Meade County Commissioners have what seems like a good transportation idea: they'd like to build a bypass east of Sturgis to connect state Highways 34 and 79 straight south to Interstate 90:

Proposed East Sturgis Bypass (annotations mine; map from Google; click to embiggen!)

Proposed East Sturgis Bypass (annotations mine; map from Google; click to embiggen!) 

This east bypass would run from the Elkview Campground near Exit 37 straight north to the Buffalo Chip entrance. The project would cut a couple miles of new road from the south end of 131st Avenue to the north end of Cardinal Place. Both of those roads appear to be gravel (I invite updates from local travelers!), so I assume the project would also include paving those existing roads.

The new road would nicely entriangle Sturgis. Folks coming from Rapid City to visit the Chip and Bear Butte would not have to drive through downtown Sturgis traffic, which on normal days may cut just a few miles and minutes from the trip but which during the Rally could shorten through-time by at least half an hour. Commissioners also say that the Fort Meade VA Hospital needs this road as a second emergency access route.

The Meade County Commission hasn't poured asphalt yet, but they are taking names: Pleasant Valley Parkway, Fort Meade Expressway, Ronald Reagan Road, Todd Beamer Road, Oren Hindman Road.... Residents will get to vote online over the Christmas break, and the commission will adopt the new name at its January 14th meeting.

But the commissioners may not get to build their road, due to their choice of funding mechanism: tax increment financing. To bring in the two million dollars needed to build this bypass, the Meade County Commission has drawn up a gargantuan serpentine TIF district: 

Proposed Meade County TIF 2014TIF districts usually are neighborhood scale. TIF districts usually encompass the immediate area where improvements will be built. Build new streets or sewer or other public improvements, and property values on adjoining lots should rise, as developers build homes and businesses to take advantage of the new infrastructure. Those increased property values provide the tax increment that pays off the financing that built the improvements.

The proposed bypass would lie in one township at the southwest corner of the TIF district. The TIF district paying for it spans 24 townships (total land area over 600 square miles), including 11 entire townships to the immediate north and east of Sturgis. East of those townships, the TIF district abandons Highway 34 and bends north, east, and back southeast to take in land on the proposed route of the Keystone XL pipeline.

That northernmost jut is the real moneymaker: it appears to encompass KXL pumping station #17 near Opal (according to the map TransCanada submitted to the PUC). Commission Chairman Alan Aker says the TIF District captures enough taxable land value to pay off the road project in 20 years even if Keystone XL does not come to fruition, but the pipeline and especially Pumping Station #17 would help Meade County pay off the TIF much faster.

The TIF would prevent the Meade County School District from cashing in right away on any added tax value from the pipeline, the pumping station or other development in the expansive district. Locking that future value into the new connector road could deprive the school district of $1.6 million over the next five years. The Meade County school board doesn't like that idea:

Superintendent Don Kirkegaard says the board is not opposed to the road, nor to TIF’s in general, but this particular TIF seems nothing more than a shift in taxes.

“I did a five-year estimate and I believe the district would lose about $1.6-million in future revenue based on projections. It really is a 2-mile road and we’re shifting the taxing structure for over 300 sections of land to pay for the road. It seems like the school is the only player in the new revenue source and the district just can’t support this particular map.”

Kirkeggard says typically, a TIF is designed to be a small area of property to help with the infrastructure in that small area. But in this one, he says it’s more of a “rob Peter to pay Paul” situation.

“The rezoning of the how we are going to use those taxes has nothing to do with the project. It’s just a way, as I say, “rob Peter to pay Paul,” and in this case, we’re Peter. So, we can’t support this particular map. It has both short term and long term impacts to the district. We’re strapped for cash, just like the county is, and we don’t think this is equitable for the school district” [Gary Matthews, "Meade 46-1 School Board Opposes County's New 131st Avenue TIF Map," KBHB Radio, 2014.12.10].

The Meade County Commission doesn't appreciate the school board's resistance. They may face broader public opposition. Under the banner of Meade County Taxpayers for Responsible Government, TIF opponents are petitioning to subject the county's funding plan to a public vote. They have until early January (January 7, by my calculation) to gather at least 762 signatures.

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Which foreign imperialist will get squashed by low oil prices first, Vladimir Putin or TransCanada and its no-long cost-effective Keystone XL pipeline?

..."the political debate is not paralleled by the realities" in the market, said Sandy Fielden, director of energy analytics at Texas-based RBN Energy. "The economics of this project are becoming increasingly borderline."

The problem is that extracting oil from tar sands is difficult and costly. Prices need to be relatively high to make the extra effort profitable.

..."The recent decline in [oil] prices has to give the sponsors some pause," said Chris Lafakis, a senior economist at Moody's Analytics [Evan Halper, "Keystone XL Pipeline May No Longer Make Economic Sense, Experts Say," Los Angeles Times, 2014.12.15].

With or without Keystone XL, our frackers will keep shipping their oil by rail. You'd think market demand would solve the problem of rail capacity—if oil is worth shipping, rail is worth building—but somehow, the oil and rail barons keep getting us to foot their bill:

States and the federal government have handed out tens of millions in public dollars to rail companies and government agencies to expand crude oil rail transportation across the country, a Reuters analysis has found.

The public assistance in states like New York, Pennsylvania, Ohio, Oklahoma and Oregon comes as railroads are posting record profits, and as state and federal authorities press for safety overhauls that the oil and rail industries have opposed, following several explosive derailments.

The Reuters analysis identified 10 federal and state grants either approved or pending approval, totaling $84.2 million, that helped boost the number of rail cars carrying crude oil across the nation [Jarrett Renshaw, "U.S. Taxpayers Help Fund Oil-Train Boom Amid Safety Concerns," Reuters via St. Louis Dispatch, 2014.12.14].

Alongside the steel for the rail and the pipeline, I smell irony in this conversation that NPR's Melissa Block had with Nebraska farm couple Chuck and Miriam Peterson. Keystone XL wouldn't cross their land, but it would cross their neighbors' a half-mile away. They support the pipeline, which will use eminent domain to take land rights from local landowners. But they get mad as heck when someone intrudes on their land:

BLOCK: Suddenly as we talk, Chuck Peterson gets up, goes to his garage and comes back with a sign. It’s covered with dust and cobwebs.

C. PETERSON: That was put on my grandparents’ farm. And I am pro-pipeline and I did not appreciate it being there.

BLOCK: The sign says Stop the TransCanada Pipeline. And when Chuck Peterson spotted it on his land, next to the road, his wife Miriam says he came home furious.

M. PETERSON: Well, Chuck came home and he said, this is the end, I’ve had it. And he said, nobody asked our permission, we don’t agree with that and people driving by will think we do because it was on our land. When someone tries to include you in their…

C. PETERSON: Agenda.

M. PETERSON: …Agenda, and you don’t agree or haven’t had a chance to even offer your opinion, it did feel personal.

BLOCK: Did you take the sign out right then?

M. PETERSON: We’re going to have a burning, but it’s still in the garage. (Laughter) [Melissa Block, "On Nebraska's Farmland, Keystone XL Pipeline Debate Is Personal," NPR via KMBH, 2014.12.16].

So close to understanding, yet so far....

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This will be an exciting day for the South Dakota Public Utilities Commission. (I can picture Commissioner Chris Nelson springing out of bed every morning and saying exactly that.) On Tuesday, December 9, amidst seven major agenda items, the PUC gets to talk Keystone XL. Tuesday's hearing isn't the whole box of Timbits. Far from it: tomorrow, Commissioners Nelson, and Fiegen will only set rules for discovery and maybe time frame for future hearings.

TransCanada, the hopeful builder of the second tar sands pipeline that would cross our fair state, moved on October 30 to severely limit the scope of discovery—i.e., the topics on which opponents of the pipeline could demand information that they could use next year to argue against recertifying TransCanada's permit. For the high school policy debaters in the audience, TransCanada is essentially arguing, "No New in Two!" TransCanada contends that state law forbids today's opponents from bringing up or even demanding documents relating to arguments against the West River pipeline that weren't brought up in the original PUC permit process in 2009 and 2010. TransCanada says intervenors may not raise the following issues:

...the effects of the Project on the soils of the Sandhills; the effects of the Project on the Ogallala Aquifer and other streams, river, and waterbodies; whether the Project is in the national interest; whether the Department of State conducted sufficient consultation with interested Tribes under Section 106 of the National Historic Preservation Act; whether Keystone is entitled to exercise the right of eminent domain; and whether development of the oil sands in Canada harms the environment and contributes to levels of C02 in the atmosphere ["Keystone's Motion to Define the Scope of Discovery under SDCL 49--41B-27," SDPUC Docket, HP14-001, 2014.10.30].

TransCanada is understandably trying to speed the process, take ground from its opponents, and keep documents out of opponents' hands.

Pretty much everyone else at the show says TransCanada is wrong. The Cheyenne River Sioux Tribe dismantles TransCanada's motion, saying the Canadians get South Dakota case law wrong, offers no statutory basis for its narrow interpretation of the relevant permitting clause, and improperly reads that key statute in isolation in an attempt to throttle the properly broad authority of the PUC. Dakota Rural Action cites examples from other states that hold that the state confers no property right with a construction permit and the state is has the authority to conduct a broad review of an expired permit. The Rosebud Sioux Tribe argues that TransCanada is seeking a protection order that improperly applies the standards for permissibility at trial to permissibility in discovery: basically, the fact that information may not be allowed in the final hearing does not justify excluding such information from discovery.

Merry Christmas, Keystone XL opponents: the PUC staff seems to agree with you!

...[W]hile SDCL § 49-41B-27 limits the proceedings, it does not limit the scope of discovery. The fact that information is not admissible in the certification proceeding does not mean that it is not discoverable. “The purpose of discovery is to examine information that may lead to admissible evidence at trial [Kristen Edwards, PUC Attorney, response to TransCanada motion on discovery, PUC Docket HP14-001, 2014.12.01].

PUC attorney Edwards is waving the caution flag at Keystone XL opponents. They will still have to make their arguments at the full hearing next year that the PUC should consider risks to the Ogallala aquifer, lack of consultation with tribes, eminent domain, and other objections that were not raised in the first Keystone XL permit hearing. But if the PUC accepts its own attorney's reading of state law, it will tomorrow allow opponents to engage in much broader discovery than TransCanada wants.

Much broader discovery will require a much broader time frame. TransCanada wants a 14-week discovery process before hearings March 24–27, 2015. Dakota Rural Action says proper discovery and response will take 44 weeks, which would put the hearing sometime next October. On this issue, PUC staff is lining up with TransCanada, proposing the same March dates for the evidentiary hearing.

This discussion could all become academic if the Yankton Sioux Tribe prevails in its motion to dismiss. Attorney Thomasina Red Bird says that when TransCanada petitioned for recertification, in included a "Tracking Table of Changes" indicating changes in thirty of the findings of fact from the original permit. Red Bird and her Yankton clients say those changes make the project proposed in the 2014 petition different from the project approved by the PUC in 2010. The PUC, says Red Bird, cannot recertify a new project that has not been certified. Throw it out, start over!

I like that argument. I don't think the PUC will. We can hope for good fortune, but for now, a victory on broad discovery and a schedule long enough to make discovery feasible will be plenty.

The PUC will webcast tomorrow's meeting live, starting at 9:30 a.m. Central. Keystone XL is the last major action item on the agenda, so it's hard to say when that excitement will begin.

P.S.: Blogger Pat Powers ignores the details of tomorrow's hearing and whines the Big Oil party line that South Dakota should change its reasonably limited permits to perpetual licenses. Funny: I don't hear him saying that homeowners should get a permanent building permit, or that I should get a perpetual teaching license, or that Grandma ought to get a perpetual driver's license....

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Saudi Arabia gave a Black Friday gift to the world oil market. The Saudis have persuaded their OPEC partners to sustain OPEC's current oil production rates (30 million barrels per day) rather than cutting production to pull oil prices out of their current slide. The Saudis' main objective is to crush North American producers with low prices and regain market share.

Remember that our country's booming oil production is based on hydraulic fracturing, or fracking. 80% of the fracking fields in the U.S. require oil prices of $80 per barrel or more to remain profitable. Canadian oil firms have been making their budget projections around assumptions of oil hanging around $80 per barrel. Immediately after OPEC's decision, the price for North American oil, West Texas Intermediate, dropped to $69.05.

Venezuelan Foreign Minister Rafael Ramirez confirms the basic profit equation and declares himself a friend of U.S. environmentalists opposed to fracking:

"OPEC is always fighting with the United States because the United States has declared it is always against OPEC... Shale oil is a disaster as a method of production, the fracking. But also it is too expensive. And there we are going to see what will happen with production," he said [Alex Lawler, Amena Bakr and Dmitry Zhdannikov, "Inside OPEC Room, Naimi Declares Price War on U.S. Shale Oil," Reuters via KELO Radio, 2014.11.28].

If you're pumping gasoline into your car, you should be cheering this price war, right? Cheaper oil means cheaper gasoline, which means we can all drive around and buy more stuff, stimulating the economy.

The OPEC price war could save North Dakota from the ills of petro-state chaos and corruption. American drillers aren't going to keep pumping oil at a loss out of patriotism or a love of the view of Minot from the man camps. The Saudis drove Americans out of the oil business in 1986; they could do it again.

The OPEC price war could also make the Keystone XL pipeline disappear. Canadian tar sands oil requires a price of $85 per barrel to make scooping that goop profitable.

For bonus geopolitical excitement, the Russians need $100 per barrel to balance their budget. Vladimir Putin will have a hard time continuing his invasion of Ukraine if low oil prices threaten a repeat of the Soviet collapse. Then again, Putin is not Gorbachev. Faced with economic hard times, rather than retreating, restructuring, and releasing his grip on his neighbors, Putin might lash out, reaching for more land, resources, and power.

But then we get to a strangely familiar and ugly economic scenario. Big banks have made big loans to finance Big Oil in North America. The frackers carry a lot of junk-bond debt. If oil stays low, we could see defaults that could create another financial crisis:

Based on recent stress tests of subprime borrowers in the energy sector in the US produced by Deutsche Bank, should the price of US crude fall by a further 20pc to $60 per barrel, it could result in up to a 30pc default rate among B and CCC rated high-yield US borrowers in the industry....

“A shock of that magnitude could be sufficient to trigger a broader high-yield market default cycle, if materialised,” warn Deutsche strategists Oleg Melentyev and Daniel Sorid in their report [Andrew Critchlow, "Oil Price Slump to Trigger New US Debt Default Crisis as OPEC Waits," UK Telegraph, 2014.11.14].

Critchlow hears 2007 all over again. Just like bankers underwriting real estaters in a housing bubble pre-2007, bankers are underwriting oilers in an oil bubble based on possibly unsustainable prices. The Saudis are now popping the bubble.

But if the joys of cheap gasoline are crushed by the pain of junk-bond defaults, at least you'll be able to blame Obama right alongside the Saudis:

...This rush to pump more oil in the US has created a dangerous debt bubble in a notoriously volatile segment of corporate credit markets, which could pose a wider systemic risk in the world’s biggest economy. By encouraging ever more drilling in pursuit of lower oil prices, the US Department of Energy has unleashed a potential economic monster and pitched these heavily debt-laden shale oil drilling companies into an impossible battle for market share against some of the world’s most powerful low-cost producers in the Organisation of Petroleum Exporting Countries [Critchlow, 2014.11.14].

The Saudis are dropping our gasoline prices more surely than anything Mike Rounds or Kristi Noem has promised us. OPEC may shut down fracking and Keystone XL more effectively than any spirit camp. But the potential for a financial crisis that could swamp the  benefits of cheap gasoline should make us beware Saudis bearing gifts.

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John Thune is running for President. How else can we explain our soon-to-be-senior Senator's seemingly sensible statement on climate change on Fox News Sunday?

Asked about the overwhelming agreement among experts on the cause and trajectory of global warming, Thune began with a familiar GOP climate-change dodge: “Climate change is occurring, it’s always occurring.” But then he said this: “There are a number of factors that contribute to that, including human activity. The question is, what are we going to do about it and at what cost?” [Stephen Stromberg, "Top Republican Bows to Scientists on Climate Change," Washington Post, 2014.11.17]

Amidst a science- and fact-averse Republican Party, Stromberg takes Thune's seemingly innocuous and wide-wiggly phrase as a "glimmer of hope." We should take it as a sign that he's thinking about how he sounds to people outside South Dakota. Democrats should take it as a sign that there's going to be another open Senate seat for which to contend in 2016.

And who better to contend for it than Rick Weiland? Weiland's latest public statement shows him swinging at the powers that be, including the Senate Democrats he wanted to join this year:

The only crock bigger than the Keystone Pipeline is Senate Democrats dumping on our environment to try to save one of their own.

Talk about business as usual, talk about midterm lessons unlearned, talk about just plain stupid!

You've already lost the Senate. Polls show that Mary Landrieu, whose runoff election you hope to influence, has absolutely no chance of winning. So what do you do, backstab your president, our Native Nations and the entire environmental community on behalf of a pipeline that will not only not create jobs or any energy security, but will pour additional billions in profits into the hands of the big money special interests who just spent a fortune to crush your party at the polls.

That's genius, DC Democrat style. And it is the reason my campaign is not over. In fact, it has just begun [Rick Weiland, campaign e-mail, 2014.11.17].

What what? Campaign not over?

For 18 months we ran for Senate with little more than my videographer son Nick, myself, a lot of shoe leather, and the help of a handful of friends with more passion and skill than common sense.

I want to keep that team together, retire our small debt, and get back into the fight, right now. If the DC Democrats selling us out on Keystone XL doesn't show why we can't wait, what will?

Please, send just a few bucks and stay tuned. We may have gotten washed over by the same wave that drowned so many Democrats. But unlike them, we're not rolling over, belly up and bloated, we're fighting on.

We are going to make South Dakota a demonstration project, and a nationwide beacon for the fight against big money.

And if you don't think that matters to you, think about this. Does Elizabeth Warren's voice matter beyond the boundaries of Massachusetts, or Bernie Sanders beyond Vermont, or did Paul Wellstone make any difference outside of Minnesota? [Weiland, 2014.11.17]

Demonstration project? Warren, Sanders, Wellstone? I said Sunday South Dakota Democrats should elect a liberal leader like Warren to chair the party back to victory, and here's my fellow Bulldog Debate alum Rick sounding very much as if he's answering that call.

Or does Weiland just sound like the Tea Party? WaPo's Dana Milbank finds a herd of liberal protestors on Senator Landrieu's front step talking a lot like Weiland and sees a no-compromise parallel:

One of the speakers, a young woman named Maria Langholz, argued that liberals must stop Democrats from “compromising on the promises they have made.” I pointed out that her message sounded like the tea party.

“I know,” Langholz said with a laugh. But she had just returned from working on the Senate race in Iowa, where Democrat Bruce Braley, “kind of middle-of-the-road,” lost to conservative Republican Joni Ernst.

“Ernst was sticking to her guns, saying, ‘This is what I stand for,’ ” Langholz concluded, “and that really inspires people” [Dana Milbank, "Purity Politics, Democrat-Style," Washington Post, 2014.11.17].

Senator Thune says today's Senate vote on Keystone XL is just a "cynical" political ploy to throw Senator Landrieu a lifeline in her December run-off election. It won't rescue Landrieu or build the pipeline. Senator Thune will still vote for the pipeline, on false pretenses, and in contradiction to his hint of concern about climate change.

And Rick Weiland says he will keep fighting Keystone XL, Big Money, and even Senate Democrats. But Milbank's column makes me wonder: are Rick and I looking for the South Dakota Democratic Party's Elizabeth Warren, or are we really looking for an SDDP Joni Ernst... or Sarah Palin?

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Rep. Kristi Noem and the U.S. House approve Keystone XL? Them's fightin' words, says the Rosebud Sioux Tribe. Literally:

“The House has now signed our death warrants and the death warrants of our children and grandchildren. The Rosebud Sioux Tribe will not allow this pipeline through our lands,” said President Scott of the Rosebud Sioux Tribe. “We are outraged at the lack of intergovernmental cooperation. We are a sovereign nation and we are not being treated as such. We will close our reservation borders to Keystone XL. Authorizing Keystone XL is an act of war against our people” [Aldo Seoane, "House Vote in Favor of the Keystone XL Pipeline an Act of War," Lakota Voice, 2014.11.14].

I am glad somebody in South Dakota is standing up to TransCanada. The term act of war is apt: a foreign entity is seizing rights from our own landowners, using our own courts and quisling politicians against us. The tribes have done fine work rousing their people and gathering allies to fight this encroachment on our sovereignty, not to mention this threat to our environmental and economic security.

But closing the reservation borders will have no impact on building Keystone XL. TransCanada drew its pipeline route to skirt all reservation borders. Rosebud Homeland Security will have to set up checkpoints and artillery on the 1868 borders.

Related: Rep. Noem and the House need to remember that Keystone XL still needs to go through the South Dakota Public Utilities Commission and the Nebraska Supreme Court. Lots of battlegrounds, Rosebud neighbors!

35 comments

Rep. Kristi Noem voted today to support the House's unconstitutional effort to violate the separation of powers and tell TransCanada it can build the Keystone XL pipeline without the approval of the President of the United States. Rep. Noem is on automatic pilot for Big Oil, so there's no news there.

Offering us something slightly more interesting is Rep. Justin Amash, the only Republican not to vote in favor of HR 5682. Rep. Amash didn't vote against HR 5682, either; he voted presentjust as he did in May. Rep. Amash says he supports Keystone XL, but he has issues with a bill that targeting a specific company. Hmm... the Constitution (Article 1, Section 9) prohibits bills of attainder, Congressional acts that single out a person or group for punishment without trial; so what do we call a bill that singles out a person or company for a special favor?

Our scholarly President could likely expound on that Constitutional point to justify a veto, but he's sticking with more practical matters. He seems a bit put off by the fact that, of all the useful legislation Congress could have taken up right away after the election, the House and Senate are concentrating on a piddly little bill that doesn't seem to do much good for anyone but a Canadian company and the Chinese:

In some of his strongest language yet, Obama pushed back against the Republican argument that the pipeline is a “massive jobs bill for the United States.”

“Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else. It doesn't have an impact on US gas prices,” he said, growing visibly frustrated.

“If my Republican friends really want to focus on what's good for the American people in terms of job creation and lower energy costs, we should be engaging in a conversation about what are we doing to produce even more homegrown energy? I'm happy to have that conversation,” he continued [Jim Avila, Chris Good, and Mary Bruce, "Obama Doubles Down on Immigration, Keystone Pipeline," ABC News, 2014.11.14].

Correction, Mr. President: Keystone XL does have an impact on U.S. gas prices. Keystone XL raises our gas prices.

Our own Senator John Thune helps peddle the lie about Keystone XL creating 42,000 jobs. (Come January, South Dakota will no longer have anyone in Congress capable of telling the truth.) No, the State Department report doesn't say that:

Over the course of up to two years of construction, the State Department estimates a total of 42,100 jobs "would be supported by construction of the proposed project." Some jobs are directly tied to the pipeline and construction. Other jobs are simply a nature of how spending $8 billion ripples out into the economy. And more than 99 percent are temporary.

...The State Department estimates that 26,100 indirect and induced jobs "would be supported by construction of the proposed project" during the construction phase. The jobs would be in providing the supply chain to Keystone as well as employee spending on lodging, food, entertainment, health care, etc.

The State Department calls these jobs "supported" and not created because it includes jobs that already exist [Katie Sanders, "Fox News Host: Keystone Pipeline Would Create 'Tens of Thousands of Jobs'," Politifact.com, 2014.11.13].

Keystone XL will create at most a couple thousand temporary jobs, most to be filled by out-of-state contractors who will follow the pipeline down the route, just as happened with Keystone 1 through eastern South Dakota. Any jobs Keystone XL creates will be swamped by the jobs it kills by raising energy costs.

Republicans keep lying about Keystone XL. The proper response to such lies is not the Democratic surrenderism of Senators Mary Landrieu and Michael Bennet; the proper response is to tell the truth (Senator Johnson! Swing harder!) and put the interest of the American people before the profits of a Canadian pipeline company.

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Senator-Elect Mike Rounds based his campaign on a series of laughable lies, including the claim that building the Keystone XL pipeline will drive trains to every farmer's doorstep to haul away their grain.

Would you believe the railroads themselves don't buy that argument? An eager reader sends me this BNSF newsletter from Winter 2013, before Republicans Doctor Moreau'ed Keystone XL and agricultural rail service, in which the company says Keystone XL will have little impact on its business choices:

Huge growth in Canadian crude oil production is expected in the next 20 years. In anticipation of the growth, many crude-loading facilities are currently under construction in Canada, and many more are being planned. Even if the Keystone XL pipeline is built, the growth in production is projected to exceed the capacity of the Keystone.

In addition, rail provides some unique advantages, including destination flexibility, and reduces time-to-market. Rail also has the potential to move the heavy bitumen crude with little to no diluent; pipelines require a diluent of 30 percent to flow. These all bring value to our customers, and so we see crude-by-rail being a key player in the Canadian market regardless of whether the Keystone XL is built [Teresa Perkins, "Oil Will Continue to Be Important Cargo at BNSF," Railway newsletter, Winter 2013].

Perkins says BNSF has invested $3 billion in crude oil rail facilities and tank cars (which can't haul grain). It would seem unlikely BNSF is going to let those assets sit idle just because Mike Rounds wants them to haul grain for a couple months a year. BNSF also contends that rail is cheaper and more flexible for Bakken shippers, which suggests Keystone XL is a non-starter for our North Dakota oil baron neighbors.

BNSF chief Matt Rose underlined this business analysis just last month:

BNSF Railway Executive Chairman Matt Rose says that even if the controversial Keystone would not take away business from BNSF. “I don’t think it would take business,” Rose says. “I think it would make the curve of our growth go down a little bit."

Rose tells Fox Business News that Keystone will not take away its crude oil business because the pipeline would largely carry heavy crude south, while pipelines won’t be able to handle all the crude oil destined for east and west coasts. BNSF is a major mover of crude oil from the Bakken formation ["Rose: Keystone Pipeline Won't Take Away from BNSF Oil Business," Trains, 2014.10.01].

We'll see how long it takes for business reality to set in with Mike Rounds and the pro-Keystone XL Republicans. The only pipeline we're going to need is the ink pipeline to load President Obama's veto pen against all of the Congressional Republicans bad ideas.

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