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Keystone XL Oil Headed for China, Not Boosting U.S. Energy Security

Last updated on 2014.03.22

On his work blog at Heartland Consumer Power District, McDowell copies and pastes an entire Robert Samuelson essay (without providing a link to the original) on how tapping the Canadian oil sands will promote America's energy security. McDowell tacks on a paragraph touting the connection of the Bakken oil deposits to Keystone XL:

Added to the Canadian oil for pipeline transportation is what the USGS says is 3 to 4.3 Billion Barrels of technically recoverable oil in the Bakken Formation in Montana, North Dakota, and a small portion of South Dakota that could also use the proposed pipeline. All that oil could replace a significant amount of what we currently import from delightful dictators in countries such as Venezuela and repressive regimes in several unstable Middle East countries [Mike McDowell, "Saying Yes to Canadian (and Bakken) Oil," HCPDBlog, 2011.08.31].

Cover of "Exporting Energy Security" 2011 report from Oil Change International
(read the full report from Oil Change International: PDF document)

Keystone XL could indeed help American national security... if the oil it carried were intended for use in America. But newly appointed South Dakota Transportation Commission member McDowell evidently missed the memo that the Keystone XL pipeline will transport oil straight across the Great Plains to the global export market.

Another memo to that effect came yesterday:

The facts:

  • Keystone XL is an export pipeline. The Port Arthur, Texas, refiners at the end of its route are focused on expanding exports to Europe, and Latin America. Much of the fuel refined from the pipeline's heavy crude oil will never reach U.S. drivers' tanks.
  • Valero, the key customer for crude oil from Keystone XL, has explicitly detailed an export strategy to its investors. Because Valero's Port Arthur refinery is in a Foreign Trade Zone, the company can carry out its strategy tax-free.
  • In a shrinking U.S. market, Keystone XL is not needed. Since the project was announced, the oil industry acknowledges that higher fuel economy standards and slow economic growth mean declining U.S. oil demand, even as domestic production is booming. Oil from Keystone XL will therefore displace American crude from new, "unconventional" domestic fields in Texas or North Dakota."

Oil is a fundamentally global market — the idea that the pipeline enhances our energy security is a scam.... Let's hope the Obama Administration doesn't fall for it. In fact, the only way to truly reduce our dependence on foreign oil is to reduce our dependence on all oil. Let's not fool ourselves that we will achieve "energy independence" by serving as a middleman for access to overseas markets [emphasis mine; Steve Kretzmann, "Report: Exporting Energy Security: Keystone XL Exposed," Oil Change International, 2011.08.31].

Samuelson's and McDowell's and the State Department's claims that Keystone XL somehow makes America safer are a scam. We won't burn a drop of Keystone XL oil in the U.S. Pipe the Bakken oil into the mix, and that shale oil too will go straight to tax-free Port Arthur and eager Chinese buyers.

This is not the first time McDowell has waved the flag and Hugo Chavez in our faces in his shillery for TransCanada. Such is to be expected from an electric industry representative. McDowell's industry doesn't view TransCanada as an energy supplier; they see TransCanada as a big energy consumer to whom they can sell lots of electricity for those pipeline pumping stations.

Bonus Keystone XL Bits!


  1. Douglas Wiken 2011.09.01

    The Mitchell Daily Republic editorial today attacks Daryl Hannah for protesting the XL pipeline and increased reliance on fossil fuels saying in effect she knows nothing relevant to the issue.

    We might wonder what the editorial writer knows as well. He or she makes a special emphasized point that we should only be concerned about reducing our use of foreign oil. Apparently the editorial writer considers Canada another US State.

  2. Shelly 2011.09.01

    Dear Gov. Daugaard:
    Do you think Keystone will give us back our $10 million?
    Unemployed and Trying Really Hard not to be Bitter Teacher

  3. Stan Gibilisco 2011.09.01

    Let's make China dependent on our oil! Is that a weird thought, or what?

    Flash! Left- and right-wingnuts, unite! We had better implement a carbon tax immediately, lest God punish us for our disregard of the environment by sending Katia trundling into Long Island as a Category-5 hurricane.

    Shelly: We can always find some blessing to count. You could be in my shoes: The recession along with copyright bootlegging has cut my income by more than 66% since 2006.

    Heck, at least my publisher still wants me, assuming certain Canadian activist investors don't decimate them in the name of "unlocking shareholder value."

    Teachers are underpaid. I am underpaid. American workers in general are underpaid. What should we do? What can we do? Emigrate to China?

  4. caheidelberger Post author | 2011.09.02

    Doug: indeed! Even if Daryl Hannah were just a know-nothing celebrity, she would not pose anything like the threat Keystone XL does.

    Shelly: I feel for you! At some point I need to hit the books and see if the property tax revenue from Keystone I has made any difference in keeping schools funded in the counties it crosses in East River.

    Stan: make China dependent on North American oil? That might be the only way the pipeline proponents could justify their national security claims. But by that thinking, might not Canada become dependent on China's cash?

  5. alan 2011.09.03

    are they going to build this or does it still have to get approval form the government

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