Such A Deal: New Pipelines for Tar Sands Oil Bad for the Environment And Will Raise Gas Prices


Anyone who follows CLF’s work knows about plans being pushed to move oil derived from tar sands in Canada through pipelines that would cut across Vermont, New Hampshire and Maine.  The purpose of the these pipelines is simple and clear: to allow this oil to reach the sea and foreign markets that can only be reached by oil tanker.

It is easy to understand why the Canadian oil industry, and the multi-national petroleum companies with big Canadian investments, want to move the oil extracted from the Tar Sands of Western Canada out to the larger world markets: doing so will mean they make A LOT of money.  The Canadian petroleum industry has explained this for us all very helpfully in an ad found on page 2 of the June-July 2013 issue of the Canadian Public Policy and Politics magazine with the zippy name of “Policy” that we reprint here.

The ad confirms the tar-sands-oilpurpose of the wave of pipeline building being pushed by the Canadian petroleum industry (and ExxonMobil and Koch Industries, the owners of leading Canadian companies like Imperial Oil/Esso and Flint Hills Resources): to raise the price of Canadian oil up to the levels found on many global markets.  As the ad shows, using little prices tags, the price of oil in the North American market hovers around $85 a barrel at times when the same barrel of oil sells for $110 elsewhere in the world. If the producers, refiners and sellers of that oil have access to world markets they can demand that North American customers pay them the higher price if they want to buy this oil.  This reality is especially stark when you look at the fact that oil refining companies with operations in the United States just don’t care if these pipelines get built – they are fully occupied with oil extracted right here at home.  It is just Canadian companies (and the multi-national companies like ExxonMobil and Koch who own Canadian operations) who profit from the push for these pipelines.

So we know who wins if new pipelines carry Canadian oil to reach global markets: the petroleum companies who reap the higher prices found beyond the United States and Canada. But who loses?

The answer to that requires us to think both about the short-term in which we all live our day-to-day lives and the longer-term world in which future generations will have to live.

When we think about immediate and short-term concerns for our families and businesses it doesn’t get any more real than gasoline prices.

Supporters of building pipelines to move Canadian oil to market generally and the highest profile project, the Keystone XL pipeline that would move oil through the middle of the United States from Canada to the Gulf Coast, invoke gas prices as a reason for taking that step, at least implying that the new pipelines will drive down gas prices.

However,  it is well documented in a number of reports and studies that Midwestern drivers would see gasoline prices rise on the order of 42 cents a gallon if that pipeline is built. And this is not surprising – if the oil used to make gasoline is being sold (and bought) at higher prices then gasoline prices will rise.

So in the short term – the losers in this equation? Anyone who buys gasoline or relies upon goods or services that rely on gasoline or diesel fuel that are transported by car, truck, ship or airplane – in short all of us.

And that doesn’t even get into the critical longer term issue: that tapping into the tar sands oil, bringing them to market and burning them would be a large step towards the devastating climate disaster that is unfolding around us and that we need to stop.

There are those who disagree with this assessment. Some politicians argue that tar sands oil from Canada is needed to free ourselves from dependence on oil imported from volatile (and often hostile) nations overseas.  They suggest that these pipelines will simply bring it that oil to markets we, here in the U.S., draw upon, oddly ignoring the stated purpose of the pipelines to bring the oil to higher-priced offshore markets.

And there are thoughtful and detailed analyses that disagree with the climate argument about this oil.  This analysis argues that if the tar sands oil is not brought to market that it will simply be replaced by slightly-easier-to-access Venezuelan oil with a very similar carbon footprint.

That climate impact analysis, and the political argument for building pipelines to tap into tar sands oil, however ignore one important, essential and difficult option: use less oil instead. The advent of electric vehicles, smarter urban development and increases in transit use all converge to show us a way forward and off of oil. The increase in fuel economy standards, a process that is well underway, is a step on that path.

Getting off oil will not be easy.  As the social critic, songwriter and bicycle enthusiast David Byrne has noted, “From the age of the Dinosaurs, cars have run on gasoline.”  Changing something so fundamental will be hard but it is what we need to do; that is what in all of our interests, not laying new pipelines to bring ancient oil derived from the cracking and boiling of tar sands to foreign markets where it will be burned and released into the atmosphere.

 

 

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