Wednesday, January 18, 2012

It all comes back to economics 0.001


The right wing talking heads that serve the 0.001 are screaming about Obama betraying the country by killing the Keystone Excel Pipeline project in order to pander to his liberal base. Liberals who are so crazed by this pipeline issue as to allow Romney to become President over it, will not support Obama anyway. They will not support him, either because of other issues, or because they believe he will simply approve Keystone the day after the election regardless. His weasel words in order to appear centrist on the issue give them good reason to think this, but I'll bet 10,000 Romney’s that this pipeline is dead as long as Obama is President. 


Most people with any inclination to vote for Obama either don’t care about the pipeline, or think he should approve it. He did himself no favors by not approving it on the basis of a simple vote count. Obama is thinking bigger than that.


The only logical conclusion is that he killed the project on its merits, and not just the environmental concerns. The biggest problem for the US isn't just the massive pollution this pipeline will cause; but rather the economic damage it will create. All of the oil currently produced in the central states and in Canada are refined in Midwestern refineries for domestic consumption. 


This is not an insignificant amount oil, and in fact our biggest export is currently gasoline, diesel and jet fuels. Through every energy price run up we have been exporting vast amounts of gasoline, we always have. This will not change if this truly massive pipeline were built across the middle of the country, it will become a giant drain. This pipeline would connect to all existing pipelines and drain everything directly to the Texas export zones. Surprisingly, this would even include oil produced in north Texas and Oklahoma that currently flows north exclusively. The oil companies would also avoid all taxes, and for good measure, be able to create a massive shortage anytime they chose to. 


Simply approving the pipeline would kill all the smaller independent refineries in the Midwest who would see the writing on the wall. There will be a race to be the first to sell out to the big monopolies to keep from simply being put out of business, and this would immediately start driving up gasoline prices just in time for the election. 


You can still say Obama did it just for the votes, but it’s also crucial for the economy that this drain be plugged. The oil companies seem to think they should be able to go ahead with the southern leg anyway, which makes it clear this is exactly their strategy. It makes no sense to build only part of the pipeline if they really needed it just to get "new" oil from Canada, it's because it lets them grab off the southern part of the Midwestern oil fields and put several refineries out of business. It might not give them a complete monopoly of the oil supply, but they’ve done well for themselves with the degree of control they already have.  www.prairie2.com

17 comments:

John said...

Your theory would gain credibility if Obama had said anything in opposition to the pipeline because of the negative effects on small Midwestern refineries.

Are there any such comments? I'm only aware of his concern about the lack of "environmental" approval for the entire proposed pipeline route.

The immediate question is the reaction radical reich will have next month upon expiration of the 2-month extension of the payroll tax holiday (and unemployment benefits?) they graciously allowed in lieu of a the rushed decision on the pipeline.

We can be assured they did NOT want a rushed "NO" decision.

John Puma

prairie2 said...

You can't tell anything from public comments from the WH. The economic reality is what it is.

John said...

I'll accept that we generally "can't tell anything from public comments from the WH."

But, in all due respect, neither should curious citizens rely solely on the mind reading of bloggers: "Obama is thinking bigger than that."

John Puma

prairie2 said...

Clearly my comment on Obama's "thinking" is meant to be a somewhat tongue in cheek description of my logical conclusions based on the available facts. If you want to argue against my conclusions you'll need something better than just a bias against Obama. I'm not here to defend him, I simply point out the reality we live with. I suggest you read my piece again.

John said...

The WaPo article I saw on the pipeline rejection said: "But he (Obama) left the door open to the possibility that a new proposal might pass regulatory muster." This would be after a new route through Nebraska is found.
http://tinyurl.com/73r358v

IF the effect of the pipeline on midwest refiners is truly Obama's main concern, then why did he initially delay his decision until 2013? What are the unrevealed facts you and Obama know that might turn this around for the midwest refineries in a year?

You appear to be telling us what YOUR thinking would be if it were YOUR decision. After three years of both of you, I would MUCH prefer you making the decisions. I trust you realize that cannot, unfortunately, be taken as much of a compliment.

If our biggest export is gasoline, then Obama should be looking elsewhere. From the WSJ article trumpeting that we have become net fuel exporter, I calculate we annually export a NET of 85 million barrels of refined petroleum products. At even $200 per barrel (about $5/gallon), that's $17 billion, net.
http://tinyurl.com/73p2q98

That's on the order of 1% of the GDP, the greater portion being from the "Texas export zones," which are, non-coincidentally, massive refinery zones that "account for more than one-fourth of total U.S. refining capacity."
http://tinyurl.com/7755eom

Did you mean to say that fuels are our largest NON-arms export. I've read that in 2010 the DoD "told Congress of plans to sell up to $103 billion in weapons to overseas buyers, a staggering rise from an average of $13 billion a year between 1995 and 2005 ..."
http://tinyurl.com/3h9g4bm

That's consistent with historic data shown here:
http://tinyurl.com/7ylye35

The only thing Obama did here was, to his credit, tell the radical reich they can't rush him on a decision. But after three years, minus two days, of catering to their every whim, the next hostage, round about the first week in Feb, taking should be a doozy.

John Puma

prairie2 said...

Because delaying it is the same as cancelling it. You are putting too much emphasis on the small refiners, it's the ability of the Koch brothers to drain oil out of the country that is the real concern.

Anonymous said...

I agree with Prairie 2. This whole thing has never been about helping the average citizen. The scream for "drill baby drill" was never anything but smoke about where the products would really go. Putting ourselves further in to the stranglehold of big oil by "creating" these jobs is hardly the kind of economic development we need or want. Look at the charts for worldwide consumption and production from 2003 until now and you will find they are virtually flat. During that time we had price swings of almost 500%. Supply and demand? Pure bullshit.

Anonymous said...

I am in favor of blocking the pipeline on the grounds indicated by some frothy santorum guided radio talk. They stated that if we don't make the pipe then Canada will sell the oil to China. I'm thinking, great, then we won't have the chinese buying the finished fuel from the frothy bastard's southern texass refineries, income tax free to the United States Gov. from southe texas free trade zones-located and we won't have the environmental chance of disaster on our continent. Oh wait, the KOK sukers regard the continent as theirs to do as they see fit and we as citizens are there to be tolerated as long as we buy....

Anonymous said...

and the price of domestically produced fuels would drop for the US market as china would not be purchasing finished fuels from the frothy bastards when they could get the wholesale product from Canada. The KOK sukers know that and want the Canadian product to run through texass and profit from that volume as well as cayman island hidden assets and favorably no-tax rate.....

Anonymous said...

It just occurred to me. The chinese have a 1/3 interest in the south texass oil fields or sands or whatever they have down there in frothy santorum kisses perry land. So the chinese want to load the boats with more fuel than the limited quantities form their newly bought share. I double dog dare say shut that damn pipe down now, for sure. So F$%k perry and the rest of those oily Bas$&^%ds. If they want oil. let the eat santorum for all I care!!!!

John said...

Breaking: "The Congress has the constitutional right to legislate permits for cross-border oil pipelines like TransCanada’s Keystone XL, according to a new legal analysis released late on Friday" by "the nonpartisan Congressional Research Service."

http://tinyurl.com/7ehlvdd

John Puma

Anonymous said...

Insightful, and pay attention to the ongoing attempts to create an LNG and coal export facility at Coos Bay ......... samo-samo?

Tom in Oregon

prairie2 said...

Congress can legislate anything they want, but without a 2/3 majority in both houses, Obama's veto will stand.

John said...

Veto, indeed.

"Bring on" them bungled defining moments!

John Puma

prairie2 said...

Every time Obama does something positive, there comes the hue and cry about how it won't work, he'll reverse it later, or he has too many other failures. How about we stick to the actual facts, and leave the pointless cynicism to Fox and Friends?

John said...

Two facts:

"But he (Obama) left the door open to the possibility that a new proposal might pass regulatory muster."

"The administration will allow TransCanada to reapply for a permit after it develops an alternate route around the Nebraska Sandhills, a sensitive habitat." WashingtonPost
http://tinyurl.com/73r358v

NOT a fact: "(T)his pipeline is dead as long as Obama is President."

So lets stick to the facts and leave the Pollyannaism to Pollyannas.

John Puma

prairie2 said...

Those aren't facts John, the fact is that there is no pipeline being built. Will the oily bastards keep trying? You betcha. Obama could have let it go through and not lost votes for it and got paid to boot. Quoting me out of context back to me isn't going to get you anywhere. A prediction of the future can't be called a fact or a "not fact". I made my case based on facts, you respond "na-ah" based on your prejudice.