Press "Enter" to skip to content

Build Keystone XL to Boost Oil Supply… for China?

Hat tip to Plains Justice!

I've noted previously that TransCanada has a hard time making the economic case for its Keystone XL tar sands oil pipeline. Gasoline demand in the United States is currently at a five-year low. That demand dip may be permanent, with experts predicting America's gasoline use may drop 20% by 2030. TransCanada insists its pipeline will boost America's oil supplies, but who will use that oil?

China, says blogger Vince Wade. Check out the pieces he puts together:

  • China's demand for oil is going nowhere but up.
  • China is buying up shares in the Alberta tar sands.
  • PetroChina and Enbridge tried to build a tar sands pipeline across British Columbia to the Pacific, but intense Canadian opposition drove PetroChina away from that plan in 2007. Enbridge still faces stiff opposition to the pipeline.
  • Tesoro recently refit the TransPanama pipeline to run oil parallel to the Canal from East to West---i.e., toward China.
  • The U.S. is very eager to make nice with China and increase exports.

It's a tight, logical picture: build a pipeline across flat, flyover prairie to conservative Texas instead of across the Rocky Mountains and to a port in liberal British Columbia. Connect with a guaranteed growing market. Use America as the middleman (and bearer of environmental externalities) for a Canada-China deal.

Oddly, TransCanada could still spin this scenario as good for America. It's still all about dependency on foreign oil... but the trick is that while we get off our addiction through conservation, efficiency, and alternative energy sources, we get China hooked on Canadian oil. Clever.

* * *

But prairie lawmakers may save us from a complete cave-in to TransCanada and its possible China connection. Nebraska State Senator Annette Dubas has floated a bill to require pipeline companies to submit their projects for approval to the Nebraska Public Service Commission. And South Dakota Governor Dennis Daugaard says he'll propose reforms to South Dakota's contractor's tax rebate system to prevent multi-million-dollar rebates from going to big projects that would have happened even without the kickback. Daugaard didn't mention TransCanada specifically... but I can't wait to see him make Senate Majority Leader and Big Oil quisling Russell Olson carry water on this bill.


  1. Lanny Oserin 2011.01.14

    There is zero reason for this scenario to occur. The US imports almost 10 million b/d of oil. If it increases the amount it gets from Canada, it will simply reduce the amount of oil it takes in from other countries. That oil, in turn, CAN be used to send to China for its growing needs. It makes absolutely no sense to take the oil to another country, reexport it, put it through a canal and then head across the Pacific. What would happen is that Middle East oil that might come to the US would instead be shipped to China, without a canal and for a lot less miles. You might want to lose the conspiracy theory nonsense and learn a little about the economics of moving oil around the world.

  2. caheidelberger Post author | 2011.01.14

    Is a pipeline through the Rockies to the north Pacific coast really an easier route than a pipeline across the plains plus a Panama crossing? Who's to say China isn't planning on bidding up both Middle East oil and Canadian tar sands oil? And where's the guarantee that TransCanada and U.S. refiners will sell to American buyers and not China? I'm not seeing the same inevitability in the business case that you do, Lanny.

    Update 2011.01.25 12:01 CST:Even more evidence that TransCanada wants to decrease American supply, raise our prices, and perhaps seek export buyers.

Comments are closed.