[David Harshbarger]

Tim,

That sounds reasonable and plausible to me.

Thanks, Dave

[Garland Bayley]

My home town in southeastern South Dakota (Elk Point) has been slated by Hyperion to build the first oil refinery in the United states since 1976.  The last time I checked, a lot of the permitting had been done, and it had passed a county vote, but was not visibly moving forward.  It has been pretty controversial in the area, partially because it's hard to believe someone telling you how "green" it will be:

http://www.hyperionec.com/news/media-coverage/Hyperions-Phillips-Ending-the-Lull/

Elk Point SD. Talk about fast and firm! Never used driver as 2 iron was going 280! What's with 9 saddle shaped greens?

[Garland Bayley]

Anyone else hear the NPR story on this?

http://www.npr.org/2011/11/07/142020522/nebraska-may-play-key-role-in-canada-pipeline-battle

[George Pazin]

You know our country is screwed up when relying on the second hand accounts of insiders is considered clarity.]

Cue Dandy Don...

[Jim_Kennedy]

Garland,
Yes, it reveals what's really going on, the state and its republican governor didn't like the route in the first place. Leave it to national politicians to forget about their beliefs, like state's rights and eminent domain, and distort the issue when they want to score political points.  

[Kalen Braley]

Garland,
Yes, it reveals what's really going on, the state and its republican governor didn't like the route in the first place. Leave it to national politicians to forget about their beliefs, like state's rights and eminent domain, and distort the issue when they want to score political points.  

Amen to that Jim,

Nebraska has got to be one of the reddest of the red states....yet on this issue it sure seems its Deep Blue!! 

Seems a wasteful investment anyways as Oil is certainly on its way out.....

[Tiger_Bernhardt]

I think you mean crude from North Dakota is moving south by rail. The Canadian crude from the tar sands is still in the early stages. It has a higher break even number to keep the play going.

[Tim_Weiman]

Tiger,

Crude from the U.S. side of the Bakken is moving to the USGC by rail from about twenty different locations. Crude is also moving from the Canadian side as well. I'm personally working on a couple projects to increase the Canadian volume moving. It is not all tar sands. There are about ten different types of Canadian crude involved.

The oil industry is booming under Obama, at least the upstream sector is. Downstream things aren't so good.  Increased light vehicle efficiency has led to the lowest gasoline demand in the past ten years. Refiners are faced with a tough prospect: higher crude prices due to growing international demand, but lower US gasoline demand thanks to energy efficiency and, to a lessor extent, the growth of ethanol which is now about ten percent of the gasoline pool.

At the end of the day, the pipeline will get built. No way the Obama Adminstration let's it get shipped to China.

The politics of the oil industry remain silly. We're Bush still in office critics on the left would attack his oil industry background. Now that Obama is in, the Republicans are acting just like Democrats: they are trying to blame Obama for rising gasoline prices when everyone familiar with the industry knows the President - Republican or Democrat - has little influence.

[Bill Seitz]

David,

Insiders know Obama is actually a big supporter of the pipeline.  The re-routing has already been agreed to. The vote to approve will come after Obama gets re-elected and he no longer has to appease his friends on the left.

In the meantime, Candian crude is moving to the Gulf Coast by rail. Less efficient compared to the pipeline but the infrastructure already exists for the most part.

I'm not convinced of this.  The oil isn't staying in the United States either way. It's going to the market. And the jobs created by the construction of the pipeline have been grossly overstated. But the real issue is the extraction. The oil pulled from the tar sands is basically the dirtiest, in terms of process on the planet. This isnt light sweet crude you get from a well. Once you decide that the process of pulling crude from the tar sands is acceptable, then the game is over. So there may still be a chance to convince a re-elected Obama (if that happens) that the pipeline is a bad idea. Let the Canadians destroy their own environment by routing it through the Rockies.

[Tim_Weiman]

Bill,

It is interesting how often you hear someone say the oil isn't staying in the United States. In fact, it is illegal to export crude oil from the U.S. and it simply isn't happening. I don't see Congress changing that any time soon.

Confusion on this issue stems from two sources: poor coverage of the oil industry in the mainstream media and the fact that while exporting crude oil is illegal, exporting products is not. So, we do export products like ethanol and gasoline, but domestically produced and imported crude oil is run right here at refineries in this country.

Ethanol and gasoline exports make sense. Ethanol plant margins would have taken a terrible hit if they didn't have export markets like Brazil and Europe. Likewise, oil refiners are squeezed between ever higher crude oil prices and declining domestic gasoline demand.

As for the job creation numbers, I have not seen the numbers for Keystone, but on almost all projects there is pressure to show the highest possible numbers. Direct job calculations are relatively simple, but the indirect jobs created often seem quite inflated, at least to me.

In any case, various grades of crude will be produced in Canada and be shipped to the U.S. The only issue is whether it continues to move by rail or pipeline. My personal interest is to see the rail shipment continue, but realistically we know Obama is a big supporter of the pipeline dispite the charade playing out in the media.

[Jim_Kennedy]

some soild reporting
http://www.csmonitor.com/USA/Politics/2012/0309/Inside-the-Keystone-pipeline-How-much-would-it-really-help-US-consumers

slightly more biased
http://www.tarsandsaction.org/spread-the-word/key-facts-keystone-xl/

a report on jobs gained and jobs lost from Keystone. 
http://www.ilr.cornell.edu/globallaborinstitute/research/upload/GLI_KeystoneXL_Reportpdf.pdf

National Wildlife federation, with mnay informative links.
http://www.nwf.org/~/media/PDFs/Global-Warming/Tar-Sands/FactSheetJun2011_NWFOpposeHR1938.ashx

slightly more biased, but informative
http://dirtyoilsands.org/files/OCIKeystoneXLExport-Fin.pdf

more good reporting
http://www.thestar.com/business/article/1087865--transcanada-enbridge-jostle-over-pipelines

spills
http://www.nytimes.com/interactive/2011/09/09/business/energy-environment/pipeline-spills.html

For the uninitiated, like me, it seems that keystone might not even be necessary as other lines are available to handle the flow; that one of the main reasons producers want this product in Texas is so they can refine it and sell the products of it offshore while avoiding paying taxes on it; that companies also want to get the oil away from Cushing so that they can make more money as prices on midwest fuels are below average due to the glut in Cushing; that once the oil moves out of Cushing farmers/truckers, etc. will be paying much higher fuel prices and their costs will be passed along to the rest of the USA; that the number of US jobs for the pipeline construction has been greatly exaggerated; that the suppliers of the components for the pipeline and the equipment needed in Canada to get the oil are from various countries and not from North America, and specifically, not the US; that the number of spills in the past two decades doesn't inspire me with any great confidence about sending a pipeline over such an important aquifer as the Ogalalla, or in the transport industry as a whole; and that politicians are using the pipeline and tarsands oil as a political football.

[Garland Bayley]

Jim,

Thanks for the research!

Garland

[Tim_Weiman]

Jim,

Yes, other pipelines will move Canadian crude. It will also move by rail. Plans for Keystone have already re- directed the line, but the media lags behind and people keep talking about old objections.

Canadian crude won't just be run in Texas (or other USGC refineries); it will also be run in the Mid West and possibly the West Coast as well.

The opposition to product exports reflects a lack of understanding about  U.S. government policy and technology. The Obama Administration, like the Bush Administration before it, is pushing biofuels and energy efficiency. Much progress has been made developing ethanol and improving fuel efficiency for light vehicles. However, the technology and possibly feedstocks don't exist to achieve the same on the distillates side of the barrel. So refiners will run crude to produce distillate and have nowhere to go domestically with the gasoline. Exports are the only option or shutting down which state governments tend not to be because of the loss of jobs and tax revenue (Pennsylvania is a good example).

[Ian Larson]

Bill,

It is interesting how often you hear someone say the oil isn't staying in the United States. In fact, it is illegal to export crude oil from the U.S. and it simply isn't happening. I don't see Congress changing that any time soon.

Confusion on this issue stems from two sources: poor coverage of the oil industry in the mainstream media and the fact that while exporting crude oil is illegal, exporting products is not. So, we do export products like ethanol and gasoline, but domestically produced and imported crude oil is run right here at refineries in this country.

Ethanol and gasoline exports make sense. Ethanol plant margins would have taken a terrible hit if they didn't have export markets like Brazil and Europe. Likewise, oil refiners are squeezed between ever higher crude oil prices and declining domestic gasoline demand.

As for the job creation numbers, I have not seen the numbers for Keystone, but on almost all projects there is pressure to show the highest possible numbers. Direct job calculations are relatively simple, but the indirect jobs created often seem quite inflated, at least to me.

In any case, various grades of crude will be produced in Canada and be shipped to the U.S. The only issue is whether it continues to move by rail or pipeline. My personal interest is to see the rail shipment continue, but realistically we know Obama is a big supporter of the pipeline dispite the charade playing out in the media.

It doesn't matter where the actual physical oil is transported to. It's a commodity. It's the value of the oil that leaves the United States and is speculated and traded in the world market.

Republicans push for this project under the guise of "lower gas prices" which it will never do. They don't even have a definite route, then it's years of permitting, years of construction and realistically a decade before a drop of gas from it hits a gas tank.

Republicans want this to "lower gas prices" now yet they want to wage war again in Iran. Because going to war with Iraq helped gas prices and the debt soooo much.

Use that money allocated for KXL now and money used in the next decade and invest in clean energy. A decade is an eternity with how fast technology is developing. Save the money, save the environment and save the world from more war and destruction.

[Tim_Weiman]

Ian,

Petroleum refining is a manufacturing business. Normally, when a company sets up a manufacturing operation importing raw materials and selling higher valued products into global markets, we appreciate the jobs created and the tax revenue provided.

But, for some reason, as your post suggests, we don't do this when it comes to oil refineries. The "value" you refer to has been created by that refiner, by the manufacturing process, but it can only be captured by selling the product into the highest valued market.

Refiners can't pay global prices for crude oil and then sell their product at less than full market value. Both Sun and Conoco tried to do that in Philadelphia and all they accomplished was losing an ever larger pile of money.

You are correct many, if not almost all, energy related projects have long lead times and can't offer immediate relief for rising gasoline prices. Rather than bashing Republicans for behaving like Democrats do when they are out of power, it makes more sense to listen to what Obama is saying. He knows there is no magic, silver bullet when it comes to energy supplies as some folks in Silicon Valley convinced themselves a few years back.

Obama is right. We need an all of the above strategy wherein, oil, gas and coal will continue to play a very large role in energy supplies for decades to comes. No serious student of energy supply thinks otherwise.

As for Keystone, it will get built with the support of the second Obama administration. I wouldn't bet against it.

[Jim Nugent]

There's a fuel that costs less, is safer, far better environmentally, and so abundant in the U.S. we could never run out.  Natural gas.  I think most cars will eventually run on it, though the big oil companies will fight like hell to prevent that.   

Ethanol, IMO, is a total scam, that has contributed to the bizarrely high corn prices.  High corn/grain/agricultural prices, in turn, are causing widespread starvation. 

One more way environmentalism inflicts untold suffering on the world it supposedly wants to save. 

[Ian Larson]

As someone in the golf course maintenance industry and an avid surfer volunteering with a handful of environmental non profits I consider myself as a golfer and surfer a steward to the environment.

You're doing a good job coming off as someone who makes their money from the oil industry and presumably Republican. I don't care how much of a manufacturing process it is and what jobs and tax revenue it brings in. It's dirty energy that's killing the environment, killing sons and daughters that are sent to b@ll$hit wars over it and it's killing our economy with billions of taxpayers dollars going out to subsidize an industry that makes the most profits in the world?!?!

Screw the jobs that come with dirty energy. Those jobs should be replaced with ones in clean energy. Tar sands? The most toxic form of oil extraction. Frakking? Im from Pa...it's just as toxic. Pipeline malfunctions and oil spills in the ocean. It's not worth it.

The only way to decrease oil consumption is to stop using it. The US is #1 in the world with China #2 and we still use 3x more than China because we are a lazy country. Building a pipeline to transport toxic tar sands oil is just another plan to perpetuate our addiction to oil. I'm sick of Republicans working for Big Oil and being corrupt, bigoted mysogenistic hypocrites.

The technology is there and waiting to be developed more and more. It's just a matter of how much money and effort is put in to it. Kicking it down the road to the next generations is irresponsible. I can't see how any avid golfer or outdoor enthusiast can support such an environmentally toxic and corrupt industry. Stop giving away taxpayer money for b@ll$hit subsidies and invest that enormous amount into sustainability.

The only thing that affects the prices at the pump are our foreign relations and speculation. Anything else like a pipeline or another exploration lease is only adding to the problem. It just needs to stop.

[Tim_Weiman]

Ian,

No serious student of the energy business believes that technology exists to produce clean energy on the scale produced by the oil & gas and coal industries any time soon. That is why President Obama is pretty clear in saying there is no magic silver bullet. Last I checked, he was a Democrat!

As for oil industry profitability, yes the energy is quite large, but the industry is really quite average when it comes to profit margin. If you are from Pennsylvania, then you know quite well that refineries aren't shutting down in Philadelphia because they were making loads of money. Just the reverse was true. They were bleeding cash badly.

[Ian Larson]

Ian,

No serious student of the energy business believes that technology exists to produce clean energy on the scale produced by the oil & gas and coal industries any time soon. That is why President Obama is pretty clear in saying there is no magic silver bullet. Last I checked, he was a Democrat!

As for oil industry profitability, yes the energy is quite large, but the industry is really quite average when it comes to profit margin. If you are from Pennsylvania, then you know quite well that refineries aren't shutting down in Philadelphia because they were making loads of money. Just the reverse was true. They were bleeding cash badly.

Not any time soon because we've been held hostage by Big Oil Republicans for over 30 years because they are profiting off of their special interests. Remember when Jimmy Carter have an evening address on our oil dependence leading us down a dangerous road. Then put solar panels on The White House to have Reagan come in and rip them down along with Carter's Energy Plan?

We needed to get serious about oil dependence and alternative energy since the 70's and Republican terms and majorities have completely stalled that. We are over 30 years behind where we should be. If it were not for Republicans pandering to Big Oil to pad their own wallets we would already be at a point where the technology is already in place to produce enough clean energy on a big enough scale to lower our oil dependence down to even Chinas realm. So are you saying 40 years isn't enough time for exponential development of the tech and infrastructure needed to support it? You have to WANT to do something to actually do it. People aren't stupid, lowering oil dependence is lowering bank accounts and that's why it hasn't happened. You dont have to be a "serious energy student" (spare me) to understand that.

The industry is really quite average when it comes to profit margin? Look at how many billions of dollars Exxon can bring in from just 1 quarter! Then pay no taxes and then get subsidized with our tax dollars. That's average? Give me a break it's far from average.

Republicans don't give two sh@ts about the environment. Hate regulation on their money making machines in oil but want to mandate trams vaginal imaging for women and tell two men they can't get married while they get caught with 18 year old boy escorts. It's all hypocrisy and greed.

If you're a "serious student of energy" and support Drill Baby Drill and screw everything else the blood will be on your hands for the future generations of your family and the world they live in because it's not going to be pretty.

Obama or myself aren't trying to eliminate all oil. It's about dependence and the scale of our dependence compared to the rest of the world. The bottom line is oil needs to be scaled down in a massive amount and clean energy scaled up the same. Ruining our environment to just put more oil up on the world market is not worth it. And it only takes an informed and logical person to understand that.

[Jim_Kennedy]

You ought to dig out your history books James, look up ethanol production, and remind ytourself that it started as a response to the  oil embargoes that resulted in high gas prices and inflation in the 1970s. I think Nebraska was one of the first states to the party.

And as was recently reported in Human Events: "Green groups like Friends of the Earth, Environmental Working Group, and ActionAid USA, limited-government groups like Taxpayers for Common Sense, National Taxpayers Union and Competitive Enterprise Institute, and business groups like Grocery Manufacturers Association, National Turkey Federation and National Restaurant Association worked together to expose VEETC as a costly, polluting, food-price-inflating special-interest giveaway".

If it wasn't for 'environmentalism' you'd be breathing through a gas mask while visiting places like the Sequoia National Stump Park, Grand Canyon Dam, and the Yellowstone National Shopping Mall.

[Garland Bayley]

...
If it wasn't for 'environmentalism' you'd be breathing through a gas mask while visiting places like the Sequoia National Stump Park, Grand Canyon Dam, and the Yellowstone National Shopping Mall.

Jim,

I suspect you were tongue in cheek on the Grand Canyon Dam. Did you know that they were actually going to put a dam in the Grand Canyon until the Sierra Club defeated it with ads asking if you would flood the Sistine Chapel to get closer to the frescos on the ceiling.

[Ian Larson]

On the closing of the Philadelphia refinery...


"To close a refinery at the apex of the driving season could wreak havoc for a portion of the Northeast, especially Pennsylvania," Kloza said. "It's quite frankly something we have not been through before.

The Philadelphia refinery, which produces 355,000 barrels a day, was hurt by its inability to refine different grades of crude – unlike some of its competitors on the US Gulf Coast – forcing it to buy costly light sweet crude from overseas suppliers, analysts said."


Is this a private owner situation or is it owned by Exxon? If its a private owner then yeah, perhaps profit margins are average and the private owner can't upgrade the system to refine anything but sweet crude that's imported. If that's the case then let it die. Those jobs should be replaced with clean energy jobs and revenue is still maintained.

But the refineries and private owners are only a small part of the equation. The problem lies within the mega oil companies like an Exxon who make astronomical profit margins and then get taxes waived and then receive tax payer subsidies? Then they use their money to lobby Washington DC and bankroll SuperPAC's to pay off elections that will promote their special interest. Eliminate regulation on the industry so it can go wild and our government will wage war for more oil. It's the root of all evil.

I wish more refineries shut down and gas goes up to $10. Maybe then people will get off their ass and walk or ride a bike two blocks to the store or think twice about buying the now more expensive single use plastics like plastic forks or bottled water. Walk to the store! Wash a fork! Get a water bottle!

Anybody who supports the growth of this industry any longer than the 40 wasted years already is part of the problem and not the solution. They are a detriment to the environment and not a steward.

As holders we should all be stewards to the environment.

[Tim_Weiman]

Ian,

The Philadelphia refinery is owned by Sun, not Exxon. Whether it will be shut down remains to be seen. Sun shut down their Marcus Hook (PA) refinery not long after Conoco shut down Trainor (PA). But, those closings may not be enough to save the Philadelphia refinery.

I am surprised you are so critical of Exxon when they are probably the leader espousing the potential and importance of energy efficiency. Go back to their 2006 Energy Outlook when they forecast a decline in U.S. gasoline from 9 MM B/D to 6.7 MM B/D and equivalent decline in Europe despite the long history of higher taxes to discourage consumption in that market.

Don't you actually support Exxon's thinking on this issue?

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