By John Karoly
Chicago, IL, USA

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It is reported in the news that key refiners in California are refusing to take crude oil from a proposed pipeline or, more accurately, they refuse to sign long-term contracts with the pipeline company thereby effectively stopping the construction of the pipeline. The company proposing to build the pipeline can hardly afford the huge expense without a guarantee that the refiners will purchase the oil. Now we are not talking about Keystone. This is called the Freedom Pipeline Project and it proposes to carry crude from Midland, Texas to Los Angeles, California.

Why are the oil refiners rushing to the cause of the environmentalist? We assume that there are plenty of them opposing this pipeline as they do Keystone. Certainly no one assumes that oil refiners are active environmentalists. They are good business people looking for the best deal. They do not want to tie themselves down to long duration, fixed-price contracts. They prefer to have access to different suppliers of crude and believe that by obtaining lower price crude they can more than offset increased transportation costs.

Thus the refiners are choosing to use rail, barge and other transportation of crude from domestic sources and ocean transport to California of foreign sources, mostly from South America. Rail transport, the principle competition, is more expensive than the piping of crude, more polluting since the diesel locomotives spew exhaust fumes and more accident prone. There were, already, two major accidents with huge spills of crude just this year in North America. Add to this the accidents which can be caused by barges and ocean tankers. The pollution of an electrically driven pipeline is a fraction of the railway pollution, and the accident rate causing pollution of the environment with crude is relatively small.

As we discussed in the March Stay Thirsty column, Keystone pipeline could readily be replaced by rail. Nobody, but economics, can stop production of crude from the tar sands. But the safer and cleaner pipeline can be replaced by the dirtier and more accident-prone railroad. This cause is hardly a winning one for the environmentalists. They are a group which appear never to have learned chess. They somehow can't imagine countermoves more damaging to their position than the initial premise which prompted their gambit to protest.

So, once again, since we don't want railroads, barges, tanker trucks and other conveyances transporting crude oil throughout the countryside and no amount of protest will shut down the Alberta oil sands projects, we should support the pipelines as the least objectionable solution. Or convert the world automobile companies to build bicycles instead of automobiles.

As I am writing, there is another serious derailment on the CSX rail line. Our infrastructure is old and not in the best of shape. It requires serious improvements which would cost many billions and a lot of time. Increased use of the railroads transporting a lot of crude oil is certainly not the answer. We are just going to have more frequent accidents which will be more serious. Obviously we are not heading the right direction.

A suggestion to well-meaning environmentalists is to chain yourselves to the White House fence and demand the lesser evil, the construction of the pipelines.

Link:

The Reality of the Keystone, March, 2013

 

All opinions expressed by John Karoly are solely his own and do not reflect the opinions of Stay Thirsty Media, Inc.