Ah, Washington, D.C. You have to love it — always arguing over what no longer matters or never did in the first place in an attempt to obscure what does matter.
This week, the Republicans will inaugurate the new Congress by taking up a Senate bill to approve the Keystone XL pipeline. This is the proposed pipeline that would connect the oil sands of Canada with the U.S. refineries on the Gulf Coast.
It is too little, too late and a dollar short.
Four years ago, the Keystone project would have dropped oil prices and added much-needed jobs to the United States, which was then mired in the Great Recession.
But today, oil is at $49 a barrel, and the heavy crude from the oil sands is selling at $35 a barrel. There aren’t many oil producers that are profitable at $35 a barrel, and there are zero tar sands producers that are.
The first of the frackers has already sought Chapter 11 bankruptcy.
Straw Men and Hypocrisy
The House will vote to pass the bill on Friday. It will then pass the Senate, and sometime later, Obama will veto it.
But all of it is politics, though many a fool will say otherwise.
The real winners, as usual, will be the lobbyists. Oil lobbyists have called it a jobs project. Environmental lobbyists have screamed global warming. They are both wrong.
Ron Fournier over at the National Journal writes:
President Obama gives that question lip service. “Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest,” he said in 2013, “and our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.”
The problem is that while the State Department has said the oil sands produce 17% more greenhouse gases than the average crude oil, stopping the pipeline won’t matter. The oil will simply find another route to the sea.
The Keystone pipeline will have a negligible effect on the environment.
Jobs Don’t Matter
The National Journal goes on to debunk the job prospects:
The president has properly raised doubts about the jobs figures circulated by Keystone advocates. Typical of the type is GOP Sen. John Barrasso of Wyoming, who said of Obama on Sunday: “His own State Department said it’s 42,000 new jobs.”
But this is so much cow dung. The jobs on offer would be a few thousand and temporary. Even the hyperbolic 42,000 jobs number would only equate to 0.02% of the annual economic activity of the nation.
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Vote or Not, It Won’t Get Built
While oil guys and environmentalists fight it out on NPR and Rush Limbaugh, the Keystone pipeline is already dead in the water due to low oil prices.
Case is point: United States Steel Corp. (NYSE: X) just announced that it will lay off 750 workers between two plants.
The layoffs are taking place in a tubular testing and finishing facility in Houston, Texas and a pipeline manufacturing plant in Lorain, Ohio.
OPEC and the Bear
Rumor has it that a few months ago, the Saudis went to Putin and tried to get a deal to cut production. Putin said no, and the Saudi’s said, “That’s fine, maybe you’ll change your mind in six months.”
The next big OPEC meeting is in June.
All the best,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
