The Bullpen

Why we don't need the Keystone Pipeline

Proponents claim it will bring down gas prices, create jobs, and preserve national security. Not so fast...

Here are some interesting facts you might not be aware of:

  • The United States now exports gasoline: Some 15 million barrels of gasoline a month. That's about 500,000 barrels a day. We're selling so much that exports have quadrupled in just seven years.
  • Americans are using a lot less gasoline. Demand peaked back in September 2007 at almost 9.3 million barrels a day. Today, we consume about 8.7 million barrels a day — a drop of 600,000 barrels a day.

We're producing way more gasoline than we need. The gap between supply and demand is so great, in fact, that the only market oil refiners can find for their product is overseas, where demand is growing (and prices are often much higher).

And this is happening even before booming U.S. shale oil and natural gas production really kick into high gear over the next few years, which brings me to two more observations:

  • The U.S. will become a net exporter of oil around 2030 and nearly self-sufficient in energy by 2035.

That means that we'll have so much oil in just a few years that we'll be able to export it — like the Saudis do now — and won't need a drop from anyone.

So with all of that in mind, tell me: Why do we need the Keystone pipeline?

Republicans — greased by big bucks from the oil lobby — ignore the above points (if they're even aware of them) and continue to be apoplectic about Keystone. They're convinced that it's absolutely necessary for national security. They're convinced that without it we'll be at the mercy of foreigners (other than Canadians, of course). They're convinced that it'll bring gasoline prices here down. And finally, they're convinced that without it, American jobs will be lost.

If we're on the verge of passing the Saudis and becoming like them — oil exporters — in just a few years, how is our national security threatened if we don't get Keystone oil? And how will we be at the mercy of foreigners?

Since peaking nearly a decade ago, American reliance on oil imports has steadily declined to about 40 percent of our needs today. Breaking this figure down, our biggest supplier, by far, is Canada. We buy more than twice as much from them as we do from the Saudis.

And why are we importing so much less? Credit the private sector, changing consumer behavior, and yes, the federal government. Cars are 20 percent more fuel efficient than they were just six years ago. Businesses have also become more efficient. Also helping: More reliance on biofuels, and big increases in domestic production of oil and natural gas to power vehicles (on this point, the "drill, baby, drill" crowd is right). As these trends accelerate in the years ahead, there will be even less need for Keystone oil. Everything Republicans claim to cherish — innovation, empowered consumers, and the magic of the free market — is making a huge difference.

What about the claim that approving Keystone will bring prices down at the pump? People who make this argument assume that every drop of gasoline refined from Keystone oil will hit the U.S. market, and all that new supply will overwhelm demand. That's not even the case today. An analysis by the State Department says that more than half of all fuel produced on the Gulf Coast (where Keystone oil would be refined) is exported, and why not? There's already a glut of gasoline in the United States, and foreigners in fast-growing overseas markets are willing to pay through the nose for what we have. Keystone backers ignore these free-market facts.

But if there's a glut of gasoline here, then why haven't prices come down, you ask? Because the oil that gasoline is made from is a global commodity. We're competing with other nations for it, and they're willing to pay more (have you seen the price of gasoline in other parts of the world?). This keeps our prices higher than you'd like. The claim, therefore, that Keystone will lower gasoline prices here at home simply isn't supported by facts.

This leaves just one more argument for the pro-Keystone crowd to cling to: That it'll create American jobs. This point is true. It will create jobs, but the devil is in the details. How many jobs? What kind of jobs? And are they temporary or permanent jobs? There's a number for everyone here. Supporters say Keystone could create up to 100,000 jobs. But TransCanada, the firm that owns the Keystone project, originally estimated that it would employ about 6,500 construction workers for about two years — and has since lowered that figure to about 4,500. Certainly, ancillary jobs for manufacturers, engineers, service workers, and the like would also be created. But once the pipeline is up and running, it'll take just 35 people — according to a State Department study — to maintain and inspect it.

The case for Keystone is dubious at best. Tell me again why we need it?


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