Engineering News

In the 70's this was sold to the American people through patriotism. It was going to provide a lot of oil for America and be a blow against OPEC.

Well, guess what... When the oil started flowing, we were suddenly informed that this oil could not be used in the US because it contained too much sulphur. What did the oil company do with it? What they had in mind all the time: they sold it to Japan for cash! Seems the Japanese are more tolerant about their air quality.

So how much of that cash have "WE" seen? I'll give you three guesses. Are you Swiss?

It really is a marvel of engineering - almost all of the oil that goes in at the north end of the pipeline comes out at the south. But the greatest feat was the social engineering that led so many in the US to think all this oil was for them. It makes sense to accept the risks if you will also share in the benefits. The social engineering worked so well that they're using it again for the Keystone pipeline, bashing anyone opposed to it as un-American.

My understanding is that the proposed Keystone route bypasses inland refineries in the mid-west to route all the crude to facilities along the Gulf. If this is true then it seems we're basically being asked to do a favor for our Canadian friends and neighbors, sparing them the enormous cost of building a pipeline west over the mountains to BC. I like Canada so maybe we should do them this favor but it seems dishonest to sell this project as being for our own benefit.

Judging by the extreme sensitivity of our domestic market to temporary shutdowns of refineries (like the current $0.60 price difference in the Pacific Northwest due to a refinery fire in Washington State) I would guess that our domestic refineries are running at or near full capacity. This would suggest that very little of this new Canadian crude will even be processed here, but will instead be loaded raw into tankers and sold to other countries. So we in the US are being asked to accept the environmental risks, in exchange for which we may see a very slight downward pressure on the global price (over a period of may years). According to Bloomberg, gas prices might eventually fall nationally by as much as $0.04 per gallon (from whatever levels they have risen to during that period), but prices in the Midwest would rise by as much as $0.20 per gallon (assuming the extra refining capacity is built), while the largely untaxed profits from the operation flow to multinational oil companies.

The only real upside I can see is that this oil would still be available in the event of a disruption in supplies from the Mideast. This is a more persuasive argument to me but it's not the one I hear. Furthermore these benefits will not arrive for several years, and strangely many of the same folks who tout this pipeline are also charter members of the Bomb Iran (now) choir. I find it hard to avoid the cynical conclusion that all this is more about maximizing private profits than about our national interest.

Too many folks in this country don't seem to understand what it means to have a global market for oil. Too many of our politicians are willing to take advantage of our slow learning curve and fill their campaign coffers with oil money. So I have to quibble with your final point: we'll see plenty of that cash splashed across our TV screens in the form of moronic, anonymous, economically illiterate campaign advertising.