The Poor Pipeline

By: Frank Yunker

Date: 2015-03-05

Politicians by their nature make political decisions rather than economic decisions. Case in point: the Keystone Pipeline. In a world fueled by Pixie Dust and Rainbows, no one would approve the Keystone Pipeline. It takes the dirty, smelly tar sands of somewhere deep into Canada and would extract the oil. The pipeline would then send it thousands of miles to America in order to be refined. Obviously, a presidential veto is necessary.

But we don't live in a world fueled by pixie dust. If we eliminate all fossil fuels, we'd be back to sailing ships, horse back riding and chopping wood to keep warm. That would destroy international trade (so say goodbye to bananas, fresh vegetables in winters and ice).

All right, then. Now that it's agreed that until someone invents cold fusion or John Galt designs the motor that powers the world we must use fossil fuels. Where should we get our oil? We have options. Iran is one, but a simple review of the past 35 years might suggest that would not be a stable and mutually beneficial relationship.

We could consider Venezuela. They need the money and they have the oil. Of course, as their unique version of "Bolivarian Socialism" implodes, they might not be the most stable supply of oil. Every time a new crisis bubbles to the surface, they begin by blaming the United States. Just this week they've begun a campaign to restrict American activity in their country.

Which brings us to Canada. They are a long time friend and ally. Americans can visit Canada without undue concern for their safety. The United States imports oil from many countries, but certainly Canada is among the safest in terms of a stable relationship. The next question is how to transport the oil.

Currently, the oil would be delivered by railroad car. Train derailments in the news this week include West Virginia and Pittsburgh. The environmental impact of oil spills has to be of concern to any president. Why then increase the chance of spills by not approving the pipeline?

The pipeline will bring close to a million barrels per day into the market. That is less than 10% of US production, but it is enough to bring the price down on the world market. It won't bring it down much, but it will keep prices lower. That is basic economics. And when you keep prices low, the poor benefit.