energy you get out in the end, per unit carbon dioxide, is poor” (McGowan, 2011). Yet carbon, which warms our atmosphere by trapping the Sun’s heat, is something to be afraid of at excessive levels. While the consensus among many scientists is that carbon dioxide should not rise above 350 ppm (parts per million) to minimize climate disruption, current measurements put the level of CO2 in the air at about 390 ppm (compared to measurements of about 280 ppm during the Industrial Revolution) (McGowan, 2011).



In the context of this climate crisis, the potential for CO2 production from Alberta’s tar soils is alarming. According to Hansen, “if released all at once, the known tar sands resource is equivalent to 150 parts per million” (McGowan, 2011). Of course, only a fraction of that total can be extracted at present; however, Hansen warns that “there is plenty more to be discovered” and that the rate of extraction will increase if the oil industry invests in this lucrative project (McGowan, 2011). Because of tar sands oil’s relative inefficiency and dirtiness, and because of its growing plentitude, making a national investment in a massive pipeline designed to transport it from Canada is untenable if we are serious about curbing our greenhouse gas (GHG) emissions. As a report by Cornell’s Global Labor Institute (GLI) points out, “KXL is an important part of an industry plan to expand the oil industry’s exploitation of dirty, unconventional high carbon fuels” (2011, p. 32). In its representation of this commitment to scouring all of the Earth’s fossil fuels, KXL is the opposite of what we presently need: a steep drop-off in greenhouse gas emissions coupled with a dedication to alternative energies.



Along with wreaking environmental havoc, this plan’s greenhouse gas emissions could have severe economic consequences. First, there is the drain on healthcare and productivity caused by air pollution. Port Arthur, Texas will be particularly hard hit, as KXL would contribute to an industry plan to convert the city into “an international refining hub,” further deteriorating air quality in an already highly polluted area (GLI, 2011, p. 30). This local injustice, however, pales in comparison to the larger problem of climatic disruption’s catastrophic effect on human life and economic systems.



When considering a key part of the oil industry’s scorched earth policy for utilizing unconventional, high carbon oils, we must take into account the consequences of the extreme weather patterns that come from climate disruption due to global warming. As James Hansen points out, utilization of inefficient, unconventional fuels is “the definition of how not to address climate change” (McGowan, 2011). 2011 was a banner year for erratic weather, with just one event, Hurricane Irene, costing an estimated 7 billion dollars, and with Texas’s worst one-year drought in history so far incurring a toll of 5.2 billion dollars (GLI, 2011, p.31). According to noted British economist Nicholas Stern, we can expect the cost of global warming to continue to skyrocket if our GHG production is not dramatically decreased. In 2006 he estimated that, in the absence of drastic changes, climate change will likely “have an impact on the global economy equivalent to the combined effect of the two World Wars of the 20th Century and the Great Depression”—wiping out “as much as a fifth of global GDP” (GLI, 2011, p. 31). Thus, there are prices in the carbon intensive Keystone XL that are not figured into TransCanada’s expense reports. KXL, and the industry plan for exploitation of unconventional fuels of which it is a major part, carries with it expenses that will be shouldered by the world in the form of climate disruption and weather instability.



The environmental damages we can expect from Keystone XL do not end with its carbon footprint. According to the Department of State’s Final Environmental Impact Statement (FEIS) for KXL, it can be expected to have “1.18 to 1.83 spills greater than 21,000 gallons per year for the entire Project,” with a total of 1.78 to 2.51 spills of any kind per year (2011, p. 8). TransCanada, for its part, has issued an optimistic prediction of “just 11 spills over a 50 year period” (GLI, 2011, p. 28). It claims its pipeline project will mitigate the risk of spills by employing “industry-leading best practices in engineering design, pipe fabrication, system testing before operation, and in pipeline maintenance and operation” (TransCanada, 2011). However, an independent study conducted by the University of Nebraska’s John S. Stansbury found that KXL would likely result in 91 major spills over 50 years (GLI, 2011, p. 29). As a reference point we can look to the existing Keystone pipeline, which began operation in June 2010 and, as of August 2011, has experienced 14 spills in the U.S., including one of over 21,000 gallons (DOS, 2011, p. 8). In fact, the pipeline had to shut down for repairs in May of last year (New York Times, 2011). Meanwhile, 19 further spills had been reported in Canada as of June 2011 (GLI, 2011, p. 28). Despite the industry-leading standards TransCanada claims it uses, history tells us that pipelines spill, and recent history tells us that KXL would be no exception to this rule.



The inevitability of oil spills from Keystone XL is warrant for concern because, along with hurting wildlife, it translates directly into groundwater contamination. The most glaring example of this danger is the proposed route’s passage under Nebraska’s Sand Hills and the underlying Ogallala Aquifer. According to the Department of State’s FEIS, “the depth to groundwater is less than 10 feet for about 65 miles of the proposed route in Nebraska and there are other areas of shallow groundwater in each state along the proposed route” (2011, p. 10). This crucial resource provides 78% of Nebraska’s water supply, as well as about 30% of the water used by the entire U.S. for irrigation and agriculture (2011, p. 10). At a public DOS-sponsored hearing in Napers, Nebraska, one participant noted the importance of the Sand Hills and Ogallala Aquifer to the state’s “jobs and economy now and in the future” (2011, p. 25).



Because of its vital importance, TransCanada may reroute its proposal to avoid the Ogallala aquifer. However, KXL’s inevitable spills would still have the potential to affect sensitive terrain and contaminate groundwater throughout its course. In fact, more than 200 Public Water Supply wells, most of them in Texas, come within a mile of the pipeline’s proposed centerline (DOS, 2011, p. 10). With a resource as vital as the public’s drinking water literally on the line, the risk of spills from KXL is not one to be taken lightly. It is yet another example of the serious environmental hazard posed by KXL, one that has yet to be countered with substantial benefits to the national interest.



Throughout its 2,000 mile course, Keystone XL would have a variety of localized environmental and economic consequences that, along with the global effects of its outsized carbon imprint, could only be justified by a state of emergency. Sensing this need, one of the key justifications for Keystone XL offered by its supporters has been that, indeed, energy security is a national emergency. For example, David Kreutzer of the Heritage Foundation, a conservative think tank, claims that “Along with the pipeline and petroleum would come increased energy security and a boost to the U.S. economy” (Investor’s Business Daily, 2011). The link between energy security and KXL is, however, a tenuous one.



A report by Oil Change International (OCI), an organization dedicated to exposing the cost of fossil fuels and fostering a transition to renewable energies, scrutinizes the claim that Canada’s tar sand oil is needed to replace imports from unstable OPEC nations. Examining data from the Energy Information Administration (EIA), OCI reveals a changing market in which the U.S.’ fuel efficiency regulations are driving down domestic demand while supply has increased due to new shale oil production (2011, p. 4). Canada’s heavy sour crude is in fact competing with and undercutting light sweet domestic oil, and many refineries here are refitting in order to process this new oil. (p. 4). This investment, coupled with a foreign market hungry for diesel oil, makes Canada’s tar soils a lucrative and attractive source—not for domestic consumption, but for export.



Furthermore, the export plan behind Keystone XL is evident in the unusual manner in which it has been “planned to operate on a business model of long-term contracts with very few shippers” (OCI, 2011, p. 5). In fact, three quarters of KXL’s oil production is already spoken for by five foreign companies and a domestic company, Valero, that “is geared toward export” (New York Times, 2011). Valero—the U.S.’ largest exporter of refined goods—reveals its export strategy in documents that discuss refinery upgrades designed to produce diesel for a hungry foreign market (OCI, 2011, p. 7). Exporting tar sands oil is part of a tax evasion strategy in which Valero exports and imports from Port Arthur, which is a Foreign Trade Zone (FTZ). Short of decreasing its imports from third world countries, Valero will continue to increase them while paying no taxes to the U.S. on the way in or out (p. 8). Thus, Keystone XL is indefensible on the grounds that it will decrease our dependency on foreign oil or increase our energy security. In fact, this pipeline would only allow us to play middle man between Canada’s tar sands oil and an international market.



In the absence of energy security as a justification for the environmental hazard posed by Keystone XL, we are left only to examine its potential for job creation. The notion that KXL is a readymade economic stimulus capable of creating thousands of jobs and offering relief at the pump has been widely circulated by its supporters in business, the legislature, and popular culture. This perception illustrates the tendency in political debates for interested parties to create what John Ramage refers to as instant doxa, or the impression of authenticity through massive repetition. However, like the argument from energy security, the investment and job claims made by TransCanada for KXL’s construction and maintenance do not add up.



TransCanada claims Keystone XL will create 20,000 direct U.S. jobs in construction and manufacturing, along with 119,000 total jobs on a 7 billion dollar budget (Cornell Global Labor Institute, 2011, p. 2). In the context of the national economic downturn of recent years, these figures are extremely appealing. Unfortunately they are unsubstantiated, and in some cases demonstrably exaggerated.



To begin with, the 7 billion dollar budget estimate includes the cost of the Canadian portion of XL, as well as 1.7 billion that had already been invested as of June 2011 (GLI, 2011, p. 5). TransCanada’s own submission to the State Department admits that KXL “will create no more than 2,500-4,650 temporary direct construction jobs for two years” (p. 7). Furthermore, the estimate of 119,000 jobs comes from the Perryman Group Study, a deeply flawed TransCanada-sponsored job report that does not even go so far as defining the scope of the project or examining its budget (p. 17). Nor has TransCanada been forthright in its claims of thousands of high-paying indirect jobs within the U.S. Like the oil KXL aims to transport, much of the work for its construction will be outsourced. According to contract announcements, “the Russian company, Evraz, will manufacture about 40% of KXL pipe in its Camrose and Regina mills in Canada” (p. 12). Before a presidential permit has even been granted, TransCanada has been busy importing another 10% of the pipe for KXL (p. 12).



Even if the Perryman Group’s figure of 119,000 jobs were accurate, KXL would not boost national employment by a decimal point (GLI, 2011, p. 26). That this number is an exponential exaggeration makes TransCanada’s job claims all the less convincing as a justification for its construction. However, the economic ramifications of KXL do not end there: rather than live up to its billing as a national jobs package, the pipeline could result in significant losses. As discussed earlier, this project’s effect on the environment through carbon emissions, pollution and spills would be an economic drain. By diverting oil currently transported by the Keystone system from the Midwest to the Gulf Coast for export, KXL will increase the cost of heavy crude in that region by “$2 to $4 billion annually, and escalating for several years” (p. 27). Ironically, the truism that “relief is just an executive relief away” (Investor’s Business Daily, 2011) could result in yet higher gas prices for many, causing a negative ripple effect throughout the economy. The economic tradeoff involved in KXL becomes one of narrowly concentrated benefits in construction and particularly in Texas for a substantial pocketbook hit, resulting in lost jobs, throughout the Midwestern economy (p. 27).



Ultimately, the economic and environmental effects of Keystone XL are interrelated. However, we are not faced with a decision of trading economic benefits for environmental losses; rather we are facing losses in both areas with centralized gains for an industry that is not in need of another government subsidy, and that plans to export everything but the pipeline’s pollution and spills. At a moment when we need a firm commitment to reducing our carbon emissions, KXL would have “a chilling effect” on green energy innovations by making it clear that the U.S. lacks the political will to curb its addiction to fossil fuels and their carbon stamp (GLI, 2011, p. 33). This at a time when green programs, which “are less capital intensive, are more labor intensive, and stimulate domestic industries and services,” create four times as many jobs as fossil fuels per dollar invested (p. 33). Not surprisingly, the increasingly efficient, future-oriented green energy industry has been ridiculed and staunchly opposed by some of KXL’s most vocal supporters (New York Times, 2011).



James Hansen famously referred to the prospect of Keystone XL as “game over” for Earth’s climate because it would represent our willingness to scour the Earth for unconventional high carbon fuels if they turn a profit (McGowan, 2011). As an examination of the evidence surrounding TransCanada’s job claims and its export strategy reveals, the profit from Keystone XL would not be one for the national interest of the United States. It is an unconscionable plan whose only backing comes in the form of lobbying and deeply vested corporate interests that coincide with neither the interests of our country nor those of humanity. With so much on the line, the American people and our representatives have a responsibility not to be taken in by the oil industry’s misinformation campaign. Rejecting KXL is a decision that will have a positive impact on our environment, on our future, and, as it turns out, on our pocketbooks as well.





Works Cited



Congressional Digest. (2011, December). Keystone XL pipeline overview. Congressional Digest

90(10), 290-295. Retrieved from Academic Search Complete.

Cornell University Global Labor Institute. (2011, September). Pipe dreams? Jobs gained, jobs lost by the construction of Keystone XL. Retrieved from http://www.ilr.cornell.edu/globallaborinstitute/research/upload/GLI_KeystoneXL_Report pdf.pdf

Investor’s Business Daily Editorial Staff. (2011, April 5). An oil market of our very own.

Investor’s Business Daily. Retrieved from

http://news.investors.com/article/568232/201104051839/an-oil-market-of-our-very-

own.htm

Jones, Kerri-Ann. (2012, January 18). Briefing on the Keystone XL pipeline. Retrieved from

http://www.state.gov/r/pa/prs/ps/2012/01/181492.htm

McGowan, Elizabeth. (2011, August 29). NASA’s Hansen explains decision to join Keystone

pipeline protests. SolveClimate News. Retrieved from http://www.reuters.com/article/2011/08/29/idUS257590805720110829

New York Times. (2011, October 2). Say no to the Keystone XL. Retrieved from

http://www.nytimes.com/2011/10/03/opinion/say-no-to-the-keystone-xl.html?_r=2

Oil Change International. (2011, September). Exporting energy security: Keystone XL exposed.

Retrieved from http://dirtyoilsands.org/files/OCIKeystoneXLExport-Fin.pdf

Ramage, J. D. (2006). Rhetoric: A user’s guide. New York: Pearson Longman.

TransCanada. (2011, February). Leak prevention and detection. Retrieved from

http://www.transcanada.com/docs/Key_Projects/LeakAndDetection_KXL.pdf

United States Department of State. (2011, August 26). Executive summary: Final environmental

impact statement for the proposed Keystone XL project. Retrieved from

http://www.keystonepipelinexl.state.gov/clientsite/keystonexl.nsf/03_KXL_FEIS_

Executive_Summary.pdf

United States Department of State. (2011, September 29). Keystone XL oil pipeline project:

Atkinson, Nebraska. Public Comment Meetings. Retrieved from http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf?Open

1 comment:

  1. Mack the Knife is right! Why has this issue seemed to die down in the media? I wish Rachel Maddow would read this and be inspired to focus again on this issue.

    Follow the money, as they used to say during Watergate. Money seems to drive everything.

    ReplyDelete