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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

January 19, 2012 at 10:15 AM

After Keystone, energy policy still lacking

Neither the drill-baby-drill lobby nor environmentalists should be taken in by the “Obama rejects Keystone XL pipeline” crawler headlines. The pipeline has been postponed, in no small measure because of the stubbornness of the company and the fossil fuels lobby in refusing to consider an alternative route that would steer clear of the most sensitive environment. I have no doubt the pipeline, bringing tar-sand oil from Alberta to the Gulf Coast of the United States, will be approved and built with minor adjustments.

In reality, the tar sands, along with whatever oil can be extracted from the Bakken formation in North Dakota, produce extremely “heavy” petroleum, aside from its horrific environmental consequences. As a result, it is much more costly to refine (and extract) than the light-sweet crude that built the modern automotive/industrial age. In addition, getting at these oil deposits requires an enormous amount of fossil fuel “inputs.” So Alberta is not the next Saudi Arabia.

As for the pipeline itself, the routing takes it to the petrochemical complex that mostly lines the Houston Ship Channel and nearby locations. This is for refining and shipping to the highest bidder. If that happens to be Americans, fine. If Chinese, well, that’s capitalism. So the tar-sand and Bakken oil will not necessarily add to “energy independence.”

Other moving pieces: The tens of billions in U.S. government fossil-fuel subsidies (far more than for cleaner energy); the Canadian government’s desire to sell tar-sands oil to Asia with the Northwest Gateway pipeline to ports in British Columbia, and, oh, that, climate change caused by the burning of fossil fuels. Meanwhile, conservation, rail and transit get little attention or money. Americans retain their childlike faith that something like the electric car (which is not a power source) will let us continue our “lifestyle.”

And Don’t Miss: America’s dirty war against manufacturing (part one and part two) || Bloomberg

Today’s Econ Haiku:

Kodak black and blue

Someday Microsoft, Apple

Snapshots, blades of grass

Comments | More in Canadian economy, Energy

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