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Keystone XL–Rail Capacity Link Dubious But Useful Argument for GOP

Stick to your guns, Rick and Corinna!

Mr. Tsitrian extends and revises his August remarks to maintain that opposition to the Keystone XL tar sands oil pipeline loses votes for Democrats. Tsitrian and I continue to disagree on the merits of the new argument onto which Republicans have latched, that building Keystone XL will free up rail cars to ship South Dakota grain.

Whether or not moving more oil out of Alberta by pipeline would result in more available rail cars in South Dakota remains a dubious prospect. U.S. oil may make up less than 8% of what flows through Keystone XL. Bakken producers can make more money shipping their product by rail east and west rather than south via Keystone XL to the Gulf Coast refineries, which already have plenty of light crude like North Dakota's product.

I maintain that we could get more direct and immediate transportation results for our farmers by a variety of policies:

  1. Nationalize the railroads.
  2. Build more railroads.
  3. Impose a "bumper crop" rule requiring railroads to dedicate a percentage of their hauling capacity to crops that rises with reported stockpiles at prairie elevators.
  4. Mandate priority for domestic products: U.S. grain moves before Canadian oil.
  5. Create big immediate tax incentives for training and hiring new truckers to relieve the shortage of road haulers, move more transport to trucks, and free up rail cars for farm products.

Those policy options would have at least as much impact on rail shipping as building Keystone XL, without the harmful side effects, like raising gasoline prices and lowering property values. Imposing regulations on the railroads (who exist by the good graces of government and eminent domain) would not be as socially or environmentally harmful as forcing a pipeline on landowners with eminent domain. Even if we used eminent domain to build a new railroad right along the Keystone XL route instead of the pipeline, we would at least be using eminent domain in its intended spirit, to create a true common carrier that could benefit multiple shippers and other businesses rather than a pipeline that profits one company and hauls one product from one region.

The problem is that to beat Tsitrian and the new GOP spin, we have to explain all that. Tsitrian and I will have immense fun digging up evidence to support our claims (we need a TV show! John, let's buy Gordon Howie's studio!), but we're both past the 30 seconds we need to convince voters, and I'm the one swimming uphill against popular sentiment in favor of Keystone XL.

Even so, beam my brain into Rick Weiland's or Corinna Robinson's body, and I stick to their guns and keep saying to South Dakotans, "You and I agree on most issues, but I'm telling you what I've told you from the start of this campaign: Keystone XL is a net loss for this state. A few more available rail cars won't make up for a letting a Canadian company take our land. I'm just being honest, and that's more than you'll get from my opponents."


  1. Francis Schaffer 2014.10.04

    Cory, how about build the refinery in northern South Dakota and rail the product. This will create investment, infrastructure, employment opportunities without the uncertainty of a meat packing plant.

  2. larry kurtz 2014.10.04

    Railbit can be shipped in modified gondolas.

    Pierre Shale makes building KXL through SD untenable.

    Canada's environmental laws prevent refineries built there: exactly why Texas gets the crud. The Souris River floods every year: if North Dakota has become a sacrifice zone the state could built a reservoir and use that water to refine that crap.

    Why not build an alternative dilbit pipeline to the RCPE railhead at Colony, Wyoming and ship it through Rapid City then south to the BNSF mainline near Chadron?

  3. larry kurtz 2014.10.04

    KXL may be created but it will never be built: TransCanada might as well stencil a target on each section.

    A Texas company proposes a land grab for a stealth Bakken pipeline for East River: high pressure lines prone to explosions. One goes off in Wyoming nearly every month.

  4. mike from iowa 2014.10.04

    Being a patriotic 'murrican used to mean all that was good for humanity and especially 'murricans. Now,to be patriotic,you have to swear undying devotion to the almighty freakin' greenback dollar and the koch suckers.

  5. JeniW 2014.10.04

    When I think of the pipeline, I think about what was left behind by the gold mining industry. What was left behind is not pretty, in fact, it is downright ugly.

    The pipeline will have a momentum for a while, but just like gold mining, it will eventually (I believe,) will cost more to pipe the oil than what it will be worth. The pipeline will be abandoned, and the ugliness will be left behind for the future generations to cope with.

    What might be a good advertisement against the pipeline is show the ugliness of abandoned mining any other kind, anywhere.

  6. john tsitrian 2014.10.04

    First off, I own commercial property close enough to the KXL's proposed route to get some benefit. Marginal and transitory as it will be, a gain is a gain--so you should know I'm not an entirely disinterested commentator. That said, two things prompted me to take this up again in the Constant Commoner. The NB poll showing 64-24 support for KXL in SD and Thune's hook-up with Sen. Amy Klobuchar (D-MN) on that letter that just went to the USDA asking the Dept to look into the economic impact of the rail backlog. SD congressional hopefuls should understand that there are a lot of Dems who support KXL ( and that doing so is as much a function of political reality as it is a willingness to allow for some wiggle room when it comes to assessing the safety of the project. I don't like that both Rick and Corinna have drawn lines in the sand on this issue and I believe their campaigns will suffer because of it.

  7. larry kurtz 2014.10.04

    Democrats in South Dakota have zero to lose by supporting the tribal nations in resistance to the climate-killing KXL land grab for China.

    There is enough plastic in Montana and Dakota landfills to make the amount of fuel that the KXL would ship not to mention biodiesel made from ponderosa pine.

  8. Jaka 2014.10.04

    Seeing SD ranchers and others support KXL simply amazes me to no end! That they would buy into a foreign corporation having authority to cross your property at will indefinitely goes against everything they claim by their "conservatism" to be important. Our "conservative" state legislature gave them this authority. Yes, a few local jobs may be produced, dang few, but not worth the risk to our ownership of land, water etc. Hardly any Bakken oil may go into this big pipe as it is Canada's oil that is so bottled up. Were Canada to solve this on it's own soils, it would have to build its own refinery there instead of trampling on the rights of its neighbors to the south.
    Rail cars for moving ag products can be allocated by a couple of Cory's suggestions as needed far better by gov't action than taking so much from its citizens in property rights....

  9. BigDaddy 2014.10.04

    This is such typical leftist blather. Let's take the rights away from someone else, so we can save rights that we think may possibly be in jeopardy for people making their own choices.

    Obama's own State Department has released 3 studies backing up the safety and utility of the pipeline. The problem here is not that Libs are against the Keystone XL, per se, they are simply against capitalism. Don't veil your proletariat dreams with actual concern for others.

  10. jerry 2014.10.04

    Greed is a powerful thing children. Focus study groups have done study after study on what makes us humans dumb down on things that will hurt us immensely for a few moments of gratification. Kind of like drug companies and illicit drug dealers peddling their wares while calling on their "hooked customers". Lobbyists call this a walk in the park while they spread cash instead of drugs to the right corners of the market.

    The hook is the "danger" of not getting crops to market on time. If South Dakota ranchers and farmers had a brain in their melon, now is the time to use it. By not having grain in the market at a specific time, it may just cause that grain to increase in value because of a perceived short supply. Ranchers and farmers could benefit from this greatly by looking at the big picture and understanding the implications of several toxic oil spills on or near their property. What would that do the value of their place? Where would they be getting their water from to irrigate, the Missouri River? Not hardly, that is corp controlled, unless the republicans sell that out as well. Nope, the pipelines a poison for all of us. Economic development would happen by expanding the rail system into what once was. That made the most sense to our grandfathers and makes the most sense now. Kill the XL!

  11. larry kurtz 2014.10.04

    It's hardly surprising that earth haters like 'Big Daddy' who is probably Charlie Hoffman, would grab land to ship the dirtiest diluted tar across sensitive waterways because Canadian environmental laws prevent refining the crap there then ship it to Communist China.

  12. mike from iowa 2014.10.04

    I wasn't aware that capitalism was listed among the unalienable rights Americans as guaranteed in the Declaration of Independence.

  13. Donald Pay 2014.10.04

    Jerry said it best. Use a little economic strategy, but that would be counter to a century of farmer whining.

    The whine from these federally subsidized "farmers" never stops. How about we take away all their taxpayer subsidies? Then they wouldn't be planting acres of grain on lands that shouldn't be planted, and they wouldn't have the problem in the first place.

    Second, we need to stop subsidizing the oil companies and the railroads. Repeal all their tax advantages and do away with eminent domain. Let them try to survive on the free market.

    These Republican talk incessantly about the "free-market," while living the high life off the government. They can't even run the state government without massive federal taxpayer inputs.

    There's a considerable brain drain from South Dakota that's far, far worse than a little delay in grain shipping.

  14. Deb Geelsdottir 2014.10.04

    Let's put a pipeline on the eastern side of SD along I 29, and run it down to a new refinery in the extreme southeastern corner of the state. We'll run the line right through Watertown, Brookings and Sioux Falls to the refinery in Dakota Dunes.

    Great plan, don't you think? It would totally and seamlessly solve the farm rail problem, create tens of thousands of jobs, bring in massive tax revenue-every single penny going directly to public education, and maintain conservative South Dakota's complete and total self reliance.

    Oops. I think I just lapsed into Republican Campaign Speak. Please forgive me. It will never happen again.

  15. larry kurtz 2014.10.04

    "Joop Runs:" sounds like rich guy's Ebola.

  16. Roger Cornelius 2014.10.04

    Please explain to me why it should be the governments responsibility to get the farmers products shipped.
    Other businesses and manufacturers have to find transportation for their products without a government hand out.

  17. mike from iowa 2014.10.04

    Dead end that sucker pipeline into the Red River so it flows back to Canada from whence it came.

  18. Paul Seamans 2014.10.04

    The Dept. of State Final Supplemental Environmental Impact Statement says that TransCanada has promised 100,000 barrels per day to shippers out of the Bakken on the KXL. The FSEIS also says that only 65,000 bpd has been contracted out of the 100,000 bpd available, shippers aren't exactly falling all over themselves to contract space on the KXL. Oil producers in the Bakken will still ship by rail even if the KXL is built, they can make more money by doing so. Harold Hamm, the biggest player in the Bakken, has said that while he originally contracted for space on the KXL that now he doesn't need it and probably won't use it. "Build it and they will come" doesn't hold true here.

  19. Francis Schaffer 2014.10.04

    Are railroads regulated by the PUC?

  20. grudznick 2014.10.04

    Railroads are now regulated by the Board of Regents.

  21. larry kurtz 2014.10.04

    This whole dealio has Kevin Schieffer smeared all over it.

  22. Francis Schaffer 2014.10.04

    So what is a viable alternative to the Keystone XL pipeline for oil from the Bakken formation? It isn't like they will turn off the pumps. Increased supply of rail lines, cars, locomotive power, how much to carry gas, oil and grain? Would shipping refined oil products decrease the demand for rail capacity? How much? I am just wondering.

  23. larry kurtz 2014.10.04

    Dilbit pipeline to a terminal at Colony, Wyoming on RCPE through Rapid City south to BNSF mainline at Chadron: done and done.

  24. Francis Schaffer 2014.10.04

    Thanks, Larry Kurtz. It's Francis by the way.

  25. Francis Schaffer 2014.10.04

    Larry to what endpoint? Refinery, where? Will this take away from BNSF revenue?

  26. larry kurtz 2014.10.04

    Or, dilbit pipeline to Colony and new right of way to Gillette: the route Kevin Schieffer couldn't buy.

    Remember that Bollen and Benda were working on this stuff trying to sell KXL.

  27. Francis Schaffer 2014.10.04

    Larry, that makes sense shorter pipeline, helps the regional carrier RCP&E, if they could expanded to a carrier to the Northwest it would open more of the ag production to the far east.

  28. SDBlue 2014.10.04

    It is not a matter of if this pipeline will leak, it is a matter of when. Bringing out of staters into South Dakota for hunting and fishing is big business. I will say here what I said on Mr. Tsitrian's site. I wonder how those KXL supporters are going to feel when a tar sands spill destroys their prime hunting and fishing grounds.

  29. jerry 2014.10.04

    Hows about we recommend to Senator Thune another suggestion. Why now start to manufacture heavy iron rails to replace the old stuff that is on some of the right of ways at present. We could then manufacture more locomotives and more tankers and more grain cars. What the hey, why not manufacture some people movers as well. Make some new rail lines and liven the joint up a little bit. Remember to dust off the old Manifest Destiny books that were used to settle the place in the first place then we are off to the races. The economy wins, the environment wins and more importantly, the people win by getting more public transportation.

  30. grudznick 2014.10.04

    Mr. Jerry, I fear you underestimate the reach of the Regents. The transportation board does their bidding for they control the railroads, and much of your day-to-day life without you even knowing it. There are few who comprehend their nefarious intentions.

  31. jerry 2014.10.04

    No, Mr. grudznick, I am clear about the regents and also about how they fit into each puzzle promoted by their gimpy look from having the puppet masters hand up their most receptive behinds to give them the direction they follow without hesitation. The regents and the railroad boards are both appointed by the governor, how nice. Why do they hate democracy so much though by being the willing accomplices of a common criminal like the governor and his predecessor? Nefarious intentions? Indeed sir, indeed.

  32. caheidelberger Post author | 2014.10.05

    Francis, I'd rather build a slaughterhouse than a refinery. The slaughterhouse at least processes a sustainable resource that we can produce right here in South Dakota.

  33. caheidelberger Post author | 2014.10.05

    Big Daddy—"leftist blather"? As Jerry and Donald note, the farmers are the ones asking for government support. I'm willing to entertain the argument that they may need government support, but Jerry and Donald help remind me that they have a hard case to make. Indeed, if shipping oil is more profitable than shipping ag products, why should the government interfere?

  34. Lanny V Stricherz 2014.10.05

    The most overlooked part of this as a campaign issue, is that other than voting to approve the treaty between the US State Dept and Canada on any such treaty or agreement to build the Keystone XL, no US Senator is going to have any voice in whether it is built or not.

  35. Francis Schaffer 2014.10.05

    Cory, point we'll made. It seems we have a slaughterhouse that is sitting empty. I would rather viable business plans be supported for the betterment of the region that what we have for the benefit of those who are politically connected.

  36. Bill Dithmer 2014.10.06

    Wow there sure seems to be a lot of hate for the people putting food on your tables. Every single thing mentioned, stop all subsides, hold on to the grain for a while and the price will go up.

    First if you truly want the subsidy problem fixed do somthing to get er done. You can pay a little now or a lot later. Its not the farmers that are making the rules, its friends of farmers that dont farm. Fix that one problem and the rest will fix themselves.

    Now if were going to start taking subsidies, or funding, or whatever term you choose to use, lets do it all at once. No more nonprofits, tax em all. Churches should not only start paying taxes, but should open their books to the public. Headstart, gone. All grants and sub par interest loans, gone. HUD, gone. Scallorships, gone. Rural electric cooptritives, gone. Reservations, gone. This could just keep going and going but eventuality it will be your turn to bite the bullet.

    Now lets talk about the biggest commodity SD has, it is in fact its commodities. The farmer is constantly walking a tightrope when it comes to grain handling. How much is to much? Of cource the answer to that question is as much as you can afford.

    Unfortunately, in lean years those bins will set empty not just not making money, but becomming a liability because an empty bin is so volnerable to the wind. In years past some of those farmers with enough bin space got "warehousing" licenses. Most of these people soon found out that with that license came a lot of hoops to jump through by the feds. Add to that the cost of keeping that grain healthy while setting in that bin, and the ever increasing cost of insurance, and it doesnt take to many sleepless nights to get out of that business. The only real option is to find more shipping options.

    Every farmer that is big enough plays the market. But in reality, farmers are only in the market, and the market controls them. This year farmers are setting on the biggest grain crop in history. For almost all of these farmers setting on that grain isnt an option for two reasons, lack of storage, and their opperating loans. We have covered storage so lets get right to the money part.

    I dont know of a single farmer that doesnt have to go to their lender every single year to get an "Opperating loan." If you farm more then 5 or 6 thousand acres that loan will be for more then $2,500,000 just to keep thing going. The less ground, the more its going to cost you per acre, unless you want to loose money. Lets face it, the bigger you are the more oppertunitys you will have to save, and make money. If those operating loans come due, it doesnt make any difference what the prices are at the time you have to satisfy the conditions of the loan so you sell. You have no choice, you owe money so you sell. If you loose or make money it doesnt matter you have to pay that loan off or you wont have operating expenses for the next year. You and you alone are responsible for getting that grain to where it has to go. I haven't looked lately, but a month ago hard winter wheat was about $3.50 higher at the terminals then in western SD. It looks like there is going to be a lot of trucks and spread axele trailers baught in the next year. Its not the best option, its the only option.

    Real farmers are doing everything within their power to keep their cost of production down. Why wouldnt they when it effects their bottom line.

    If you want expensive food just keep talking. The relief you are seeking will have to come from somewhere else because farmers are doing everything they can already to make their operations as effecient as they can. Its only through that effecintcy that you are able to feed your families for the prices you pay now.

    If you dont farm you have no idea what it takes to farm. Of all the businesses that you could get involved in, SD agraculture is the one that takes the most time for the money. Sometimes that money is good, but I have to wonder where you people were when nobody in farming made any money for 6 or 8 years at a time. That's right you still were able to get what you wanted at the store because of the subsidies that kept your plates full.

    If someone has an idea of how to make agraculture more effecient, by all means dont keep it a secret, but if you want to bitch, at least have a clue as to what youe bitching about. If you truly believe you can do it cheaper and still take care of your families by all means buy some land and get to it. But, you wont because you cant get the money, you cant get the help, unless you have enough kids, and none of you would be willing to sacrifice the freedom you have now in exchange for the work and knowledge it would take to farm.

    The Blindman

  37. lesliengland 2014.10.06

    so government is a good thing. lots of food for thought. well done.

  38. Bill Dithmer 2014.10.06

    " Indeed, if shipping oil is more profitable than shipping ag products, why should the government interfere?"

    Cory you tell me. Can you drink gas and live? Can your little girl get by with a can of 30weight oil for lunch?

    The Blindman

  39. lesliengland 2014.10.06

    "blathering" is a term 1st perfected in "the big lebowski" as the old man criticized the dude's complaint. grudz next picked it up and then this large father figure, but the common element throughout appears to be the denigration of (this) dem's criticism in support of returning the hills, or against capitalism, that religion of the GOP; or some other well-meaning action for the little people, like saving the planet from to maw of corporate greed, exploitation, pollution, obstruction and science denial. amen

  40. john tsitrian 2014.10.06

    Bill Dithmer, at what terminal was HRW $3.50 higher than it was out here in West River?

  41. Bill Dithmer 2014.10.06

    John that would have been Deluth.

    The Blindman

  42. john tsitrian 2014.10.06

    That's an amazing spread. Didn't know that Duluth handled winter wheat--always thought it was mainly a spring wheat terminal. That huge of a basis spread does indeed indicate that the wheat was having a tough time getting from the farms to the terminals. I imagine farmers must have been crazy with frustration when they saw those prices but couldn't get their product to that market. Reasonable or not, many of them must have been shaking their fists at the North Dakota oil shippers.

  43. Bill Dithmer 2014.10.06

    John, i have to expand on what I've said, I'm sorry for the confusion.

    What i should have said was that there was no space for any wheat of any kind in western SD in any elevators. They wouldnt be able to take wheat if they wanted to because they were just to full. The price that I gave reflected that inability to sell or move grain through the elevators.

    I sure dont see that problem getting better soon. After all, we are just talking about wheat here and that problem hasn't aleviated. Now here comes beans and corn harvest on top of an already filled to capacity system and you have some idea of the problems that producers are facing.

    Most people dont understand that the price of a bushel of grain isnt what a farmer ends up with, its what it took to get that price thats important. Out of that price most of that money has already been spent. Fertilizer, money for applicating, equipment, help, and then getting that grain to the place you have agreed on for delivery.

    If there is no place to sell your grain in western SD, what would you do if you needed to get money? You take it to where they can buy it.

    John the price doesnt matter if nobody will except your product. Lets see here, that would be no money in west river SD, or a paycheck at a terminal. It doesnt look like there is a choi e to me.

    The Blindman

  44. john tsitrian 2014.10.06

    Got ya, Bill. That situation was the basis for my post in the Constant Commoner that started Cory on this thread in the first place.

  45. Jana 2014.10.06

    Let me get this straight. John Thune and the GOP think that the government should pick winners and losers?

    Boy, it is getting harder and harder to figure out the hypocrisy of the GOP.

  46. john tsitrian 2014.10.06

    Actually, Jana, Thune's recent letter to the USDA on this matter was co-signed by Democrat Amy Klobuchar of Minnesota.

  47. mike from iowa 2014.10.06

    According to Duluth shippers,most of the wheat grown in N Dakota and Montana goes west to pacific ports and S Dakota and Minn wheat goes to Duluth.

  48. john tsitrian 2014.10.06

    Hit the post button too quickly, Jana. The hypocrisy is compounded by Rounds, the Senator who publicly supports the Thune-Klobuchar initiative and apparently wants to "fix Washington" by giving it even more authority to impose its well on a private enterprise, i.e., the railroads. Some fix.

  49. john tsitrian 2014.10.06

    Thanks, mfi. Appreciate the info.

  50. john tsitrian 2014.10.06

    Ooops. Multi-tasking again, my bane. Rounds, the Senate wannabe.

  51. mike from iowa 2014.10.06

    You are welcome,john t and might I add,I find your blog a breath of fresh air when it comes to Republican opinions and for that you have my respect.

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