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A Presidential Decision That Could Change the World
Posted on Feb 12, 2013
By Michael T. Klare, TomDispatch
This leaves the third option, a plan to pump tar-sands oil to Ontario and Quebec and then employ an existing pipeline now used for oil imports. It connects to a terminal in Casco Bay, near Portland, Maine, where the Albertan crude would begin the long trip by ship to those refineries on the Gulf Coast. Although no official action has yet been taken to allow the use of the U.S. conduit for this purpose, anti-pipeline protests have already erupted in Portland, including one on January 26th that attracted more than 1,400 people.
With no other pipelines in the offing, tar sands producers are increasing their reliance on deliveries by rail. This is producing boom times for some long-haul freight carriiers, but will never prove sufficient to move the millions of barrels in added daily output expected from projects now coming on line.
The conclusion is obvious: without Keystone XL, the price of tar-sands oil will remain substantially lower than conventional oil (as well as unconventional oil extracted from shale formations in the United States), discouraging future investment and dimming the prospects for increased output. In other words, as Bill McKibben hopes, much of it will stay in the ground.
Industry officials are painfully aware of their predicament. In an Annual Information Form released at the end of 2011, Canadian Oil Sands Limited, owner of the largest share of Syncrude Canada (one of the leading producers of tar-sands oil) noted:
“A prolonged period of low crude oil prices could affect the value of our crude oil properties and the level of spending on growth projects and could result in curtailment of production… Any substantial and extended decline in the price of oil or an extended negative differential for SCO compared to either WTI or European Brent Crude would have an adverse effect on the revenues, profitability, and cash flow of Canadian Oil Sands and likely affect the ability of Canadian Oil Sands to pay dividends and repay its debt obligations.”
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Michael Klare is a professor of peace and world security studies at Hampshire College, a TomDispatch regular and the author, most recently, of The Race for What’s Left, just published in paperback. A documentary movie based on his book Blood and Oil can be previewed and ordered at www.bloodandoilmovie.com. You can follow Klare on Facebook by clicking here.
Copyright 2013 Michael T. Klare
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