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Exposed: Keystone XL Pipeline Will Export Energy Security Overseas

Steve Kretzmann
Oil Change International / News Report
Published: Thursday 1 September 2011
Keystone XL will not lessen U.S. dependence on foreign oil, but rather transport Canadian oil to American refineries for export to overseas markets.
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In pushing for the Obama Administration’s approval of TransCanada’s proposed Keystone XL tar sands pipeline, the North American oil industry and its political patrons argue that the pipeline is necessary for American energy security and its construction will help wean America of dependence on Mideast oil. But a closer look at the new realities of the global oil market and at the companies who will profit from the pipeline reveals a completely different story: Keystone XL will not lessen U.S. dependence on foreign oil, but rather transport Canadian oil to American refineries for export to overseas markets.

A new report from Oil Change International lays out the case, based on data and documents from the U.S. Energy Information Administration and the Canadian National Energy Board, corporate disclosures to regulators and investors, and analysis of the rapidly shifting oil market.

The facts:

  • Keystone XL is an export pipeline. The Port Arthur, Texas, refiners at the end of its route are focused on expanding exports to Europe, and Latin America. Much of the fuel refined from the pipeline’s heavy crude oil will never reach U.S. drivers’ tanks.
  • Valero, the key customer for crude oil from Keystone XL, has explicitly detailed an export strategy to its investors. Because Valero’s Port Arthur refinery is in a Foreign Trade Zone, the company can carry out its strategy tax-free.
  • In a shrinking U.S. market, Keystone XL is not needed. Since the project was announced, the oil industry acknowledges that higher fuel economy standards and slow economic growth mean declining U.S. oil demand, even as domestic production is booming. Oil from Keystone XL will therefore displace American crude from new, “unconventional” domestic fields in Texas or North Dakota.

“To issue a presidential permit for the Keystone XL, the Administration must find that the pipeline serves the national interest,” said Stephen Kretzmann, executive director of Oil Change International. “An honest assessment shows that rather than serving U.S. interests, Keystone XL serves only the interests of tar sands producers and shippers, and a few Gulf Coast refiners aiming to export the oil.”

Valero has contracted to take at least 100,000 barrels of tar sands crude a day from Keystone XL until 2030. It’s publicly disclosed business model relies on refining heavy sour crude for export. It is upgrading its Port Arthur refinery to process heavy sour into diesel fuel. Its investor presentations clearly show it plans to ship diesel to Latin America and Europe.

Valero – the Texas independent behind last year’s attempt to overturn California’s clean fuel standards – is the only U.S. company among the six customers who have jointly committed to purchase 76 percent of Keystone XL’s initial capacity. The other refiners are Motiva, a joint venture between Royal Dutch Shell and the Saudi government, and Total of France, both of which have newly upgraded facilities in Port Arthur tax-free trade zones.  There are also two Canadian producers and one international oil-trading firm in the group of six customers.

“Oil is a fundamentally global market – the idea that the pipeline enhances our energy security is a scam.” said Kretzmann. “Let’s hope the Obama Administration doesn’t fall for it.  In fact, the only way to truly reduce our dependence on foreign oil is to reduce our dependence on all oil. Let’s not fool ourselves that we will achieve ‘energy independence’ by serving as a middleman for access to overseas markets.”



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Wow, your post makes mine

Wow, your post makes mine look felebe. More power to you!

I hope this Keystone XL

I hope this Keystone XL pipeline is not relevant to the American Jobs Act.

'Drill baby drill' is

'Drill baby drill' is ridiculous. It only helps the oil companies sell more oil on the world spot market, to whoever pays the most. We might ask politicos what the hell they are talking about, every time they say US oil exploration helps provide energy security. As if !!! Well, I suppose it does increase the GLOBAL pot of oil, but that's not particularly reassuring. I want a new car, but will wait and get electric only.

The reason we are having an

The reason we are having an increase in gasoline prices now is not because the cost of oil is increasing; it actually continues to decline. One of the major reasons is that more oil is being exported. The oil companies are not concerned about national security or maintaing lower gas prices for beleagured Americans. If they can increase profits by pennies on a barrel of oil they will happily export more despite the well-being of our country.

Very true. The current

Very true. The current increase in gasoline prices is not due to an increase in the cost of oil, which is actually declining. One of the major reasons is that oil companies are exporting more oil.

Unfortunately this is

Unfortunately this is actually nothing new. There are pipelines on both coasts from coastal refineries that run out underwater to Tanker ships which load at sea, (ie. El Segundo in LA) then ship out to sell to other countries. 

Canada is and has been the US's biggest trading partner largely because of oil which is mined in Canada, sold to the US who refines it, then sold back to Canada and other countries. 

This is just more if the same credo - America says one thing, then does whatever makes the most money. 

This is true. The reason

This is true. The reason we're having an increase in gas prices now is not because of an increase in the cost of oil, which continues to decline. It is largely because we are exportig more oil.

Business as usual boys. Don'

Business as usual boys. Don' get in the way now ... the machine is rolling and nothing is gonna stop it. Want to bet?

Why do we continue to let

Why do we continue to let these corrupt corporations lie to us and get away with it! Oil corporations are just like the criminal banksters and all the other companies that lie to us with their advertising!

What a deal. Tear up Canada,

What a deal. Tear up Canada, expose the US West to oil spills, pollute the air in Texas and Lousianna , lock in the US to a unlimited committment to fossil fuels, raise the CO2 ppm 200 points and then sell the oil for profit overseas.

The United States of America,

The United States of America, the new Afghanistan.



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