Where Have I Heard That Before?

One of the advantages of age is that, if you have a functioning memory, listen to the sides of a battle over some issue or another, and realize that it’s virtually a repeat of a similar battle that took place long ago.   I’ve seen this in the battles over “digital piracy,” which remarkably resemble the same battles that took place over the introduction of cassette tapes and videotapes.  I’m seeing it now in the battle over the Keystone XL pipeline.

Let’s see.  The oil industry wants to construct a long pipeline through environmentally sensitive areas to help exploit a find.  There’s lots of promises about how they’re going to build it right, that it won’t cause serious problems.  The oil will help this country by giving us a steady supply, moderating gasoline prices and making us less dependent on politically unstable overseas suppliers.  Sound familiar?    If you’re my age, it should.  It’s a summary of all the arguments for the Alaska Pipeline.

Which, as it turned out, didn’t have the all the worst effects that environmentalists had feared.   That doesn’t mean it didn’t have bad, in fact, some (Exxon Valdez) weren’t thought of by the environmental groups at the time.  The pipeline company (British Petroleum) has had a record of poor maintenance and problem spills over the years its been running.  What else?  Very little of the oil piped across Alaska was actually ended up here in the U.S.  Instead, it went to Asia.   We’re still just as dependent on politically unstable foreign countries for oil.

Which is why I take the proponents’ arguments for the pipeline with a hefty grain of salt.   The route is problematic, so much so that even non-liberal states like Nebraska are against it.  It also helps to know that the “massive deposit” isn’t, as at least one oil company has said in commercials, “clean.”  It isn’t even going to significantly reduce the price of oil.   While today they refer to the “oil sands,”  the original name better describes them:  Tar sands.  It’s bitumen, or as the oil industry refers to it “very heavy crude oil.”  There’s a lot of it, but the reason it hasn’t been developed before is that it’s not cheap to make it usable.  You have to use a lot of energy (steam or very hot water) to get it out.  Then you have to modify it to create “synthetic crude” to enable you to pump it over a pipeline.  It’s not until the price of oil rises over a certain point (which happened in 2003) that it’s remotely profitable to do it.  It’s also been pointed out by by opponents that there is no guarantee that the oil coming through the pipeline will be used in this country.  That’s quite true.  It’s a matter of the “free markets” that conservatives love to tout, although they really don’t believe in it.  We’re not “the only game in town,” there are a lot of countries who are using oil these days.  They’re willing to pay for it as well, and the result is that if they offer a better price, they’re going to get it.   Which means that no matter how much there is, it’s not going to reduce the price you pay at the pump.

So when I hear various politicians singing the praises of the pipeline, and various oil companies telling me why it’s a good thing in massive advertising campaigns, I keep thinking “Where I have I heard that before?”  Oh yeah, back in the ’70′s.  Which leads me to a different reaction than they want:  “Stop bullshitting me.”

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8 Comments

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8 responses to “Where Have I Heard That Before?

  1. Alan Scott

    Norbrook,

    I dispute your analysis. Since when did increasing supply ever become a bad thing ? I have been around a long time too. I remember the gasoline lines and price spikes of the 1970s and I know what worked and what was stupidity . To paraphrase you, stop Blödsinn me .

    You do realize that in America there are already about 55,000 miles of crude pipeline and maybe another 95,000 miles of pipeline for refined fuels . Why don’t we just shut em all down and rip em out now ? That’s a lot of old infrastructure . Why would a brand new pipeline not be far safer ?

    I am also surprised that an educated man, such as yourself would make that tired old obsolete argument about the Alaskan oil really doing nothing to lessen America’s imported oil bill because the oil goes to Asia. As you know, it really isn’t the oil per se that is the problem . It is how much of your foreign exchange you must use to pay for it . It is more cost effective to sell Alaskan oil to Asia and use that money to buy imported oil for American refineries . Which actually has absolutely nothing to do with Canadian oil coming down the keystone pipeline to Texas. Once that pipeline is built it will make no economic sense for Canada to sell that oil to anyone else .

    And lets say the price of crude drops below what is profitable to produce and ship Alberta crude. That would be a good problem to have . It would mean that more oil is on the market and our economy would benefit . The risk is on Canada and the investors in the pipeline . It’s not like there is any ‘ Green Stimulus ‘ money at risk .

    • Alan, you’re beating the heck out of a strawman here.

      The price of oil is unlikely to ever drop below that point. Unlike the 1970′s, there are a lot more consumers of oil than there were. Back then, it was mostly the US, Western Europe, and Japan which were the major markets. These days, there’s also India and China along with others who are increasing their usage. When you say it “makes no economic sense” for Canada to sell to anyone else, you’re not talking reality. In fact, one of the major investors in the Athabascan fields are the Chinese, and yes, they are making plans to export it there. Apparently they think it makes economic sense.

      What this is about is not whether or not the pipeline will be built – this one shouldn’t, but one with a different routing eventually will – but the bullshit that’s being used to sell it to the public. Like it or not, and I know you don’t, “cheap” oil is a thing of the past. There isn’t enough “easy to get to” or “easy to refine” oil left, so what is in the future is going to be expensive and tough to get to. Any idea that it’s going to make us “energy independent” or allow us to return to the “good old days” of cheap gasoline is just wishful thinking.

  2. Alan Scott

    Norbrook,

    I know as much about the oil markets as you do. I know as much about the history of the markets from the 1970s as you do . I know the number one problem is not that India and China are increasing their usage . The number one problem is political.

    I find your statement of Canadian oil never dropping in price so as to be unprofitable to be puzzling .There are many reasons for that possibility . The world economy could easily crash again. Or more likely production from North Dakota and offshore sources in the US could rapidly increase . Or the US could scrap the electric cars and convert a large percentage of it’s vehicles to natural gas . The fuel competition would drastically drop the price. Kinda like Ethanol was supposed to .

    Unlike batteries and electric cars, the technology for nat gas cars is already developed. The infrastructure is the only major hurdle .

    Now let us discuss reality as you put it . Doncha think that our Canadian friends would already be selling their Alberta bitumen to the Chinese if it were really that simple ? I mean they are our friends and all, but after the way President Obama continues to anscheißen all over them, they can be excused for abandoning us . The reality is it is not that easy to get oil out of Alberta onto the world market . That pipeline will be the only cost effective way to move the large volumes involved .

    We can make a lot of progress toward energy self sufficiency. It will never happen with our current political leadership . I think 2013 would be a good year for Barak Obama to take time off and write another bestselling auto biography . He looks stressed and tired .

    • Alan, the problem is that there will be no rapid increase. We’re now at peak oil, or just beyond it. That means that all new supplies found simply serve to keep production near that, not increase it enough to reduce the cost. A drop in price due to a depression or major recession is a temporary one at best.

      You also don’t seem to be following the news. The Canadians have already sold bitumen to the Chinese. In fact, Chinese oil companies are among the owners of the fields.

      This week, Athabasca Oil Sands Corp. triggered an option on a 2009 deal with CNPC subsidiary PetroChina, so the Chinese oil giant is not just a shareholder but also the owner and operator of the MacKay River oil sands project, to open in 2014. In December, another Chinese firm, Sinopec, closed a $2.2-billion deal for Daylight Energy Ltd.

  3. Alan Scott

    Norbrook ,

    ” The Canadians have already sold bitumen to the Chinese. ”

    I keep rereading the article in your link and cannot find where it says any Alberta bitumen has gone to China . It says Chinese companies are buying ownership stakes in Alberta oil facilities. There is a proposed pipeline to British Columbia to export to China. That is not going well and is really only a back up because of Obama holding up the keystone pipeline .

    As best I can determine China currently buys no Alberta crude . This is strictly a money investment for the Chinese and a possible future supply source. The Canadians are keen to expand oil production. They need markets and we need their oil .

    ” You also don’t seem to be following the news. ”

    Yes I follow the news, but for the life of me I cannot follow your reasoning that buying more Canadian oil is a bad thing .

    • It’s not “a bad thing,” it’s the way it’s being pushed by various Republican politicians and the oil companies. First off, it’s anything but a “clean source of energy,” as the Exxon commercials would have you believe. It’s probably the dirtiest fossil fuel extraction method you could find, outside of mountain top removal for coal. This is a good example of what it looks like from space. It requires massive amounts of water, huge amounts of natural gas, and has a number of toxic byproducts that have to be disposed of, to make into something that can be piped.

      Second, your assertion that Obama is “holding up the pipeline.” Well, you can blame congressional Republicans for that one. By trying to make it a political football, and pushing it forward before a complete evaluation of the route had been completed, they forced the project to be killed. I might also note, which you keep ignoring, that the state of Nebraska was against the pipeline, as well as a number of politicians and groups in those other notorious hotbeds of liberalism, North Dakota, South Dakota, Montana, and Wyoming. Their major concern was the routing, which not only takes it across a number of rivers, but on top of the Ogalalla aquifer, all of which are extremely important for their agriculture, among other things.

      Third, any idea that it’s going to make us “energy independent” when it comes to oil, or less reliant on other sources, is not likely to be borne out, and it definitely won’t make gasoline or oil products “cheaper.”

  4. Alan Scott

    Norbrook ,

    Once again, I have a real problem with just about everything you say . I am not going to even bother to look up who in the Dakotas, Montana, and Wyoming has anything to say against the Keystone pipeline. My intuition tells me that even there you must have liberals. If you want to list who they are to bolster your claim, please do so .

    But leave us discuss your statement that the State of Nebraska, the actual State is against the pipeline. You did not say some people in Nebraska, you said the State of Nebraska.

    Who exactly ‘ is ‘ the State of Nebraska ? Have a majority of Nebraska voters in a referendum voted to ‘ please keep that evil dirty pipeline out of our beloved State ‘ ? Is it their Governor ? Is it their Legislature ?

    Go ahead, back up your words .

    • Nebraska? Their governor, for one. It’s not just liberals, it’s a lot of the landowners. You know, farmers and stuff? Seriously Alan, the major complaint all these groups have is that they’re against the routing. You take an oil pipeline right through sensitive areas, right over the water supply most of them depend on, and after the Yellowstone River spill, (pipeline break) you expect the the people out there to take a pipeline lightly? Believe that the company (which has a pretty piss-poor record of pipeline maintenance) is going to do it right this time? :roll: