For over a year, I've maintained with a variety of evidence that building the Keystone XL pipeline will raise the price of oil and gasoline here in the middle of America. At the very least, empirical evidence says Keystone XL won't decrease gasoline prices.
This morning, let's look at the inverse: not building Keystone XL lowers the local price of oil:
The delay of the Keystone XL pipeline's approval and completion is forcing distributors to take larger discounts than usual, according to a report from the North Dakota Department of Mineral Resources in Bismarck.
The North Dakota sweet crude price had a 30 percent discount to the New York Mercantile Exchange-West Texas Intermediate price , DMR director Lynn Helms wrote in the report last week....
"What's occurring right now is there is quite a bit of congestion in the Cushing, Okla. and the Great Lakes area," said Justin Kringstad, North Dakota Pipeline Authority director....
If the Keystone XL is completed it may help return discounts to normal, Kringstad said....
"The more we can debottleneck midcontinent and open up additional access for midcontinent barrels to get to the Gulf Coast, that's going to raise the price of a barrel in the Great Lakes area and then in turn affect the North Dakota crude pricing," he said [April Baumgarten, "Oil Express: Keystone XL Delay Increases Oil Price Discounts in North Dakota," Dickinson Press, 2012.03.31].
Now you have to read the Bakken-beholden local press carefully: "increasing price discounts" means lowering the price of oil. "Returning discounts to normal" means raising the price of oil.
Baumgarten does point out one significant problem with delaying the Keystone XL pipeline: with or without the pipeline, oil producers are still going to frack all the oil they can out of the Bakken and seek access to the market. Absent Keystone XL, oil producers compete with agribusiness for boxcars, making it harder to get crops and critters to market when the price is right. Of course, if farmers and ranchers focused on diversified local agriculture instead of industrial scale monoculture, they wouldn't have that problem, would they?
Just herd Congresman Ryan this morning on Sabbath gasbag circuit claiming Obama was raising gas prices by opposing XL pipeline. They just keep telling the same big lies over and over again assuming that in time, they will fool enough people to foul up rationality completely.
Cory how much food do you produce yourself which feeds your family? How many items do you eat every week which are not grown within biking distance of your home? (If we go totally green the automobile is out.) Do you ever drink from a plastic water bottle? (petroleum product ) Should we just forget all the third world countries starvation problems and stop shipping massive shipments of food aid to those countries? You said eat diversified locally grown food only above.
Your isolationist mentality has zero chance of becomming a sliver of normal and rational thought in the world of production agriculture unless you want billions of people to starve world wide Cory. If I were you I'd start learning how to can veggies soon and grow one huge garden.
And to the people who honestly believe that Obama can re-write the supply and demand theory; good luck with that. Anyone with half a brain understands that more product in the pipeline; any product, decreases the overall market demand for that product by filling the availability supply. Liberals continue to distort the truth any way they can to fit their warped sense of right and wrong. But hey Cory; keep going Green friend.
"Anyone with half a brain understands that more product in the pipeline; any product, decreases the overall market demand for that product by filling the availability supply."
I don't think that's always true, Charlie. Especially when viewed in the limited context of US demand, which has remsined relatively constant for the past 35 years, even as supply (and the corresponding prices) fluctuate dractically. I think it's more like buying lottery tickets, actually. Demand is driven by perceived value, not actual, regardless of supply. We never run out of lottery tickets for those foolish enough to buy the, ;^)
And, conversely, when there is less demand (perceived value) it doesn't make any difference how much supply you have.
In other words, prices are driven more by perception than anything else (sometimes.) That's how people end up buying Lexuses and Cadillacs instead of Toyotas and Buicks. Or shares in Microsoft instead of Apple (Whoops!)
The Spearditch Valley used to provide the produce needs of Lawrence County. Now it's a driveway.
That diatribe illustrates the mass dementia that possesses the conservative movement. First, it misrepresents to the point of falsification of the liberal and Green positions. Then once it has erected that straw man out of falsehoods, it proceeds to attack it.
Going green does not mean giving up automobiles. It does mean some adjustments to transportation system to make it efficient and more sustainable. But it means mostly alternative fuels for automobiles which do not exploit and lay waste to the land and defile the earth, water, and air. It means coordinating and utilizing multiple sources of energy and putting as much effort into developing them as are now used to keep us dependent upon petroleum.
And it means freeing the nation from dependency on foreign oil. While we are caught up in denying science and quibbling about what sources of energy we want, foreign countries are moving in on the alternate sources in ways that will keep us dependent. China has all but taken over production of solar units. Europe has taken the lead in the manufacture and operation of wind turbines. Half of the wind farms in South Dakota are owned by European and Australian-based companies.
The land on which modern America was built is being covered over by an industrial form of agriculture that operates not on the best principles of agriculture, but on the devastating exploitations of agri-business. We have a chance to free ourselves, but being free of corporate domination is a warped sense of what is right and wrong,
I say build the pipeline.
Let's do it all. If nothing else it will create job oppurtunities for people. Maybe only for a year but it's better than them having to be on unemployment for a year.
Mike, legalizing hemp and prostitution would create longer-term jobs for more local people than Keystone XL, with less environmental damage. Hemp, I hear, is actually pretty good for the soil. Will you back that jobs plan, Mike?
Charlie, why is it so hard to understand an economic principle longer than three words? I'm not making this price increase up: the experts and industry honchos are saying it themselves. Right now, we have the Canadians by the balls. We are the only customer they can reach with their tar sands. We get a discount thanks to a local oversupply and lack of competing bidders. Keeping that oil bottlenecked on our turf is great for our energy security and economy: we pay less, we have a surplus, and China pays more. Keystone XL drains all of those advantages. I'm trying to be Reagan-Haig here, not Nader-Kucinich.
Dragging our feet on Keystone XL is economic stimulus without one cent of deficit spending. Why not keep our energy prices low for as long as we can?
That said, I still agree with every wise word Anne just said. Rock on, Anne!
Sorta related:
http://switchboard.nrdc.org/blogs/amall/colorado_farmers_losing_out_to.html
Ok CH. I'm continuing to stick to supply and demand theory but must admit we have little control over the demands increasing from abroad. We do though control supply. One positive note I do see in containing the exploitation of oil reserves is we may end up being the last continent with large untapped petroleum stores.
Here is an economic theory which should entice you to consider changing your views on the pipeline. Let us assume that it is going to be built someday. The Texans involved with Hyperion need a steady flow of crude in order to even start the process. Let us assume Hyperion actually happens. The river of money flowing back into SD Government would be the largest single source of revenue to date in SD's history. Do you think the first thing we would do is set up an irrevocable trust fund to fully fund education? And possibly lead the nation in teacher pay? And don't just say no before thinking about it positively, please.
One more thought for whomever Anne may be. There is no such thing as green energy. Oh, an electric car you say. Where do the batteries come from? The acid in the batteries? The plastic making up the car? The steel of the frame of the car? Oh you say the electricity comes from the wind. And the towers are made of what? They do what to birds flying close by. (that is gross) And when the wind does not blow do you just shut the town down and quit pumping water and stop living in the 21st century? Foolishness. Plain foolishness this green talk of energy is.
To be conservative in energy usage is smart. To try taxing every energy source you don't like and send it to the ones you do trying to save the planet; insane!
Charlie, we already have Keystone 1. If Hyperion really has the chops to build a refinery in Union County, they run a 40-mile feeder line from Keystone 1 at Yankton. Unless TransCanada reroutes well around the Sandhills, Keystone XL doesn't come within 125 miles of Union County... and even then, they'd have to cross the Missouri, which is an environmental hazard and a pain in the butt. Unless you plan to move Hyperion out to Buffalo or Winner (Doug interested?), Hyperion doesn't do jack to improve your case.
So just to be clear, Charlie: do you accept my argument that keeping Canadian supply bottled up to depress our local prices is free economic stimulus for the U.S.?
http://www.greatfallstribune.com/article/20120328/NEWS01/120328002/Tester-wants-ban-exports-Keystone-XL-oil?odyssey=tab%7Ctopnews%7Ctext%7CFrontpage
Cory what percentage of a barrel of oil's cost can be attributed to commodity traders pushing the price? When it rains grain futures drop because of commodity traders rushing to buy (actually sell but futures are reversed). In a drought situation with a short supply looming traders sell sending prices higher. There is no historical data which lends support to the opposite happening upon increasing the availability of crude oil in our national markets. So the answer is NO I do not believe the smoke screen being played out by a few. It just makes no sense Cory. But I can see how by stopping the flow of oil out onto huge cargo ships and forcing it to bulge the storage capacity of it here could in the short term reverse the markets. For only a very short time would that occur before natural forces of supply and demand take over once again though.
Moving packaging from plastics to aseptic paper products using some of the 70 million acres of collapsed pine forest and hemp processed with waste water would is the blue state solution.
No! It's not a smoke screen! It makes perfect sense! It's exactly what the original article to which I linked said is happening now! The discount on WTI crude is caused by the Cushing glut and the absence of Keystone XL! It's right in front of you! The traders aren't bidding up WTI; they haven't done so all year! The oil can't move to other bidders. Why are the facts so hard to acknowledge here?
By the way, would you please clarify your "no historical data which lends support to the opposite happening" statement? I'm not trying to be dense or tricky: I honestly lost track of what you were saying with relevance to the current argument.
Again, there is a definition of "green" that is more fabrication than anything the concept of green defines. For one thing, green means a reduction and a control of those factors that despoil the environment. I know of no responsible advocates who do not deal with the facts that there are trade offs and problems to be solved. Electric cars are a fact of life, and advances have been made in fuel cells. And it is easier to neutralize and dispose of battery acid than it is to find somewhere safe to put depleted uranium or excesses of carbon. The idea is conservative of resources, not the mindless exploitation and destruction of them. And a related issue is the use of antibiotics which once easily controlled staph infections and the like, and now are practically useless because the over use of antibiotics in our food sources and given as mere palliatives by physicians has resulted in super strains that have become invariably lethal.
Green refers to policies that pay attention to cause-and-effect, where we anticipate what things we do will do the viability of our planet for life. If you have the inclination, you can google all manner of reports on how advocates of sane energy development consider, criticize, and analyze the better alternatives to destruction and the oppression of life on a black planet.
Anyone know what it costs to get a barrel of oil out of the ground? The numbers I'm hearing range from $5 to $35 with $35 being from the deepest off shore wells. That's a baseline production cost.
If oil is going for $120 a barrell, there's a whole lot of speculatin' an' profteerin' goin' on. The number I keep hearing is around $.56 on a gallon of gasoline.
Not sure what it is on crude... maybe 50%? Refiners could perhaps be getting oil for half what they pay now if the speculators (who don't do anything with the oil except sell it after they buy it) were reigned in.
Yes? No? Anyone? Anyone? Buehler?
And every year we can keep our corner on Canadian oil and maintain that WTI discount is another year that we can develop even better green tech (with Anne's progressive thinking!) before the Canadians build a route to get that oil to China and sandbag our economy by boosting our oil prices.
Bill, super-smart Fareed Zakaria says Russia needs oil to top $110/barrel to balance its books. Iraq: $100; Saudi Arabia: $80. Shell says it can dig oil out of the tar sands for $50/barrel. Bakken shale oil has a similar breakeven point.
McKibben just retweeted this:
http://www.tomdispatch.com/archive/175523/
Enbridge pipeline conference cancelled citing "security concerns:" source. RT @wicaglata (Vi Wain).
I heard one analyst today say that 50% of the oil price is due to speculation. Not sure about quality of source however.
The tar sands oil is bitumen and requires lots of energy to be in a state to pump in a pipeline. It generates 10% more carbon emissions than other crude because of the extra energy needed to process it.
South Dakota's best energy hope is locally owned wind generation producing methanol and anhydrous ammonia fertilizer. That will do more than any pipeline for employment and economy here.
Consider the cost to South Dakotans of an extra 20 cents per gallon gasoline costs because of the pipeline, and the property tax revenue from it looks mighty insignificant. Maybe not quite as bad as a lottery that takes nearly 75% of the intake and moves it outside SD.
Interesting tax comparison, Doug. The U.S Department of Energy says South Dakota used around 550 gallons of gas per capita in 2005. Multiply that by 800,000 people, and you get 440M gallons. Multiply that by 20 cents per gallon, and you get $88 million more each year transferred from South Dakotans' pockets to the oil companies. TransCanada says Keystone XL would generate more than $10M in annual state/local tax revenue... but TransCanada has a history of bad math.
On Keystone, Cory, I know you won't cry any tears but I must defer from commenting anymore.
You are either so formed in your opposition that you desire to ignore real information in context from reputable sources or you intend to deceive people. Just like you comments about the meat from BPI, you could care less about the impact on those less fortunate. You just want the world your way, facts or reason be damned.
Troy, again you resort to this "I know you are but what am I?" GOP-Jedi mind trick. I care about the less fortunate as much as you. I've cited bunches of facts, not from greeny-lefties, but from people in the industry, people who want Keystone XL, supporting my exact point: the Cushing glut keeps our oil prices down. Draining that glut raises our prices, sends North American oil to the global market, and weakens our economic situation, including that of the working folks who have to drive from Belle Fourche to Rapid or Madison to Sioux Falls for work each day.
You are advocating the maintenance of an inefficiency in the market which ultimately adds price and enhances profits for the powerful.
All you do is proveany concern you may have for the poor is secondary to your goal to raise oil prices worldwide to make your alternatives more competitive. Honesty is the best policy. Using deceit doesn't behooves you.
I asked Bob Mercer what the revenue was from the six Missouri River hydropower stations to SD: zero dollars. Yet the state pays millions to flood victims. Sounds like the real money is in insurance. Right?
I can't be any more honest that I am in the original post. No Keystone XL = lower oil prices and gas prices in America. That's good for Americans rich and poor.
Matt McGovern just retweeted this:
http://cnews.canoe.ca/CNEWS/Canada/2012/04/02/19584726.html
Troy,
I should let this one die, but what the heck....
When you use phrases like "an inefficiency in the market" and express the desire to make the market more efficient, I reach for my wallet and pray that I will have enough to pay for my funeral.
As a non-business owner and non-speculator, it seems to me the market was extremely efficient prior to the 2008 meltdown. That efficiency nearly sent he economy and the country as a whole into a free fall.
Since then, the market have efficiently reduced the value of my labor and increased the prices of goods and services.
I will concede that markets may--and I stress the conditionality of the word--be the least bad option, but Ayn Rand was immorally incorrect to assert that they are some sort of unmitigated good that if allowed to run freely will produce Heaven on Earth.
I am not saying there is a Masonic New World Order Skull & Bones Trilateral Commission Illuminati Socialist Nazi conspiracy. I’m just saying that, at best, efficient markets are like a casino; the house always wins and big players get good comps. At best efficient markets produce a system that protects the interests of the stronger.
...and LK's last sentence notes why we are perfectly justified in applying a little government brake every now and then to keep things fair. (Don't forget: we're already producing more oil under Obama than we ever did under Bush, and we're not winning on price.)