Which foreign imperialist will get squashed by low oil prices first, Vladimir Putin or TransCanada and its no-long cost-effective Keystone XL pipeline?
..."the political debate is not paralleled by the realities" in the market, said Sandy Fielden, director of energy analytics at Texas-based RBN Energy. "The economics of this project are becoming increasingly borderline."
The problem is that extracting oil from tar sands is difficult and costly. Prices need to be relatively high to make the extra effort profitable.
..."The recent decline in [oil] prices has to give the sponsors some pause," said Chris Lafakis, a senior economist at Moody's Analytics [Evan Halper, "Keystone XL Pipeline May No Longer Make Economic Sense, Experts Say," Los Angeles Times, 2014.12.15].
With or without Keystone XL, our frackers will keep shipping their oil by rail. You'd think market demand would solve the problem of rail capacity—if oil is worth shipping, rail is worth building—but somehow, the oil and rail barons keep getting us to foot their bill:
States and the federal government have handed out tens of millions in public dollars to rail companies and government agencies to expand crude oil rail transportation across the country, a Reuters analysis has found.
The public assistance in states like New York, Pennsylvania, Ohio, Oklahoma and Oregon comes as railroads are posting record profits, and as state and federal authorities press for safety overhauls that the oil and rail industries have opposed, following several explosive derailments.
The Reuters analysis identified 10 federal and state grants either approved or pending approval, totaling $84.2 million, that helped boost the number of rail cars carrying crude oil across the nation [Jarrett Renshaw, "U.S. Taxpayers Help Fund Oil-Train Boom Amid Safety Concerns," Reuters via St. Louis Dispatch, 2014.12.14].
Alongside the steel for the rail and the pipeline, I smell irony in this conversation that NPR's Melissa Block had with Nebraska farm couple Chuck and Miriam Peterson. Keystone XL wouldn't cross their land, but it would cross their neighbors' a half-mile away. They support the pipeline, which will use eminent domain to take land rights from local landowners. But they get mad as heck when someone intrudes on their land:
BLOCK: Suddenly as we talk, Chuck Peterson gets up, goes to his garage and comes back with a sign. It’s covered with dust and cobwebs.
C. PETERSON: That was put on my grandparents’ farm. And I am pro-pipeline and I did not appreciate it being there.
BLOCK: The sign says Stop the TransCanada Pipeline. And when Chuck Peterson spotted it on his land, next to the road, his wife Miriam says he came home furious.
M. PETERSON: Well, Chuck came home and he said, this is the end, I’ve had it. And he said, nobody asked our permission, we don’t agree with that and people driving by will think we do because it was on our land. When someone tries to include you in their…
C. PETERSON: Agenda.
M. PETERSON: …Agenda, and you don’t agree or haven’t had a chance to even offer your opinion, it did feel personal.
BLOCK: Did you take the sign out right then?
M. PETERSON: We’re going to have a burning, but it’s still in the garage. (Laughter) [Melissa Block, "On Nebraska's Farmland, Keystone XL Pipeline Debate Is Personal," NPR via KMBH, 2014.12.16].
So close to understanding, yet so far....