Why Not Just Build the Pipeline Through Canada? They Can’t

One of the threats the Canadian government, oil companies and Republicans in the United States have raised about Keystone XL is the notion that, if not allowed to build the pipeline through the United States, oil companies will simply build it west to move the oil directly to the Canadian coast for shipment to China.

Why, then, hasn’t this happened? Because there’s no way the people of Canada will allow it to happen. The Canadian pipeline argument is simply a dishonest attempt to force the United States to bear the risks of the pipeline with little promise of profit.

Rick Smith and Andrew Light expose some of the reasons that the pipeline simply cannot be built west:

  • Pipeline construction will require the consent of indigenous peoples, who oppose the construction.
  • It will risk tourism and seafood jobs on the coast.
  • It will risk critical wildlife habitat and environmentally sensitive areas.
  • It would have to cross the Rockies, a far more daunting and expensive proposition than the plains of the Midwest.

Those reasons to oppose the construction of the pipe certainly sound familiar, don’t they? It’s almost unbelievable: those who are pushing so forcefully for the construction of the pipeline are arguing that American water, agriculture, health, and jobs should be sacrificed for a pipeline that Canadians either won’t or can’t build in their own country.

Are the profits of a Canadian oil company and a few short-term jobs really worth the potentially devastating impacts of an almost inevitable spill? Certainly not, especially when the oil will be shipped to world markets anyway–and actually raise prices on the people bearing the risks.

There are a number of excellent reasons why Canada won’t build this pipeline west, and we would be fools to ignore them.

23 comments
G. Johnson
G. Johnson

Anyone who wants a better perspective should start reading the Calgary Herald and the Edmonton Journal, where you would have learned over recent months that Keystone will increase prices for refined products in the American Midwest (and that the "Canadian" companies are just fronts for Chinese money). Funny how the right wingers are fighting to take Americans' property by eminent domain to help out their Commie Chinese friends.

The Polish Wolf
The Polish Wolf

regardless of the challenges, I think it's ultimately inevitable, barring a huge drop in oil prices, that the pipeline will be built. If its totally impossible through the US, they will ind a way to build it west, or east, or somewhere. But it's also obvious that the companies involved vastly prefer going through the US. The way I see it is that this puts us in a great negotiating position. The longer we hold out, the more environmental, safety, and economic concessions we can wring from the developers. And if we end up asking too much? They can spend their money trying to build through the Rocky Mountains and setting up the necessary infrastructure in Vancouver (and if they think that Midwest Americans are too stingy about the environment, they'll sure have a fun time dealing with coastal British Columbians!

Dave Budge
Dave Budge

Sending the Bakken oil to Canada wouldn't at all address the economic stability issue - which really is no small thing. But, yes, it would lead to some economies of scale. Secondly, We have a pretty good environmental track record with pipelines in this country. That's not to say that's there's not risk or a public cost. Quantifying that cost, however, can be as exaggerated by opponents as job creation is by supporters. I warn against confirmation bias on both sides (and, yes, that would include your Cornell study. ) BTW, you'll notice that I didn't mentioned jobs since I do agree that the jobscreated don't do much good for solving our systemic unemployment problem. That's a different discussion, however, it seems that those people who constantly talk about economic multipliers ala Keynes seem to think that a similar multiplier does not exist in the case of the XLP. It seems difficult to me that holding that hiring government employees or building public infrastructure has an economic multiplier and project like the XLP don't. Regardless of the fact that I have no objections to the project and, actually, I have a bias for its going forward, I think that the general discussion is far more political than it is economic in regard to both the private and the political economy. So, in that context, you probably have a point that the project is being sold as something that it's not. But I think that holds true for a lot of the objections as well.

Pogie
Pogie

This analysis from Cornell University makes it pretty clear why Keystone XL isn't what we're being sold. http://www.ilr.cornell.edu/globallaborinstitute/research/upload/GLI_KeystoneXL_012312_FIN.pdf Conclusion: Put simply, KXL’s job creation potential is relatively small, and could be completely outweighed by the project’s potential to destroy jobs through rising fuel costs, spill damage and clean up operations, air pollution and increased GHG emissions. As noted above, it is unfortunate that the numbers generated by TransCanada, the industry, and the Perryman study have been subject to so little scrutiny, because they clearly inflate the projections for the numbers of direct, indirect, and long-term induced jobs that KXL might expect to create. What is being offered by the proponents is advocacy to build support for KXL, rather than serious research aimed to inform public debate and responsible decision making. By repeating inflated job numbers, the supporters of KXL approval are doing an injustice to the American public in that expectations are raised for jobs that simply cannot be met. These numbers—hundreds of thousands of jobs—then get packaged as if KXL were a major jobs program capable of registering some kind of significant impact on unemployment levels and the overall economy. This is plainly untrue.

Pogie
Pogie

If this were a debate round, I would suggest a counterplan. Why not just send Baaken oil through the proposed Canadian pipeline? Wouldn't that accrue all of the advantages you claim and prevent the harms to the aquifer in the US?

Dave Budge
Dave Budge

I can think if a few reasons both the U.S. and Canada benefit. For the U.S.: A consistent source of oil from an economic and politically stable economy. Economies of scale to help defer the costs of oil transport from the Bakken. Although it may have only marginal effects on prices in the short run, a predictable and continuous supply of oil from North America should have a marginal effect to dampen price volatility in the long run. (Look at the spread between North Sea Brent and West Texas Intermediate.) For Canada: A mature and politically stable economy to reliably sell product into. Since oil trades in U.S. dollars a more predictable price effect on demand from the buyer. To offset costs by economies of scale with oil transport for the Bakken. I'm sure there are others but those are the ones that immediately come to mind.

Pogie
Pogie

I don't even need to get into a discussion about the viability of the pipeline. Let's assume that my evidence is incorrect, that Canada can certainly build the pipeline west. What's out reason for not just letting them? What does the United States gain in this transaction?

Pogie
Pogie

Sounds great then. If Enbridge (the company you are shilling for today) can build a pipeline across western Canada, surely TransCanada can as well, right? Why in the world would they build a longer route across the US? More importantly, why would the US let a Canadian corporation endanger American health and environmental protection? Especially given that the pipeline will do nothing to reduce oil prices.

Ted
Ted

Let's pretend your company-backed site (which isn't Transcanada, by the way) is correct. Let them build that way, then. Why does a Canadian company need to build a pipeline over American territory, endangering our environment and health?

Craig Moore
Craig Moore

G. Johnson, why would you call Brian Schweitzer a right winger?

Pogie
Pogie

I'm not nearly as confident about the construction of the pipeline, and not just because of what happened to the Yellowstone last year. A former engineer for TransCanada was fired for criticizing its substandard construction model:  As an inspector, my job was to monitor the construction of the first Keystone pipeline. I oversaw construction at the pump stations that have been such a problem on that line, which has already spilled more than a dozen times. I am coming forward because my kids encouraged me to tell the truth about what was done and covered up. When I last raised concerns about corners being cut, I lost my job — but people along the Keystone XL pathway have a lot more to lose if this project moves forward with the same shoddy work. What did I see? Cheap foreign steel that cracked when workers tried to weld it, foundations for pump stations that you would never consider using in your own home, fudged safety tests, Bechtel staffers explaining away leaks during pressure tests as "not too bad," shortcuts on the steel and rebar that are essential for safe pipeline operation and siting of facilities on completely inappropriate spots like wetlands. So we have a pipeline that a) could very well leak into critical water supplies, b) will create few permanent American jobs, c) will actually increase the price of fuel in the Midwest, and d) will ship oil for sale overseas rather than ensuring a supply for the US. I just don't see the upside.

Craig Moore
Craig Moore

...and China wants it bad: http://business.financialpost.com/2012/03/28/petrochina-bids-to-help-build-5-5-billion-northern-gateway-pipeline/?__lsa=8e562c7d Chinese investment in Canada’s energy sector could move to a new level if PetroChina wins a bid to build the controversial Northern Gateway oil sands pipeline. The largest of China’s three state-controlled oil companies has expressed an interest in building the $5.5-billion project across the northern Canadian Rockies and is considering purchasing an equity stake, said Pat Daniel, president and CEO of proponent Enbridge Inc. “They have made the point to us that they are very qualified in building pipelines, and we will take that into consideration when we are looking for contractors,” Mr. Daniel said in an interview. “It’s an open bid process. They are a very big organization, they build a lot of pipelines, and they would love to be involved from what they have told me.” If PetroChina were to become a part-owner in the project, it would have to purchase an equity interest from one of Northern Gateway’s 10 existing owners because there is no room to expand the group, Mr. Daniel said. Don, your suggestion that all of this is some sorta bluff is beyond ridiculous.

Craig Moore
Craig Moore

I thought you talking about the Canadian pipeline and it's challenges. As to Aboriginal groups, you know not the facts: http://www.northerngateway.ca/news-and-media/what-s-new-at-northern-gateway/enbridge-signs-majority-of-groups-eligible-to-participate-in-aboriginal-equity-agreements/ Jun 05, 2012 May 31, 2012, is the deadline we had set for Aboriginal groups along the proposed route of the Northern Gateway pipelines to indicate their acceptance of the offer of a 10 percent equity stake in the $5.5 billion project. We’re pleased to confirm that, as of the deadline, a majority of the groups eligible to participate as equity owners have signed up to do so. Almost 60 percent of eligible Aboriginal communities along the proposed right of way, representing 60 percent of the First Nations’ population (and 80 percent of the combined First Nations’ and Metis’ population) have agreed to be part owners of the proposed Northern Gateway pipelines. Half of the equity units taken up went to groups in British Columbia, and the other half to groups in Alberta. The most significant way in which Aboriginal people can benefit from the Project is by owning a stake in it and sharing in the revenue it produces. Through equity ownership, Aboriginal people will be able to generate a significant new and stable revenue stream that could help achieve the priorities of their communities – such as improved health care, education and housing. The long-term financial benefits for participating as shareholders will be significant. Aggregate equity ownership is expected to generate approximately $280 million in net income to Aboriginal communities over the first 30 years. Becoming an owner in this project means Aboriginal groups are going to see significant cash flow within the first year of operations.

Pogie
Pogie

Still waiting for an answer to my question, Craig. How about it? Why in the world do we need to build it here?

Moorcat
Moorcat

The moving target is why I completely disregard Craig at this point. Sadly, he is probably one of the few intellegent conservatives that actually make some attempt to engage. I miss the old Craig a lot.

Pogie
Pogie

I think the history of your comments on this (and almost every post we have disagreed on) is my evidence for your argumentative style. Read your own damn link first. Admit the difference between the northern and southern pipelines and then maybe can discuss this. I'm simply not interested in arguing with your perpetually moving targets.

Craig Moore
Craig Moore

Don, get serious. There is a bottleneck for Bakken oil. That's why Schweitzer is upset with the obstructionists like you that he labels "jackasses." He doesn't care about Canadian oil. He cares about the oil in the US having a delivery system to refineries and markets. Please try and show you have something more than personal animus towards me to support your nonsense.

Pogie
Pogie

As much as it is to replay this game where I prove you wrong and you change the subject, I think I'll walk away now and let you continue your fascinating approach to argumentation. It's like arguing with a child, except that children eventually learn. From the link you posted: While the southern leg is planned to relieve a bottleneck of oil from the Plains states awaiting shipment to gulf refineries and vessels, opponents say the pipeline would ultimately be used to transport tar sands oil, much of it for export globally, if TransCanada is permitted to build the northern half. If you can't be bothered to read your own arguments, it's pretty hard to have a reasonable discussion.

Pogie
Pogie

I know it's a lot of work to actually read the links you post, but maybe you can make it through that whole one. Hint: it's about the southern portion of the pipeline. Thanks for trying.