Keystone XL: Voting for the Stone Age

(update: link is fixed)  My new Forbes column is up, and it attempts to strip away the window dressing around the Keystone pipeline decision to get at the core issue -- "a quasi-irrational ('I'm blogging against the modern economy from my iPhone'), almost aesthetic distaste for energy production, the modern industrial economy, and capitalism itself. "  Read it all here.

PS-  the contrast between the Administrations support of the egregious HSR project in CA and its rejection of the takes-no-tax-dollars Keystone XL infrastructure project reminds me of my earlier piece on the Timeless Appeal of Triumphalism.   Politicians love to shift capital from private, boring, productive things like pipelines to sexy taxpayer-funded things that they can put their names on.

  • traderpaul

    I'm surprised that Warren, who often claims to have libertarian views, has completely ignored the most important issue regarding Keystone XL pipeline, the abuse of eminent domain. It's easy to beat up on environmentalists but how does a libertarian square with Trans-Canada Pipeline's heavy use of eminent domain?
    http://www.theglobeandmail.com/globe-investor/oklahoma-landowners-challenge-transcanadas-keystone-pipeline/article1872884/
    http://www.cbc.ca/thecurrent/episode/2011/10/24/keystone-vs-landowners/
    http://www.triplepundit.com/2011/11/keystone-xl-pipeline-dreams-true-only-eminent-domain/

  • Sean

    It gets worse. There is now a coalition of 6 Democrats who want to tax "excessive" oil company profits at 100%. (They don't define excessive.) What's funny is, all that profit is being made by oil companies and the price of gasoline and other types of transportation fuels is not changed much if you allow for inflation over the last 30-40 years. (If you throw natural gas into the mix, it's way down.) On the other hand, a very large part of higher education gets substantial public funds (and most are non-profit entities) and the price has risen more than 3x the rate of inflation. Health care is not that different and I suspect I spend at least 5x as much just for insurance than I spend at the pump each year. How do you get these clowns in congress to address the real problems in the economy rather than just emotional knee jerk nonsense against their favorite villains?

  • Mark

    My link from yesterday is gone :(

    Obama Administration last week also closed down any new mining in the richest Uranium area in the USA. This is because it could effect the Grand Canyon, which is miles away, and doesn't seem affected by current activity.

    http://www.businessweek.com/ap/financialnews/D9S5MH0G2.htm

    The Obama admin and the eco-freaks just don't like any reasonable energy as Warren stated.

  • Dan

    This is one of the worst decisions Obama has made.

    But the pipeline will eventually be built, no doubt, and Obama certainly knows that. This is just election year meat for the left. A rather cynical move by him, but I know why he's doing it.

    What I struggle to understand is, where do people who oppose Keystone think we should get our energy? They'll be against wind farms, solar and nuclear, too, for various environmental reasons. But I'm sure they continue to drive their cars, heat their homes, etc. Do they think the energy used for that just appears magically, with no environmental or geopolitical impact? Are they OK buying energy from the Middle East, Africa and Venezuela, when we could be getting more from a friendly neighbor that observes environmental laws?

    From what I can tell, their solution is for everyone to use less fuel. Actually, on a per-capita basis, the U.S. is a lot more energy efficient now than it was 40 years ago, which is a good development, and the environmental movement gets some credit for that. But as a country, we use far more energy than 40 years ago, and that's because of economic and population growth.

    Yes, we can continue to try to use less fuel on a personal level (I drive a hybrid, by the way), but the amount of energy used as a whole will continue to rise as the economy grows. If energy sources don't grow, then the economy won't. It's as simple as that.

    All domestic energy sources, including wind, solar, fossil fuel, nuclear and geothermal, need to be developed if we want economic growth to continue. And when I say domestic, I mean Canada and Mexico as well as the United States. Mexico's oil production has fallen precipitously, but that's mainly because of poor management of its oil fields by the government. Eventually, when its economy weakens enough, I imagine Mexico will allow more foreign (U.S.) oil companies to come in, and I'd bet their energy reserves are immense.

    The U.S. also has vast resources of natural gas and oil. We have empty lands in deserts that can be used for solar and wind power. We have uranium deposits that can be used in new nuclear power plants. Research should be done on other energy sources as well, such as shale oil and nuclear fusion. All of these should be developed.

    Obama must know there would be huge job growth accompanying this development, just as we've seen in North Dakota, where shale gas and oil production has skyrocketed. History shows that energy can be developed in an environmentally friendly manner.

    A rejection of Canadian oil through the Keystone pipeline won't slow the process of developing oilsands in Alberta, as the environmental movement wishes. The oil will still be developed, but it won't come here. The carbon will still be released into the atmosphere, but we won't benefit from the oil (although any oil production growth will contribute to lower oil prices on the market, so we may get a slight benefit).

    As for the environmental impact, does the anti-Keystone movement realize that our country is criss-crossed by hundreds of pipelines? How often do you hear of a spill from one? Seldom. There was a spill a few years ago in Michigan that contaminated one river, but it was quickly contained. The Alaska pipeline has had a few spills, but none that have caused major damage.

    I've been to the Nebraska Sandhills and it's a beautiful region. If the pipeline developers can re-route the pipeline to not cut across this land, that would be great. But I wouldn't be overly worried about a pipeline going through the area.

  • Mark

    @Sean Oil companies already pay 40% tax on their profits. The max tax rate for other companies is 35%

    They are already being penalized and those Dems want more? Of course you say anything against their anti energy obsession, and they ask, "Why do you hate the environment?"

  • Fred from Canuckistan

    Trans Canada Pipeline is saying they'll now go ahead and build the US side of the XL pipeline from the Bakken oil lands to the refineries in Texas. They have the permits and rights of way to do so.

    Yesterday's decision was all about oil crossing the border and that will have to wait for common sense to prevail. They'll link the Oils Sands up later.

    But then again, maybe Obama enjoys bowing in subservience to Arab potentates who currently control US imported oil sources.

  • traderpaul

    I know Warren likes to think of himself as a small 'L' libertarian and its easy to beat up on environmentalists in the Keystone XL debate. I find it odd that he makes no mention of the use of eminent domain by Trans-Canada Pipeline. It's sort of hard for a libertarian to be onside with that.
    http://www.theglobeandmail.com/globe-investor/oklahoma-landowners-challenge-transcanadas-keystone-pipeline/article1872884/
    http://www.triplepundit.com/2011/11/keystone-xl-pipeline-dreams-true-only-eminent-domain/

  • Evil Red Scandi

    Traderpaul beat me to it - Eminent Domain is a major concern. My understanding is that they could do the project without it if they really wanted to - but why spend more money when you can use government guns?

  • Ted Rado

    The environmentalists base everything on viable alternative energy, such as wind and solar. Due to the intermittent nature of these resources, backup or energy storage is required. The backup route limits replacement of fossil fuels to the time wind blows or the sun shines. To replace more than that, energy storage is needed.

    There are NO viable backup of storage methods. The most elementary calculations show that the proposed schemes are all nonsense, yet the enviroloonies persist in pushing their agenda. It appears that zealotry wins out over rational analysis, and the loonies are willing to destroy our entire industrial economy in pursuit of their notions. What mindless crap.

    My father used to say, re evolution,"the smart monkeys stayed in the trees". He apparently was right!!

  • IGotBupkis

    >>>> Mark:
    >>>> My link from yesterday is gone :(

    Yeah, my post disappeared, too.

  • IGotBupkis

    >>> But the pipeline will eventually be built, no doubt, and Obama certainly knows that. This is just election year meat for the left. A rather cynical move by him, but I know why he’s doing it.

    I don't it's electorial suicide. Anyone who actually cares about "The Environment" in the sense of rejecting this is never going to vote GOP, so he's not gaining any votes with this -- on the other hand, it gives a tremendous debate bullet point against The Great Big 0 in regards to being against job creation.

  • Uncle Bill

    Politicians love to shift capital from private, boring, productive things like pipelines to sexy taxpayer-funded things that they can put their names on.

    I call this The Great Pyramid Syndrome. Politicians love to build monumental projects, that will have their name associated with them. It doesn't matter if they have no practical value, and divert countless resources from things that do have value, as long as their names are remembered. The pyramids are amazing to look at, but what could Egypt have accomplished if they hadn't expended so much of their resources building them?

  • Dan

    IGotBupkis:

    Obama is doing this because people who care about the environment may not come out to vote if he doesn't. They may stay home. But this makes them feel that despite other things he's done that offend, he actually is still on their side, and they'll come out on election day. That's why it is an important move for him as the election nears.

  • Mark

    @Ted Rado, it is still expensive, but fuel cells could be used to avert some of the problem, they start up relatively quick and can use natural gas (which is evil now that we can get it.)

    In fact it might be practical in 10 years to have a fuel cell in every home.

  • Dan

    Man, natural gas is cheap. It fell to $2.35 today (it had been as high as $13 back in 2008). Inflation-adjusted, we're near all-time low prices for this commodity (which makes me wonder how our local utility has the nerve to be raising prices for natural gas, which it just did).

    Amazing what new supplies delivered by better technology can do. All of those who tell me oil is a diminishing resource and we need to replace it with wind and electric cars should be looking at what happened to natural gas prices. The same thing could happen to oil. Already, we're getting better and better at extracting oil from far under the sea and from shale formations.

  • Mark

    @Dan, they always have two fees, the resource cost, and the transmission cost. They probably raised their cost to transport the stuff.

  • http://sevencontinents@mindspring.com Benjamin Cole

    This is the worst energy policy move since ethanol.

    Actually, the ethanol program, a permanent, mandated use of a dubious product is a lot worse in scope and scale than killing one pipeline.

    Libertarians: Keystone is using eminent domain to seize property from landowners--many ranchers--who do not want to give or sell right-a-way across. Is eminent domain proper on behalf of private enterprise?

  • http://thedeclarer.blogspot.com Floyd McWilliams

    @Benjamin Cole: Please let us libertarians know when the Obama Administration, or James "game over for the planet" Hansen, or Henry Waxman, oppose Keystone XL on the grounds of eminent domain.

  • marco73

    I put this comment in yesterday, looks like it got lost in the shuffle.
    The greenies are already lining up to oppose the Canadian pipeline and tanker route to the Pacific:
    http://ngm.nationalgeographic.com/2011/08/canada-rainforest/barcott-text
    Run the oil through mostly American ranchland, or run the oil through a Pacific rain forest. It's still going to get to market, and someone is going to use it.
    We won't burn that oil in our cars; it will just come to our shores as the plastics in Chinese manufactured products.

  • Mesa Econoguy

    Obama is a dangerous fascist thug beholden to scumbag “environmentalists” who are documented liars:

    http://www.coyoteblog.com/coyote_blog/2011/12/environmentalist-stick-up.html

    Keystone will cost him the election. Watch.

  • http://sevencontinents@mindspring.com Benjamin Cole

    Floyd-
    I am a libertarian--except a real one. I would allow gypsy cabs, sidewalk push-cart vendors, prostitution (including brothels filled with immigrants) and wide open drug-use, gambling, no real estate zoning, the works---all the stuff the GOP would crap in pants about.

    But property rights are sacred---the right to refuse a pipeline across your own property strikes me as sacred. Also, the right to have your property be free from others' pollution.

    As a "libertarian," how do you address these issues? I assume you merely ignore issues such as these, and pompously pettifog against those with whom you have partisan beefs.

  • John B.

    I´m the person that would be directly affected by this pipeline. So I´m against it. I´m scared that it would produce environmental challenges (and I don´t believe environmental studies of multinational oil corporations). Do I want to risk my health and the environment I live in for the sake of national interests? No. The idea of an ethic oil, which are strengthened by our politicians, is a scam. I think it is clear for any reasonable person, that our only national interest is to block this pipeline. Energy Resources in Canada says that minister of natural resources of Canada Joe Oliver wanted to invest 78 million to create new jobs in energy sector, which leads to the pipeline again. And the construction had not even started. This project would be insanely expensive. As I can see many people support the idea of this pipeline, but I have to be against it! For my own sake...

  • http://thedeclarer.blogspot.com Floyd McWilliams

    @Benjamin Cole

    I don't understand what eminent domain has to do with the Obama Administration's arbitrary decision to appease religious fanatics by refusing to let Keystone build their pipeline. Eminent domain is evil[1] and libertarians should oppose it. SOPA is also evil, but if I found out that the CEO of Keystone was in favor of SOPA that would not make Obama's decision any less wrong.

    [1] Kelo-style, certainly; some wiggle room for easements. I don't think if a large landholder surrounds a small lot, he should be allowed to deny the small landowner power or water.

  • Val

    Has anyone considered that this is a sort of deal with the Chinese to gain their support for isolating Iran, and perhaps the middle east in general? Might not be a bad idea, if so, since we then get them hooked up to a supply that is much easier for the US to control, links them even more to the west economically, and frees them up from having to stick up for Iran or other middle eastern radicals. Chinese officials have mentioned the latter publicly.

  • I Got Bupkis, AGW Skeptic to the stars

    >>> Obama is doing this because people who care about the environment may not come out to vote if he doesn’t. They may stay home. But this makes them feel that despite other things he’s done that offend, he actually is still on their side, and they’ll come out on election day. That’s why it is an important move for him as the election nears.

    Dan, good point, but it's worth far more as a job creation anti-O point than it is as a GOTV point for him. After all, he could readily trust the media to spike enhanced commentary on this and put focus on other arenas in which his Green creds would shine.

    The Swing bloc is much larger than the Green bloc, and they are very much more responsive to economic and job issues than to minor enviro quibbles.

  • I Got Bupkis, AGW Skeptic to the stars

    >>> I am a libertarian–except a real one.

    HOLY CRAP!!!

    Benny actually managed to get two posts off without mentioning Iraq and Afghanistan!!

    The world IS coming to an end!

    :-P

    P.S., Benny is like Bill Mahar, someone who claims to be a libertarian, but actually isn't in the least.

    ====
    Floyd, I beg to disagree. I am a small-l libertarian, but even the Founders recognized the need of the State to be able to take land for public use, and instilled it into the Constitution. This does not include, however, a support of Kelo-style ED. Part of the difficulty, though, lies in the obvious problem of gaining miles and miles of right-of-way, as opposed to a single patch of land in an easily bounded area.

    The difficulty of invoking ED should be sufficiently high that purchase at a vaguely reasonable price is always preferable (define reasonable? I dunno, have a dozen randomly selected property value analysts evaluate the land, then set the price at 2x their median, or even max, for ED purposes. This guarantees that there's a clear benefit to buy another nearby property rather than force a taking)

    The above is not a lock-on answer, either, it's a quick stab at the idea. The chief point is that taking land should be painful and troublesome -- both for the governmental entities doing it and/or any private entities involved in the process (but NOT for the land-owner who does not wish to sell). Both the government and private individuals involved should have very strong encouragements to finding an alternative. I believe any such encouragements have melted away notably in the last 40-50 years.

  • Dan

    I Got:

    Good point about eminent domain. You're right about the founders; it is constitutional. People who declare themselves libertarians with a "big L" would do well to study the constitution, as it does impose limits on personal and property freedom.

    Has it occurred to you, Benjamin, that maybe the founders weren't libertarian with a big L? Also, since you don't want zoning and you're in favor of brothels, let's see how you'd feel if someone opened a brothel next door to you!

  • Dan

    Marco73:

    Great comment and so true. If we don't use the oil and it goes to China, we'll eventually get it as plastics in the cheap junk sold at Wal-Mart and Target.

    Val:

    That is a very interesting hypothesis. Do you have anything that would back this up? It actually sounds feasible, and I'd be in favor of anything that would stop the Chinese from cozying up with Iran.

  • http://sevencontinents@mindspring.com Benjamin Cole

    Dan-

    If said brothel used low-cost immigrant talent, I might find find such a facility very useful. What really hurts is when the guy next door wants to open up a 24/7 convenience store. Then my libertarian instincts would be sorely tested.

  • Russ R.

    While Eminent Domain may not be "Libertarian", it is entirely Constitutional, as specified in the Bill of Rights, and interpreted in subsequent cases to establish "just compensation" as "market value", and "public use" as "public purpose".

    Please see the Fifth Amendment, "United States v. 50 Acres of Land" (1984), "Hawaii Housing Authority v. Midkiff" (1984) and "Kelo v. City of New London" (2005).

    While I may have personally disagreed with the Kelo decision (for reasons similar to those set out in Clarence Thomas' dissent), unfortunately, it reaffirmed the Midkiff decision and is now settled case law, whether we like it or not.

  • Val

    Dan: This is one source, but there are others in regard to China's recently changed attitude towards Iran. It is significant because China depends on Iran a great deal for oil. In addition, China certainly looks out for their own interests first and foremeost, so the change of attitude makes me very curious, even though I have quite a bit more in mind when making the aforementioned hypothesis. Still, it is just a hypothesis. We will probably never know.

    http://www.telegraph.co.uk/news/worldnews/middleeast/iran/9025789/China-begins-to-turn-against-Iran.html

  • Dan

    Benjamin:

    LOL!

  • caseyboy

    Let us not forget that Obama gave Brazil (Petrobras) a $2 billion taxpayer loan to conduct off-shore, deep water drilling. Something he doesn't want done by us. Petrobras has entered into a contract to sell this newly sourced oil to (drum roll) CHINA. That's right, Canada's oil and Brazil's oil headed to China because our boy wonder wants to placate his environmental supporters.

    Coming soon, the EPA shuts down shale oil operations in the Great Plains. The relief we are getting in terms of supply will be gone as will tens of thousands of jobs (Montana has a 3.5% unemployment rate).

    Oh yeah, Mr George Soros has over $600 million invested in Petrobras. He is a brilliant investor. How did he know it would all work out this way?

  • Ted Rado

    Mark:

    Fuel cells run on hydrogen, which is usually made from natural gas. If one runs the calcs, it turns out that the overall efficiency from CH4 to H2 to fuel cell output is about the same (or less) than if you used the CH4 in an engine in the first place.

    I don't understand how you would use fuel calls as backup for wind power. Please explain.

  • Ted Rado

    John B:

    There are thousands of pipelines, power lines, etc. all over the US. They run through SOMEBODY's back yard. If we accepted your point of view, nothing would be allowed anywhere. Great thinking.

  • markm

    Ted: One way to backup wind and solar power, at least in theory, is to electrolyze water when there is excess power, producing hydrogen and oxygen. The hydrogen can be stored until needed, then used in fuel cells. There are plenty of problems with this concept:

    -The overall efficiency is probably well under 50%.
    -The storage tanks will have to be *huge*. You could reduce the volume with high pressures or liquefaction, but that takes more energy, not much of which is recoverable.
    -The details of the safe storage and handling of large quantities of hydrogen (on a commercial budget rather than a NASA one) need to be worked out.
    -So do the details of large-scale electrolysis to produce hydrogen, rather than other substances. E.g., you might add salt to the water to make it conductive enough for electrolysis - but then you also (and maybe mostly) produce chlorine and sodium hydroxide. Chemical engineers have used that process for chlorine and lye production for a long time, and understand well how to minimize the oxygen/hydrogen production. Tuning the process the other way is going to be a whole new learning curve, made more interesting by the requirement to scrub out every trace of poisonous chlorine before venting the oxygen...

    On the other hand, electrolysis and hydrogen storage isn't so much worse than the other large-scale energy concepts I've seen. Hydro storage (pumping the water back to the high side of the dam) is practical with well-known technology, but I can't think of a single hydro power project that got started since environmental impact statement were required. Battery storage is too expensive. Flywheels??? Gigantic compressed air tanks???

  • Ted Rado

    Markm:

    There are endless schemes that are theoretically possible. Hydraulic storage, for example, is straightforward, well understood, and could be implemented immediately. Furthermore, the great plains (wind farm area) are near the Rockies where high reservoirs could be built. At first glance, this scheme looks good. However, a few calcs show that the storage and recovery efficiency will be in the 60-70% range, and about ten times as much electrical gear is required as for simply generating the power in a conventional plant. If you were willing to have an electric bill many times as high as at present, and flood a lot of the high country, it could be done. How many people are willing to pay a several thousand dollars per month electric bill?

    Almost anything is scienticically possible. Very few are technically and economically feasible. For example, you can make gasoline out of CO2. Anyone interested in $1000/gal gasoline?

    Mankind has been searching for workable energy sources since the dawn of time. The feasible ones are already in use. Perhaps some new breakthrough (a al nuclear energy) will show up. However, the USG idea that if only we throw enough money at it, we will have a miracle happen is a cruel hoax. One can easily show, with a few calcs, that EVERY DOE project is a joke. We are wasting billions for political grandstanding.

    Let's do paper studies and identify ideas with potential rather than just throw money around. I have done many myself, and so far have found nothing with a chance of being a feasible large scale source of energy, either for engineering or cost reasons, or both.