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].

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!

• The Watertown Public Opinion editorial board commits the same error as McDowell, claiming Keystone XL will "make a dent" in our dependence on foreign oil. One more time, everyone: Keystone XL's oil will become foreign oil.
• Energy Secretary Steven Chu, who usually has really good ideas (like painting roofs white to reduce energy usage!), also appears to be facilitating the Keystone XL = energy security scam.
• Nebraska Governor Dave Heineman wins my Nice Republican of the Week award by putting water over oil and asking President Obama to deny TransCanada its pipeline permit.