Tag: "pipeline"

President Obama Keeps Energy Costs High

While Obama has not yet been able to stop the fracking technology that is producing an American oil and natural gas boom on private and state owned lands, he has sharply constricted exploration and development on the extensive federally-owned lands and offshore. That is why gasoline prices have doubled since he became President.

The Heritage Foundation explains that under Obama’s policies, the EPA’s:

Proposed limits for carbon dioxide emissions essentially would prohibit the construction of new coal-fired power plants, and force existing ones into early retirement, driving up the cost of energy on American families and businesses.

Then there is Obama’s indefinite hold up of the Keystone XL pipeline, which would simply transport, at no cost to taxpayers, abundant, low cost Canadian oil and natural gas to American Gulf Coast refineries, assuring American access to low cost, reliable oil and gas supplies. But if Canada cannot sell to America through the Keystone pipeline, then they will sell the oil and gas to our emerging rival in China, through pipelines on the Canadian west coast. These policies would deprive America of 50,000 high paying jobs not only for construction of the extensive pipeline networks, but also for the budding boom and rebirth of American manufacturing and associated higher paying blue collar jobs, which the revival of low cost, reliable American energy supplies is producing.

The Heritage Foundation further explains that “higher energy prices shrink production and consumption, resulting in less income for families, more people in the unemployment line and less economic growth.” All of this means that Obama is on track for increasing electricity and other energy costs that are the inevitable result of a constricted supply of low cost, reliable, American energy.

Keystone XL: More than a Domestic Issue

The United States has been abuzz with activity this past year over the promise that President Obama made concerning pushing forward the Keystone XL project. However, the President is still failing to deliver on any of his promises. What is new are the affects that are taking place on the Canadians. There are currently 3 pipeline projects (Northern Gateway, Trans Mountain Expansion and Keystone XL) that are at the forefront of energy development in Canada.

The Canadian Energy Pipeline Association predicts that all three projects combined are worth a staggering $1.298 trillion dollars to the Canadian economy. By allowing Canada’s crude to transport down to the Texas Gulf where it can be refined, Canada expects to bring in about $15.52 billion dollars in additional salaries to its citizens. In addition, the U.S. State Department reported an increase of 42,000 jobs during the construction process, and roughly 118,000 jobs to maintain the pipeline and the refineries.

pipeline economic impact

There are currently four ways that crude oil is being transported in the U.S. and Canada, which are train, truck, pipeline and by ship. Depending on which environmentalist you ask, each mode of transportation is more dangerous than the other. 70 percent of petroleum and crude oil are currently shipped by pipeline, which in recent years has proven to be safer. A recent study by Fraser affirms their safety by reporting pipeline accidents are a staggering 30 times less harmful than by train. Although, an increasing number of transports by rail are creating more harm than good.

At this point, a majority of the holdup seems to come from the upcoming elections and Obama’s reluctance to fulfill his promise. The regional trade partnership that can be gained from the pipeline is very advantageous for the U.S. and can only decrease the overseas dependency on oil. For the good of the environment, Keystone XL should be moved forward. It is imperative that the safer, and cheaper alternative be used.

However, it is also important to note that all of these advantages could be multiplied significantly with a new refinery built in the Gulf Coast. North Dakota is currently building the first oil refinery since 1976 and plans to further decrease the amount of reliance on foreign oil. Just by allowing one small refinery in North Dakota, we would decrease the amount of barrels imported per day by 53,000. A larger, more advanced refinery like the Port Arthur Refinery in Texas has a capacity of 600,000 barrels a day. Combine that with an additional pipeline from Canada, and the amount of economic growth would be tremendous. As of now though, the only thing that can be done is sit around and wait until after the November elections.

Economic Benefits of TransCanada Keystone Pipeline System

According to a study by Southern Methodist University’s Maguire Energy Institute, there are substantial economic benefits with the TransCanada Keystone Pipeline System.

Phase III of the Keystone Pipeline System, known as the Gulf Coast Project. The Gulf Coast Pipeline Project is a 485-mile (780-kilometre), 36-inch crude oil pipeline from Cushing, Oklahoma to Nederland, Texas.

An examination of per capita income growth in the Gulf Coast Project counties between 2000 and 2012:

  • Six of the eight affected counties in Oklahoma recorded faster per capita income growth than the state average of 65 percent.
  • 11 of the 16 counties in Texas posted per capita income growth higher than the state average.

State of Texas Pipeline Impacts

Total Economic Activity $3,638,561,905
Labor Income $1,696,054,834
Employment 26,924
Total Taxes $144,992,343
Indirect Business Taxes $112,533,584
Direct Business Taxes $32,458,759


State of Oklahoma Pipeline Impacts

Total Economic Activity $2,143,364,856
Labor Income $1,041,174,418
Employment 15,852
Total Taxes $72,384,852
Indirect Business Taxes $50,339,639
Direct Business Taxes $22,045,213

The Gulf Coast Project has the initial capacity to transport 700,000 barrels per day from storage tanks in Cushing to Gulf Coast refineries. With the expected completion of the Houston Lateral project in the fourth quarter of 2014, this number is expected to rise to 830,000 barrels per day adding $5.8 billion in new economic activity to Texas and Oklahoma.

The fourth and final phase of the Keystone pipeline system is known as Keystone XL. The Keystone XL Pipeline is a proposed 1,179-mile (1,897 km), 36-inch-diameter crude oil pipeline beginning in Hardisty, Alberta and extending south to Steele City, Nebraska. This pipeline is a critical infrastructure project for the energy security of the United States and for strengthening the American economy. The Keystone XL pipeline would have the capacity to transport 830,000 barrels of oil per day to Gulf Coast and Midwest refineries.

Approving the estimated $5.3 billion Keystone XL project would create approximately 9,000 construction jobs. When combined with the southern portion of the Keystone pipeline (the Gulf Coast Project), it is estimated that the total $7 billion pipeline would create:

  • 13,000 construction and 7,000 manufacturing jobs
  • Add $20 billion to U.S. GDP
  • Add $5 billion in taxes revenue to local counties
  • Create an additional 42,000 direct and indirect jobs

Keystone to Pass Senate, Not President

The Keystone XL pipeline looks like it will get a vote in the United States Senate really soon. Even the Senate Majority Leader, Harry Reid, is showing support for a vote. Pipeline supporters outnumber their opponents in the Senate, yet lack the two-thirds majority to override a presidential veto.

As the largest infrastructure project that has been proposed in the United States, the Keystone XL Pipeline Project will provide work for over 42,000 Americans who will directly and indirectly help in the manufacture and construction of the pipeline. The pipeline will add $172 billion to U.S. gross domestic product (GDP) by 2035 and create an additional 1.8 million jobs in the U.S. over 22 years.

The pipeline would also provide an additional 830,000 barrels a day of crude oil from Canada. This additional energy supply will help the United States with its current dependence on the importation of over 15 million barrels a day. On top of increased U.S. energy production and pipelines like the Keystone XL, the United States will become more energy independent quickly over time.

Keystone XL Good to Go, But Wait…

In an article by Rich Lowry of the National Review this week, a new Department of State review of the New Keystone XL Pipeline Application concludes that the pipeline poses no environmental hazard, among other evidence, and supports the construction of the pipeline. Unlike the Alberta Clipper pipeline project, Keystone XL had become the focus of harsh attacks from fringe groups that caught the attention of the White House. Even though Keystone XL would add 800,000 barrels a day to our refineries, strengthen our strategic resources and give an economic boost; the final authorization for the pipeline may never happen — we will just have to wait and see.