No, seriously, I love pipelines. (Image credit: AFP/Getty Images via @daylife)
On Thursday, as part of a roadshow for his “all of the above” energy strategy, President Obama is scheduled to visit Cushing, Okla., home to the world’s biggest oil storage complex. There he will tour a yard where TransCanada is storing pipes to be used in building the southern leg of the Keystone XL pipeline. The line will stretch from Cushing down to refineries on the Texas gulf coast.
It will be a strange and remarkable visit considering that Obama in January denied a permit for the northern section of the pipeline that would have crossed the Canadian border. The strangeness wasn’t lost of Harold Hamm, the chief executive of Continental Resources, Mitt Romney’s new energy advisor, and a first-rate oil tycoon, worth $11.5 billion by Forbes’ most recent reckoning.
“It’s so hypocritical and so ironic after everything he’s tried to do against the industry,” said Hamm in a phone interview with me today. “He’s trying to take credit for all the gains we’ve made against the backdrop of the biggest oil storage complex in the world.”
Take credit? Naw, the president couldn’t be taking credit for this stretch of the Keystone XL, could he? After all, he must know full well that TransCanada got approvals to build the southern stretch months ago, and that pipelines that stay within U.S. borders don’t need presidential approval anyway. Maybe someone forgot to tell Obama advisor David Axelrod. “This president has approved dozens of pipelines,” said Axelrod on CBS’s “Face the Nation.” “So he’s certainly not hostile to transporting oil but we have to do it in an appropriate way.”
Isn’t it more likely that the president is going to Cushing (as well as another stop to an oilfield in New Mexico) to bash oil? After all, it was just a couple weeks ago at a campaign stop in North Carolina that Obama dismissed oil as “the fuel of the past.”
Maybe the president is going to Oklahoma to apologize for the comments of his actor friend Alec Baldwin (seen here with the Obamas at the White House correspondents dinner, May 2010). Over the weekend Baldwin tweeted that Oklahoma’s pro-oil, anti-environmentalist Senator James Inhofe should be retired “to a solar-powered gay bar.” Baldwin also tweeted, “Is there a bigger Oil Whore than James Inhofe?”
Maybe he wants to take credit for the mammoth gains in domestic oil and gas production in the past three years? No, that couldn’t be the case either. The president knows full well that he had nothing to do with the development of oil and gas from shale reservoirs in Texas, Oklahoma, Pennsylvania and North Dakota. In fact, it’s clear as day that the president thinks oil and gas companies should be drilling less, not more. Why else would he have said in his radio address last Saturday that Congress should move to cut billions in oil and gas tax breaks. A congressional vote, he said, would put lawmakers on record as to whether they “stand up for oil companies” or “stand up for the American people.”
It’s an either/or, huh? Tell that to the oil-and-gas boom states of Oklahoma, Pennsylvania, Texas, Louisiana, or North Dakota, which has the lowest unemployment rate in the nation, and where there are thousands of jobs available working on the Bakken shale oil field. Harold Hamm’s Continental Resources has the biggest position in the Bakken, where oil production has grown from a trickle a decade ago to surpass 500,000 barrels per day now. Last month North Dakota surpassed California as the state with the third-most oil production. Hamm says it will pass Alaska later this year. Thanks to fracking, domestic oil production is up 20% since 2008 to 5.8 million bpd.
Yet we know the Obama administration doesn’t like oil drilling in the Bakken because last year the Department of Justice brought a criminal indictment against Hamm’s Continental Resources (and other oil companies) over the death of a handful of migratory birds that apparently died in a wastewater pit. Nevermind that an estimated 100 million birds die each year from flying into windows. (A judge threw the case out.)
The southern stretch of the Keystone XL will be instrumental in opening up the bottleneck that has prevented Bakken oil from getting to market. Bakken producers have had to rely on tanker trucks and trains (especially those operated by Obama buddy Warren Buffett’s Burlington Northern Santa Fe) to get crude to market.
I can only guess that the president has a surprise in store for Thursday. A wild prediction: he will use his remarks in Cushing to explain that the U.S. economy needs oil and gas, that he’s approving the entire Keystone XL–because no matter where they are laid, pipelines are a far safer way of moving crude than by truck or train. What’s more, he will declare the entire Eastern Seaboard as well as the Alaska National Wildlife Refuge open to oil drilling. Whaddya think? Too alienating to his base?
What’s the worry? It’s not as if they’re going to vote for Romney.
Trains roll from Canada to Gulf to fill void left by failed Keystone Pipeline
A Canadian railroad carrying millions of barrels of oil to Gulf refineries is hurtling full steam ahead through the Obama administration's block of the Keystone Pipeline.
The amount of oil Canadian Pacific Railways carries down through the heartland has surged 2,500 percent since 2009, to 8.5 million barrels per year from just 325,000. The company expects to move 45 million barrels per year within the decade.
“We are responding to a growing demand,” Ed Greenberg, a spokesman for Canadian Pacific told FoxNews.com. “There has been unprecedented growth in the energy industry.”
The Calgary-based railroad is one of two that carries oil down from Canada's tar sands, but Canadian Pacific also carries thousands of barrels per day to the Gulf from North Dakota's booming Bakken Formation oil fields.
Experts estimate shipping by rail instead of pipeline adds anywhere from $5 to $10 to the price of a barrel, not to mention the high-capacity, 24-7 flow a pipeline affords. Rep. Fred Upton, (R-Mich.), chairman of the House Energy and Commerce Committee, says the explosive growth of oil delivery by rail underscores the missed opportunity of the Keystone XL Pipeline, a Canada-to-Texas oil pipeline that became bogged down by environmental concerns and was ultimately tabled by the Obama administration and the Democrat-controlled Senate.
"We need to be doing all we can to develop our resources, particularly now, with rising gasoline prices and the threat of supply disruptions overseas," Upton told FoxNews.com. "Most observers acknowledge that rail transport is the best option we currently have to get this oil down to the refineries -- but the Keystone XL pipeline presents us with a better alternative."
Supporters of the pipeline, which the Obama administration plans to consider again after the 2012 election, say it would not only lower the price of a barrel of oil, but that it would also provide jobs. TransCanada, the company seeking to build the pipeline, has estimated it would generate 130,000 jobs, a number endorsed by Republican supporters of the pipeline. But Democrats cite a study by Cornell University that places the number at just 5,000 jobs.
With the pipeline in limbo, trains are the next-best way to move the oil south to the thirsty refineries on the Texas and Louisiana coasts, Michael Ervin, a petroleum industry analyst based in Calgary, Alberta, Canada, told FoxNews.com.
“The use of rail as a short-term solution to pipeline capacity limitations was a likely approach either with or without the additional production,” Ervin said. “It is more a matter of a lack of pipeline capacity, which in turn is depressing domestic crude oil prices of all types in the Midwest and Canada as well.”
Oil companies are investing their own money in the older mode of transport, said Tony Hatch, a New York-based transportation and railroad industry analyst, noting that Hess Oil is among the latest companies to buy its own rail tankers. He said even if the pipeline ultimately gets built, rail transport will be a piece of the puzzle.
“The markets are ready for the oil now," said Tony Hatch, a New York-based transportation and railroad industry analyst. "It’s clear that they are investing in rail even when and if a pipeline is built."
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