Ask the Fuel Expert

This is an update on an article written earlier this year.

October 30, 2010

One of the recent conflicts between oil and politics is in the final stages of being resolved. U.S. Secretary of State Hillary Clinton now says that she is inclined to approve the proposed Keystone XL pipeline carrying tar-sands-based crude oil from Alberta, Canada, to Texas despite pushback from environmental groups.


“The U.S. is either going to be dependent on dirty oil from the Gulf or dirty oil from Canada. That will continue to be the case until we can get our act together as a country and figure out that clean, renewable energy is in both our economic interests and the interests of our planet,” she said.

The Keystone XL project will transport 900,000 barrels of crude oil a day nearly 2,000 miles from Alberta, Canada to U.S. Gulf Coast refineries, potentially doubling the current imports of tar-sands based fuel. Canada is the largest single exporter of crude oil to the U.S., and the Canadian oil sands are the largest single source of imported oil for the United States.

A couple of recent studies examined the role oil politics have changed have played with the rise of major producers and exporters outside OPEC. They conclude that there is risk of violence among nations that export or consume large quantities of crude oil.

In one of them "Seizing Power: The Grab for Global Oil Wealth -- How oil volatility may lead to violence among oil powers," by Robert Slater, he argues that volatility and uncertainty of global supplies of crude oil are recipe for conflict.

Russia is at the top of his list and Slater called nations willing to use oil as a weapon "petro-aggressors". He said other nations, including Iran and Venezuela, are using oil as a weapon in global politics. Slater notes that: “The ranks of petro-aggressors are flanked by countries such as India and China who are desperate to secure the supply of crude oil with very few scruples to fuel their respective economic growth". He argues oil was "toxic" to world stability and introduced elements of uncertainty and exposed consumer nations to manipulative politics by oil producers.

Mrs. Clinton decision to have the Canada to US pipeline proceed forward will go far to forestall global instability resulting from oil price spikes. After all is said and done the U.S. has never been threatened by Canada to cut off oil supplies. The completion of the much needed pipeline will go a long way to leading to the U.S. becoming energy secure.
The U.S. State Department has extended its review of the Alberta, Canada-to-Texas crude oil pipeline in order to give the U.S. federal government agencies more time to make comments and produce a final environmental impact report.

Article written earlier this year:

Construction on $7-billion TransCanada Corp.'s Keystone XL pipeline may be delayed by up to six weeks. The Keystone XL is an extension to an existing TransCanada pipeline that stretches from Alberta to the U.S. Midwest and Cushing, Oklahoma.

Meanwhile, the State Department is in the midst of putting together its final environmental impact assessment, which will take comments obtained from the general public into account.

Normally those two reviews take place simultaneously, but now the national security question will be dealt with after the environmental matter is resolved.
The agencies originally had until mid-September to submit their comments, but they requested more time to see the final outcome of the environmental review. Now they'll have 90 days until after the department issues its environmental impact assessment.

Documents released last week by the U.S. Environmental Protection Agency (EPA) harshly criticized the State Department's draft environmental impact statement for Keystone XL, saying it doesn't consider how importing more oilsands crude oil would affect U.S. climate change policies.

The expansion would increase capacity from its current 590,000 barrels per day to 1.1 million barrels per day. Keystone XL would cut on a diagonal through Montana, South Dakota and Nebraska, with another leg stretching from Oklahoma to refineries along the Texas coast.

Environmental groups say Keystone XL will increase U.S. reliance on "dirty" oilsands crude, which they say emits much more carbon dioxide than conventional types of crude, endangers wildlife and destroys forests.

The project will create much-needed jobs and inject billions into U.S. government economy as well as reduce U.S. dependency on crude oil imported from abroad.

Bob van der Valk is the Fuel-Pricing Analyst with 4Refuel and can be contacted at (406) 853-4251 or e-mail to: bvan@4refuel.com