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On Friday, November 6, 2015, President Obama announced that he, under the counsel of Secretary of State John Kerry, would deny the permit requested by TransCanada Corporation to expand the Keystone XL pipeline.
Citing factors such as the lack of jobs the project would generate, and the damage that more oil in the marketplace would do to the climate, Obama said he felt compelled to reject the permit. “Today, we’re continuing to lead by example. Because ultimately, if we’re going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.”
What Obama forgot to mention was that oil from the Alberta oil fields still flows through America, if not by pipeline, at a cost of approximately $5 a barrel, (U.S. State Department estimate) by rail -at a cost of $10-15 a barrel. The Keystone XL pipeline is designed to carry 830,000 barrels of oil per day, or 302,950,000 barrels a year, while the Congressional Research Service states that rail transport of Canadian oil had attained the level of 40,000,000 barrels per day in 2013.
The major transporters of this railroad-bound oil are the Canadian National Railway and Burlington Northern Santa Fe Railway. Why is that important? Well, as you may know, the Burlington Northern was purchased by Berkshire Hathaway in November 2009, shortly after the election of President Obama. BNSF pioneered the use of so called “long oil trains” around that time, and have become leaders in the field of oil transport by rail, along with the CN. Berkshire Hathaway is headed up by Warren Buffett, a longtime Obama supporter, who not only raised huge sums of money for Obama’s first run, but raised even more for his second run. He also has supported Hillary Clinton financially. Were promises made by Obama to Buffett that led him to invest heavily in oil trains? We may never know that, but we do know that Buffett has profited handsomely from Obama’s 2,604-day delay and ultimate denial of the XL permit.
As to the statement that the pipeline project won’t create many jobs, what about the 4,000 construction jobs that were created by the building of the southern portion of the pipeline, the portion that required no Presidential approval?
We all know that Obama fashions himself a champion in the fight against climate change, and this permit rejection is but one more example of his righteousness. But does it really affect worldwide energy consumption at all? Trains burning diesel fuel spew tons of particulate and CO2 into the air. You don’t get any of that with pipelines. Besides, the recent lifting of sanctions against Iran permits them to put 2,300,000 barrels of oil per day into the international market, 270,000 more barrels a day than the XL would have done, but benefitting Iran over our longtime ally, Canada, while creating a significantly larger amount of greenhouse gasses.
Meanwhile, the US has been exporting an oil refining byproduct, petroleum coke, or “petcoke” to China, because it is far too filthy to burn in America, per our environmental laws. According to the U.S. Energy Information Administration, China imported just under 2 million barrels of petcoke from the US in 2008. By 2012, that figure had jumped to 26 million barrels. Today, China is consuming nearly 90 million tons per year, according to Roskill Information Services, Ltd.
Petcoke is a solid fossil fuel derived from the oil refinery coking process, and it is burned in much the same way as coal. But it’s toll on both the local environment and global climate change is much greater. Burning petcoke releases about 10 percent more carbon dioxide than burning coal (to generate the same amount of energy). Unrefined petcoke contains 50 percent to 300 percent more sulphur by volume than coal. Sulphur emissions contribute to PM 2.5 and other forms of air pollution that jeopardize human health.
The real monkey-wrench in the machinery of this pipeline was actually the opposition from groups in Nebraska, especially the Nebraska League of Conservation Voters. One has to wonder if Warren Buffett, the wealthiest resident of Nebraska, had his fingers in that cake.
All of this hullabaloo aside, this decision doesn’t really have any bearing on our own, pending pipeline project in Minnesota, the Sandpiper, but maybe Warren Buffett doesn’t have anything to gain by opposing it.