The good news is that even Politico is beginning to realize that Alberta Tar Sands are not economically sound and will cost more to extract than they are worth.
Also 2 interviews from Democracy Now at COP 20 in Lima.
Will cheap oil kill Keystone?
By Elana Schor, Politico
12/15/14 5:35 AM EST
The same collapse in oil prices that is pumping dollars into motorists’ wallets also risks undermining the case for building the 1,179-mile pipeline in two crucial ways: It’s squeezing the western Canadian oil industry that has looked to Keystone as its most promising route to the Gulf Coast. And anti-pipeline activists hope that falling prices will make it politically safer for Obama to reject the project, despite the new Republican Congress’ pledges to put Keystone at the top of its 2015 energy agenda.
U.S. oil prices have plunged by nearly half since late June, tumbling to around $58 a barrel on Friday, thanks to the refusal of OPEC to cut production amid a glut of global supplies. Gasoline prices have fallen to a five-year low at the same time, reaching a national average of $2.60 a gallon Friday morning.
The oil price is crucial to the Keystone debate because the latest State Department environmental study on the project says prices in the $65-to-$75 range are a potential danger zone for oil production in western Canada – the point where transportation costs driven higher by failing to build the pipeline could “have a substantial impact on” the industry’s growth.
Cheaper oil also makes it easier to blame Keystone for the greenhouse gases that the Canadian oil fields send into the atmosphere. The State Department study said Keystone would be blameless for all that carbon because Canada is likely to keep pumping more oil even without the pipeline, sending the crude to the U.S. by truck or train if necessary. But the rail and truck options are more expensive – so if cheap oil makes them no longer cost-effective, greens argue, the pipeline would be the thing that keeps the pollution coming.
“It is now impossible to credibly argue that Keystone XL won’t enable significant expansion of the tar sands and associated climate emissions,” Natural Resources Defense Council international program attorney Anthony Swift said by email. “Plummeting global oil prices have highlighted the fact that tar sands only work in a world of expensive crude – and without cheap pipeline infrastructure, many carbon-intensive tar sands projects simply will not be built.”
Canada’s heavy-fuel producers are facing a cash crunch as cheap crude chokes profits for some of the industry’s most expensive new projects, and Prime Minister Stephen Harper declared last week that trying to regulate oil emissions during the current price crash would be “crazy economic policy.”
Everywhere you look in the region, companies are cutting back: The company Canadian Oil Sands sliced its 2015 budget nearly in half compared with this year’s spending. Baytex slashed its dividends to stockholders by more than half, announcing a focus on U.S. oil assets. Cenovus described its 15-percent budget cut for 2015 as “capital restraint in the year ahead in the face of weaker oil prices.”
(P)olitical jostling over the murky nuances of oil markets often glosses over some of the escape hatches in the State Department’s price scenario: For the death of the pipeline to slow Canadian oil sands growth – and the resulting greenhouse gas emissions – other major export projects for the Canadian fuel would also have to run into problems, the study said.
That “pipeline-constrained” scenario was taking shape even before this fall’s oil crash, thanks to an obstruction campaign by climate activists and indigenous peoples on both sides of the border. Three other massive pipeline projects that would funnel crude from Canada’s oil-rich Alberta province to its coastlines have met fierce resistance from greens.