Here is an interesting comment at the end of this update by Igor.
1 - Igor
Oct 07, 2011 at 11:51 pm
I´m against the XL pipeline on National Security and financial grounds (I also believe that the jobs projections are grossly exaggerated, and are characterized by double-counting, but I´ll leave that for another day).
XL is bad for national security because it does little to alleviate our energy problems. We must look elsewhere for energy sources that will layoff against oil requirements.
All oil is fungible. Every American should have that written across the inside of his windshield so he can read it everyday driving into work. All oil extracted from the earth is interchangeable once it is extracted. It does not bear a brand, as a cow might. All oil goes into a common virtual pool. There is no way, for example, to sequester oil for domestic use, and even if a nation were to attempt to do so by military means the attempt would be subverted by shifts in the international oil market, which are basically a (close to ) ideal free market. Thus, Ghaddafi of Libya, whose country has prodigious reserves of oil, could NOT subsidize cheap petrol for Libyans by sequestration, but only by granting huge subsidies to drivers to counteract high pump prices (as determined by free international markets). Of course, the money to do that derived from relatively high crude prices to the fungible international market.
Every barrel of oil (from whatever source, since oil is fungible) from Canadian tar sands will go 80% to foreigners! Only 20% will benefit US consumers! That´s because the US only uses 20% of all oil drilled anywhere. China uses about 30%, and I can´t recall what India uses (it´s easily available on the EIA website). But both of those countries are using a higher percentage every year, while our percentage decreases. Therefore, the future benefits of more oil will fall more and more to foreigners.
Oil companies are 60% owned by foreigners. The stocks are publicly traded on international markets. Therefore, when we subsidize an oil company by $50billion it represents a $30billion savings to foreign investors. That´s $30billion less capital they need to put in.
The oil companies, Chevron, Exxon, Valero, pay zero corporate taxes while getting high profits. That´s another subsidy that goes 60% to foreign investors.
The USA will certainly be required to provide direct and indirect subsidies for the construction of XL, whether for direct costs like construction, or indirect costs such as lost property value (opportunity cost) for land seized by imminent domain.
There will be other subsidies such as lost value for fresh water usage (about 4 to 8 gallons of fresh water are required for every gallon of tar sands oil). USA Citizens will pay for this one way or the other.
The Ogallala Aquifer will be de-valued by contamination to a large extent (we already know that other such pipelines leak freely and depreciate the waters they run thru). This will cause great financial damage to the Nebraske agri-business which is a mainstay of USA food production, so food costs to US consumers will rise drastically.
The paltry results simply do not justify the costs to American citizens. It´s a very poor ROI.
Here is the Update.
http://blogcritics.org/politics/article/keystone-xl-pipeline-update/Read more:
http://blogcritics.org/politics/article/keystone-xl-pipeline-update/#ixzz1bjJeoDPw
