Press "Enter" to skip to content

Not Good Strategy: Keystone XL Would Raise Oil Prices and Pollution

As we celebrate the latest delay in the Keystone XL oil pipeline, don’t forget: the whole purpose of TransCanada’s tar sands project is to get that Canadian oil off the continent and into the global market where it can fetch a much higher price:

The low prices for Canadian oil are particularly galling for producers because of changes in international oil markets that have increased demand for heavy crude. The Gulf of Mexico coast of the US was “the largest heavy oil refining centre in the world”, Ms Forrest said, because refineries there were configured to make more products from heavy crude.

US imports of heavy crude from Mexico and Venezuela have declined as their output has fallen, however. So heavy Maya crude, which traditionally sold at a discount to WTI, has been trading at a premium. If Canadian heavy oil can reach the Gulf Coast, it can be sold for about $50 a barrel more than the WCS price in Alberta [Ed Crooks, “Canada’s Oil Producers Look Beyond Keystone XL Pipeline,” Financial Times, 2018.11.13].

Hmm… if I were America’s chief geostrategist, I’d say to Canada, “Sorry, no pipeline, but we’ll be happy to run our cars and factories off all the oil you can produce… at a discount, of course, since we’re all close friends here.” With U.S. oil consumption declining gradually over the coming decade, adding more Canadian oil to our portfolio would only decrease our imports from farther away sources.

Or we could just think globally, keep that environmentally harmful oil sequestered in the tar sands as an emergency backup, and constrain global supply to encourage everyone toward conservation and the development of fusion reactors.

Either approach seems to serve America’s interests better than seizing land from American property owners and handing it to a foreign company just to let the global market turn North America’s oil reserves into pollution as fast as it can.


  1. mike from iowa 2018-11-15

    Canadian refineries could reboot and process tarsands for about a billion a pop. There are at least three refineries in the East that could do this, but tarsands profits won’t allow for expansion at current prices in Canada.

  2. paul Zeeb 2018-11-15

    Do not overlook the fact that Koch Industries hold more leases of tar sands than any other company.

  3. Cory Allen Heidelberger Post author | 2018-11-15

    Indeed, Paul, we must not forget that the Koch business case is to burn up all the oil we can right now to maximize their short=term profits… and perhaps to make sure that they can charge higher prices for whatever alternative fuels are left when the oil runs out.

  4. mike from iowa 2018-11-15

    Gas at the local convenience store is $2.36 for 10% gasahol. Oil prices are dropping and that won’t make tarsands any more profitable.

    What I find interesting is the Drumpf order that pipelines built in America use American steel, but that order was rescinded. Tarsands demand thicker wall pipe for higher pressures and higher heat just to make a soup that will flow through the pipe. Drumpf may decide forcing thicker pipe on Trash-Can is un American.

  5. Debbo 2018-11-15

    The reason the don’t pipeline it to Vancouver is ? ? ? ?

  6. Robert McTaggart 2018-11-17

    May be transported in the form of sealed hockey pucks by rail or truck instead of pipelines.

    “Based on the initial description of this product, it appears that it could alleviate many of the risks involved with moving tar sands oil by rail. The research teams says this product floats in water, does not pose a fire and explosion risk like the diluted bitumen currently moved in rail tank cars, and would eliminate air quality issues related to the volatile components of diluted bitumen.”

  7. mike from iowa 2018-11-17

    Won’t they still get pet-coke as a by product of refining the pucks and won’t it still be as hazardous. Ask Chicago.

  8. Cory Allen Heidelberger Post author | 2018-11-18

    Tar sands pucks—that’s the oddest thing I’ve seen this weekend. I’d think the process of turning the oil into pucks for transport and then back to refinable form would cost money… but as the article notes, producers already have to add diluents to make the stuff flow into the rail cars or pipelines, so maybe that conversion cost is a wash.

    Mike, I would imagine the refining and burning for fuel would remain just as toxic as now. I’d certainly rather leave it in the ground. But if the tar sands are going to be used, if we can’t stop it, puckification is worth considering as a way to reduce spills in transport and reliance on rail instead of eminent domain-based pipelines.

  9. Debbo 2018-11-18


    There’s really nothing I can add to that word. It just sounds funny.


  10. Cory Allen Heidelberger Post author | 2018-11-18

    I’m happy to pour more new words into the linguistic pipeline, Debbo. Now if we could just run cars on neologisms.

Leave a Reply

Your email address will not be published.