Fraser Forum

Raising the Keystone bar to infinity

Printer-friendly version

A new study in the Journal Nature Climate Change is being touted (as they all are) a potential game-changer that proves vast quantities of additional study are needed before pondering whether or not a simple pipeline might be constructed between Alberta, and the Texas Gulf Coast. This study, in essence, asks an economically simple (if not simplistic) question: “What happens to global oil sales if Keystone is built, and if it carries enough oil to world markets to slightly depress the world oil price?”

Well, it turns out that under this analysis, Canadian oil would be like that “first potato chip” that leads the world to consume more of them, and that means more greenhouse gas emissions. By Canada dropping reliable, affordable oil into the world market, others would be compelled to burn more oil on net, and the Keystone Pipeline would therefore be responsible for increasing global GHG levels, and failing President Obama’s test for approval.

Yes, you read that correctly. Under the new math about building pipelines, you’re not just going to be responsible for the emissions of the stuff you’ve pulled out of the ground at point A, pushed through the pipeline to point B and sold…No, you’re going to be responsible for emission changes that depend on how the entire rest of the planet reacts to your new contribution to the market.

The authors conclude, in essence, that for every barrel of Canadian crude passing through KXL on the way to foreign markets, world consumption will increase by another six-tenths of a barrel, just because of Canada’s impact on lowering world oil prices. The authors do observe that there could be mitigating factors, like the onset of highly-efficient vehicles, switching to non-petroleum fuels, or cartel responses, but those are considered “likely to be small.” (Don’t tell that to the people holding stock in Tesla).

The authors call the U.S. State Department to task for not recognizing their Supply/Demand calculations: “Using those same lifecycle emissions estimates and assumptions about increased oil sands production, our analysis suggests incremental GHG emissions of 100–110 Mt CO2e, or four times the upper State Department estimate. The sole reason for this difference is that we account for the changes in global oil consumption resulting from increasing oil sands production levels, whereas the State Department does not.”

To be fair, the authors do admit that the same logic could apply to pretty much every other kind of fossil fuel: “Similar approaches could also be applied to other pending investments in fossil fuel extraction and supply infrastructure, such as deepwater oil rigs, new ports or rail lines to transport coal, or any of a host of investments under consideration that would expand global fossil-fuel supply”

But honestly, I think they undersell the power of their argument. It is clear that their analysis has merit in innumerable other dimensions as well. For example, by their analysis, the costs of potentially increased obesity should be considered whenever a telecom company seeks to increase bandwidth. After all, that new cell tower could enable couch-potato behavior at lower cost. Or when Amazon seeks to drive down the cost of ebooks, hence driving up sendentary behavior, exacerbating weight gain. Whatever Amazon did to lower ebook prices clearly has to be include the costs of the new weight gain. If a proposed bike lane, busway, trolley, or subway would actually reduce traffic congestion, inducing new motorists to take the road, would you blame the new transit for the new GHG emissions? If you were as single minded in opposition to the Keystone Pipeline as oil-sand haters are, sure you would.

Opponents of the oil sands and the Keystone XL pipeline will reach out for any argument, however absurd, and hold it up as the smoking gun that proves old reports false, and no doubt warrants yet another five-year cycle of environmental reviews. How very convenient with a U.S. Midterm election this year and a Presidential election slated for 2016.

Blog Category: 

Subscribe to the Fraser Institute

Get the latest news from the Fraser Institute on the latest research studies, news and events.