The Oil Sands Pipeline…A Lesson in Lunacy

 By Dwight Owen Schweitzer December 7th 2011

I am sure most of the cognoscenti at least, are aware of the novel idea put forth by Exxon Mobil and their Canadian partners of building a pipeline from Canada to Texas to bring what appear to be a substantial reserve of poor quality oil called ‘oil sands’ to the refineries there. If my memory serves me it has been at least 20 years since we have built a new refinery in the United States and world refining capacity is inadequate to meet present let alone future demand. Russia is particularly hard hit by it’s lack of refining capacity and is relying on it’s admittedly huge natural gas reserves to bring in the hard currency on which it’s economic growth depends, being a ‘Mifiaocracy’ not withstanding.

 

While I have no hard figures on the cost to build this pipeline it is reasonable to assume that today’s number is at best a low ball guess although no one would argue that whatever the cost they certainly have the money. What troubles me however, is the simple question of why bring the mountain to Mohammed when, at least to me, it makes a lot more sense to build a new refinery not only a lot closer to the location of the deposits in Canada which apparently are sufficient to keep it in the black (pardon the pun) but a west coast accessible refinery could be a profit center pulling in refinable petroleum from present and both known and suspected potential sources around the Pacific rim. More importantly, it is generally known that the oil contained in the Canadian oil sands is ‘dirty’ oil and in order to be made ‘clean’ the refining process needs to be state of the art, a far cry from what exists today at the other end of the proposed pipeline. The actual and potential environmental damage from the pipeline is another issue of significant concern in a area of the country that is not immune from potential threats both natural and man made. Let us not forget that we are in a state of seige or so the Patriot Act tells us, and if we cannot seal out border with Mexico I tend to doubt that we can keep a 1500+ mile pipeline free from some spare semtex and a creative terrorist or two.

 

Refining capacity is the bottleneck through which supply meets demand and whoever controls refining capacity determines the price of gas at the pump here and around the world. It is common to hear proponents of more exploration cry about the need for us to have greater control over our energy supplies but I have yet to hear any whining about the state of our refining capacity and yet it is refining capacity that makes that black goo into the innumerable products the kracking process from refining enables the owner of the refinery to create. A bit of history here; the Rockefeller fortune came from controlling access to refining because if you don’t have the ability to add the ‘gold’ to the ‘black’, all you have is a lot of gunk that has potential.

 

For those of you who decry the governments involvement in keeping us healthy and safe or at least trying to keep ahead of those who would happily sell us any number of dangerous goods and illegal services, they have a positive role to play here. One of the impediments to adding to our refining capacity is an abundance of local, state and federal regulations, often at odds with each other. There is a national need for adding to our refining capacity and as the government can get in the way it can also pave the way when our national interest is at stake. Here is the perfect opportunity for the federal government to play a positive role in moving the building of a new, state of the art, refinery located in a place in the pacific northwest where it could open up new markets, keep us from a 1500 mile boondoggle, and get it built within a reasonable time. It is worth keeping in mind during all this, that up to now at least, refining has been left up to big oil to decide when and how much petroleum products to produce, resulting in a strangle hold on the price of our most crucial national resource and the one upon which our economy depends.

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2 thoughts on “The Oil Sands Pipeline…A Lesson in Lunacy

  1. I think that the answer is that refining capacity is the spiggot that controls the price of gas at the pump every bit as much as speculation on future availability. BY increasing refining capacity they will have to refine more crude to make it profitable…here they have the best of both worlds.

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