Opinion

Oil industry will move overseas

Photo Courtesy of Wikimedia commons

When most UH students hear the word Keystone, they immediately think about what they were drinking last weekend. They don’t think about the Keystone XL pipeline.

This pipeline is a $7 billion project from TransCanada Corp. that would transport an estimated 830,000 barrels of crude oil from Alberta, Canada, to Houston every day. The pipeline could produce as many as 20,000 jobs, many of them in the Houston area. Last week, the Obama administration killed the hopes of this pipeline being built by delaying the rest of its construction until 2013.

TransCanada Corp. has already poured $2 billion into the project, but has repeatedly come under fire because part of the pipeline will cross the Sandhills region of Nebraska, an ecologically fragile area that lies above the Ogallala Aquifer. About 27 percent of the irrigated land in the US relies on this aquifer for agricultural needs.

The fear that this pipeline could pollute this aquifer is understandable, but with the amount of research TransCanada Corp. has put into the project, it is highly unlikely that this will happen.

On Monday, the company announced that it would examine alternative routes for the contested portion of the pipeline — routes that would allow them to bypass the Ogallala Aquifer.

You would think this would be enough for opponents of the project, but it seems they are more concerned about killing US jobs and ridding the US of a viable source of oil than protecting the aquifer.

“It’s our hope that (the delay) will kill the pipeline,” said Nick Berning, a spokesman for Friends of the Earth, a grassroots environmental group, to the International Business Times. “It’s simply not true that we need this oil.”

This couldn’t be further from the truth. We do, in fact, need this oil. In addition to doubling the amount of oil sand refined in the US, the pipeline could potentially lower oil prices and give the US a necessary alternative to oil produced in the Middle East.

Furthermore, what is the message the Obama administration is sending to oil companies? The application for the project was submitted to the U.S. Department of State in September of 2008. Why now, after three years have passed, is the US government making the decision to halt construction of the project?

It is possible that this is simply a political move by President Barack Obama. By delaying the construction of the project until after 2013, Obama has prevented the pipeline from becoming an election issue. It will enable him to enter the 2012 election with a stable voter base.

The Obama administration is sending the message to oil companies that the US is not a good country in which to do business. Most oil companies are already moving their operations overseas. This pipeline could have been a symbol of our nation’s commitment to the oil industry — an industry that employs and provides benefits to thousands of US citizens.

Canada’s Prime Minister, Stephen Harper, is already considering focusing his nation’s oil resources in another direction — West. Harper talked to reporters on Sunday at the Asia-Pacific Economic Cooperation leader’s meeting in Hawaii about how the decision to delay construction of the pipeline will affect the future of Canada’s oil industry.

“This does underscore the necessity of Canada making sure that we are able to access Asia markets for our energy products,” Harper said.

Alberta Premier Alison Redford echoed Harper’s sentiments in the National Post on Monday.

“Reality is, Alberta and Canada will build markets, and we will go where there are markets available to us,” Redford said.

The Obama administration needs to be held accountable for its reckless decision to delay the construction of this project.

Hopefully, TransCanada Corp. will be able to finish the project. But if not, we will know where to place the blame.

Daniel Renfrow is an anthropology and print journalism double major and may be reached at [email protected]

19 Comments

  • Why is nothing said about the fact that the Keystone pipeline stems from the tar sands?

    The oil from oil sands is FAR more toxic than crude oil, emits FAR more CO2, and is FAR more costly in the long term (public health, land, water, air, etc.)

    Now come on, whats more important? Are jobs and gasoline the priority?

    • Bauer Alum is right, Confused you appear to not know whats going on in this situation. Canada will regardless sell this resource it is up to the US to decide if they want it or if Asia will get it. Environmentally it is better for the US to take it since it is safer for this oil to be transported via pipeline rather than by a freighter.

      Your reasoning relies on the assumption this might not be done but it will. Might as well make us more dependent on Canada for oil than the Middle East and get jobs at the same time.

      Obama is simply playing politics with this issue. He does not want to anger environmentalist or unions before the election….is this the so called change people voted for???

  • Confused – The tar sands are going to be mined regardless of where the end product goes. The damages you speak of will occur whether the pipeline gets built or not. So yes, the only relevant question is; where do you want the jobs, gasoline and money to go? The US or Asia?

  • "…but with the amount of research TransCanada Corp. has put into the project, it is highly unlikely that this will happen." Unites States Citizens trusted the research of Trans Ocean (not to mention BP) in this regard and look what happened. Better safe than sorry especially considering, "About 27 percent of the irrigated land in the US relies on this aquifer for agricultural needs." Over a quarter of the United State's agricultural needs, (is how I'm interpreting this statement.)", seems significant enough that "most likely", is just not good enough.

    Rather than risk one resource for another, it's probably a better resolve to make them mutually exclusive, or it's a bad idea to begin with. We need to create jobs, while stringently protecting our resources that are making us money. I just read an article just release by Texas A&M today on traffic congestion titled, 'Nightmare roads identified in congestion study'. According to MSNBC, "The report estimates more than 1.4 million person hours are wasted each year by people sitting in traffic at … one intersection, using 2.1 million gallons of gasoline." Before we risk our water resources, more people should catch a bus, carpool or even better ride a bike!

      • Guess you've never heard of a motor scooter or car pools. People own cars for status and convenience, but mostly to satisfy an auto addiction. Addictions are expensive. And Houston is the most car-addicted city in the US. Our car-oriented culture is its glowing example. You are just a car addict rationalizing. You can move closer to your job/school. But that would be too simple, eh? It's like an addict saying, I need that $20, for a fix…I'm in pain. I need my car…I can't live without it. Go a weekend without it. Experiment. Test your self. Prove me wrong.

        • Why not get off your self righteous horse for a minute and realize that it is not an addiction but a necessity for many of us. An addiction would be all the pristine trucks that people don't need. There you could begin your rationalization. We do not want to have to bend over backwards to accommodate some asinine schedule that does not fit our needs for transportation.
          For starters I guess you don't read the news or see the accidents but it is crazy to drive the freeways on a scooter or motorcycle. That is almost a death sentence around here. Also for some of us who work and go to school that just won't work. But hey since mom and dad pay for your school I guess you don't understand that. Again A carpool requires me to make sure my schedule lines up with everyone else. One that is not possible all the time. Two why must I give up my freedom of movement.

          Go with out it for the weekend means I would have to sit at home and not go anywhere. Whether it is needed or not. Sorry not happen.

          • This is too cute. My parents have been dead since the 1980s; I work FT, and go to school PT ( I like to eat) and have my apartment, bills, etc (and my 2 cats who think I'm just swell,) and no one pays for my anything. I ride 25 miles/ week to work on a $900.00 hybrid cruiser (that's a bicycle,) in all kinds of weather, so my life choices are dictated by economics, not geography.) And NOT having a car, (aside from NOT contributing to our filthy Houston air,),saves me thousands a year. I live within five miles of where I work/ go to school because that's how I planned it. So, there ARE choices. I'm living proof cars are NOT a necessity. And I have all the movement freedom I can stand. (BTW that's a tired, easily-refuted argument,)

  • "but with the amount of research TransCanada Corp. has put into the project, it is highly unlikely that this will happen."

    Anyone else see the error in this logic?

  • We have a private company investing money that will create jobs and bring an energy resource we can use. Then we have a "green" friendly company that was supposed to create jobs, funded by the government, only to go belly up within less than a year. Yeah I say the administration has a double standard.

  • While the Keystone PL has been stalled, it does not mean none of the Tarsands petrol will make it to Houston. More than one (I think Enbridge and another) have lines available for use.
    Another reason the project is being changed, when the people of Nebraska realized the risk is greater than the reward they came around to oppose the project as it was. They are in favor of re-routing it.
    Besides, we don't need this oil, no one is in danger of running out. No big oil companies will leave the US. Why would they? They get to do business here for free already, as they don't their share of taxes, while being subsidised for r&d.
    Finally, no one has mentioned how destructive extracting this oil is to the fragile environment where it is found. Getting the tar sands out of the ground is as bad as mountain top removal to mine coal. Jyust stop it already.

    • Agreed, the oil companies have written domestic energy policy for about 100 years now and have the country in an extractive position. They can't get a better deal anywhere else. If they are moving operations overseas, it would be for other reasons.

  • Great article. Big business is moving out of the USA thanks to the Obama administration. The upside is the environment will be in great shape when we're unemployed and walking to get our government checks. Oh wait, without business to tax there won't be any government checks!

  • I would really appreciate it if people would do their homework before spouting the "big oil doesn't pay taxes" lie. Lets look at the most recent 10K's filed by a few companies.

    ExxonMobil's effective tax rate = 45%
    ConocoPhillips' effective tax rate = 42.2%
    Apple's effective tax rate = 24.2%

    Yes, big oil, like all major corp.s receive many tax breaks, but they are far from being the worst offenders when it comes to avoiding taxes.

    • I would really appreciate it if people cited their sources before spouting off "do your homework". Then I wouldn't have to weaken their arguments by finding conflicting reports. My research brought up these values for overall effective tax rates for the years 2008-2010.

      ExxonMobil's effective tax rate = 14.2% (p. 30)
      ConocoPhillips' effective tax rate = 26.9% (p. 30)
      Apple's effective tax rate = 31.3% (p. 26)

      Care to state who you think are the worst tax evaders?
      http://www.ctj.org/corporatetaxdodgers/CorporateT

      • I did cite my source. As stated in my original post, the source for the figures stated above are the most recent Form 10-K's filed with the Securities and Exchange Commission by each respective company. These are the independently audited annual reports filed by public companies, as required by law. If you don't know what a 10-K is, you probably shouldn't be arguing about tax matters.

        Your source (according to the methodology section) starts with these 10-K's and then subtracts the taxes they don't think should count for their purposes and then make other adjustments as they see fit. So, in other words, they adjusted the data to fit the conclusion they wanted.

  • Wow, a lot of people need to do some research on the industry as a whole before posting or writing anything. The oil industry is not gonna move overseas. North America has one of the largest oil reserves in the world. Oil sands are included. Oil sands are mined through a process called "in-situ" which a lot of you should probably google. Oil sands is essentially a mud and nowhere near as volatile as high grade crude. After processing it is basically comparable to light, sweet crude. Whatever stats people have of it being worse than crude, are absolutely false. Maybe people should look up how much oil is actually recovered per well, and notice that we are not running out.

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