The key to the meaning of Keystone XL

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Is oil like red meat or is it like tobacco? Your answer to that question determines how you feel about the North American boom in unconventional sources of fossil fuel, particularly the Canadian oil sands.

If you think oil is like tobacco, it is a strictly noxious commodity, which seriously harms its users and those around them. We should stop consuming it at once and at all costs. But if you think oil is like red meat, you take a more nuanced view. For the health of the planet, we should find greener alternatives to it whenever we can, but used wisely and in moderation it has an honorable role in the 21st-century economy.

This morality play is being acted out with the greatest intensity in the fight over the proposed Keystone XL pipeline, which would stretch from Canada to the Texas Gulf Coast.

“Keystone is really a symbol of oil, it is very emotive,” Daniel Yergin, the Pulitzer Prize-winning energy expert and chairman of IHS Cambridge Energy Research Associates, told me. “It is probably the most famous pipeline in the history of the world, and it hasn’t even been built yet. It is a symbol around which the opponents of hydrocarbon have rallied.”

Last autumn, the consensus view was that the pipeline would be approved after the U.S. presidential election, no matter who won. In recent weeks, those odds have shifted.

“If you had asked me prior to the U.S. election, I would’ve said, ‘Of course it’s going to be built after the election, regardless of who wins,’” said Naheed Nenshi, the mayor of Calgary, Alberta, where many of the oil companies that are counting on Keystone have their headquarters.

“If you had asked me immediately after the U.S. election, I would’ve said, ‘Of course it’s going to be built, now that the immediate political pressure is off,’” he said. But today, Nenshi is less certain: “The feeling in Canada over the past four or five weeks has become less optimistic about this thing being built.”

Jim Flaherty, the Canadian finance minister, took the same view. “I actually don’t know,” he replied, when I asked him if the Keystone pipeline would be built. “I had reason for optimism before the election that the president would approve it, were he re-elected.”

But, Flaherty said, President Barack Obama’s inaugural address “was not encouraging.”

Many politicians and business leaders in Canada, whose economy relies heavily on fossil fuels, have been caught by surprise by the intense opposition to the Keystone pipeline and to the oil sands crude it would carry south. The paperback edition of Yergin’s latest book, “The Quest,” provides a powerful explanation of that mystery.

“We have to start somewhere to end the addiction to oil,” is the way one environmentalist explained the broader strategy to Yergin. “The pipeline is a convenient device for fighting a larger battle,” Yergin said.

Canadians, who are accustomed to being thought of as the world’s official nice guys – think of all those students globe-trotting with maple leaves on their backpacks – are uncomfortable with this new role as climate change villains. (Disclosure: I am a proud Canadian myself.)

“I think it’s a shame that a one-meter-in-diameter pipe is suddenly having to wear all of the sins of the carbon economy,” Calgary’s Nenshi said. “You know, it’s not clubbing seals with child labor.”

Yergin agrees. “The one thing that doesn’t get much talked about is that this oil sands technology continues to advance; it is not static,” he said.

“We reached peak oil demand in the U.S. more than half a decade ago. Our oil demand is going down. Our cars are getting more efficient,” he said. “Meanwhile, there is a supply of energy we do need now. The real trade-off is, is it going to be Canadian oil or is it going to be Venezuelan oil?”

That trade-off used to be viewed in primarily strategic terms: Were our oil suppliers political friends or foes? By that measure, the Canadians score high. But the World Economic Forum at Davos, Switzerland, of all places, underscored another consequence of the North American boom in unconventional sources of oil: its impact on jobs.

Participants from slow-growth Europe and more vigorous Asia alike were dazzled by the job-creating potential of North America’s renaissance as a fossil fuel producer. Moreover, these jobs happen to be the very sort that are being hollowed out by globalization and the technology revolution: high-paying, skilled, blue-collar work that cannot be outsourced or done by robots.

Which may be why the Canadians are picking up such mixed messages from the White House on the Keystone pipeline. For the Al Gore wing of the Democratic Party, it has become a symbolic battle in the fight to save the planet; for the Joe Biden wing, Keystone and the unconventional oil revolution are a source of the middle-class jobs many feared modern economies could no longer provide.

The pipeline is also a litmus test for what you think is the most important problem in the early 21st century.


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anonymous    
February, 03, 2013 at 09:58 AM

Build the pipe..... But all Americans should understand that the pipe is not intended to increase our supply of crude, it's intended to allow Canadian crude access to world markets at market rates. Without the pipeline, their crude is worth $70 per barrel vs $100 per barrel (current) Not everything is as it seems.

Henry Heck    
Texas  |  February, 03, 2013 at 02:14 PM

This is oil and sells to us at a discount to virtually all other oils. It has low sulfur content and fits US refineries very well because they have made the investments needed to handle very heavy oil. It complements the light sweet tight oil coming out of Texas. The pipeline is by far the safest way to ship the oil. 800,000 barrels per day is the equivalent of loading and unloading 1600 rail cars a day.

michael    
kansas  |  February, 06, 2013 at 09:29 AM

One other point to consider. This oil is already being transported into the U.S... via Warren Buffett's seven railroads. And anyone who's paid attention knows Buffett is "owed" quite a lot by the Obama administration. Crony Capitalism comes first in The One's "evolving" world, and its big money donors. We'll soon see the Canadian oil flowing to the Pacific coast of Canada to boost value/price, while the even higher cost left-overs continue to flow into the U.S. via Buffett's railroad tank cars, as it already does. But shhhhhhhhhh, we don't want to be speaking of such things in public, do we?


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