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The Koch Brothers-Keystone XL Filthy Oil Connection

By       Message Eric Zuesse     Permalink
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From http://www.flickr.com/photos/97325711@N05/10140437653/: 36 People Risk Arrest at State Department Office in Boston Protesting Keystone XL Pipeline
36 People Risk Arrest at State Department Office in Boston Protesting Keystone XL Pipeline
(image by NoKXL)
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Keystone XL Pipeline wouldn't contribute to U.S. energy-production, but instead to exports of the global-warming-dirtiest oil, from Canada, to Europe and South America. It would transport Alberta Canada's tar-sands oil -- half of which is owned by the Kochs  -- south to two Koch-owned refineries near the Texas Gulf Coast for transshipment mainly to Europe. President Obama is thus trying to get Europe to relax its anti-global-warming standards to permit their importation of this oil, which is the world's absolute worst oil from the global-warming standpoint.

Furthermore, "Currently, most Canadian tar sands exports are mainly limited to the U.S. Midwest market by a lack of transportation infrastructure." This fact (the lack of "infrastructure" or transportation facilities to move the oil to the international market) keeps down not only the price the Kochs can get for their oil (since it can't currently be sold on the international market); it also greatly lowers the sheer volume of it that they can sell (at any price), because the local Midwest oil market is small. Keystone XL would thus also enormously increase the annual sales-volume of this currently deeply landlocked oil.

Moreover, if this filthy oil isn't sold out fast, it won't ever be sold at all; and here is why, as explained by no less than the Oil & Gas Sector Analyst at the world's largest bank (in terms of assets):

He says, "Between 60 and 80% of current fossil fuel reserves listed on global markets cannot be burned if we are to limit the rise in global temperature to 2 degrees [Celsius, or 4.5 degrees Fahrenheit]," and that's the temperature-rise 97% of climatologists endorse as being the cut-off point that mustn't be exceeded if the climate is to avoid going haywire with soaring heat and destroying the planet's biosphere as humans have always known it.

He was accepting the climatological consensus, and he thus issued a study, "Oil & Carbon Revisited: Value at Risk from 'Unburnable' Reserves." His team calculated that for just oil-producing companies alone, "the value at risk from unburnable reserves would be equivalent to 40-60% of the market capitalisation."

This percentage would be even worse (much higher) for the Alberta tar-sands oil than for normal oil, because throughout its entire cycle, from the ground through to burning, the tar-sands oil generates far more carbon dioxide than does the cycle for regular oil.

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Consequently, Keystone XL is do-or-die for the Kochs, since they own half of this ultra-filthy oil. Also consequently, they need to buy the U.S. Government to adopt laissez faire policies that will prevent environmental and other types of regulation, etc., which would threaten their ability to sell this oil fast and completely (before enforcement kicks in). So: "The cumulative cost to Koch Industries and Charles and David Koch for ... political and lobbying influence, nonprofit public policy underwriting and educational institutional support was $134 million over a recent five-year period [2007-2011]." This is a pittance in comparison to the roughly $100 billion they stand to gain from selling their tar-sands oil -- which can happen only if the U.S. Government approves Keystone XL and succeeds in browbeating Europe into relaxing their anti-global-warming regulations.

This is just the Kochs' business-plan to become the world's two wealthiest men. It's a status thing, actually -- rather normal for conservative aristocrats, but deadly with the Kochs.

If Obama approves Keystone XL, and forces Europe to relax their anti-global-warming rules, then the likely outcome will be that Charles and David Koch will achieve their dream of being the world's wealthiest men, and also that 500 million metric tons of carbon will be added to our planet's atmosphere. (Note: that link also explains how Obama's State Department rigged their environmental impact statements on Keystone XL, for anyone who wants to know.) This will be a virtually permanent atmospheric carbon-increase, which will work each and every year for centuries, to increase our planet's heat. Once it's done, it won't be able to be undone. This will become a different planet.

In short: what the Keystone Pipeline would do is enable the tar-sands oil, which produces the highest CO2 throughout its entire cycle (from the ground through to its burning), to be far more cost-competitive than it now is versus regular oil. Right now, it costs about 50% more to produce-and-get-to-market than does normal oil (see page 16 there), because it's so landlocked and so dirty (thus, also, more expensive to refine). The Keystone Pipeline is all about making that oil more cost-competitive, even though that will get the world to climate-catastrophe much faster than if Keystone isn't built. They don't want their two-million-plus acres of tar-sands oil to become worthless -- which would happen if the anti-global-warming regulations start being enforced. So, they need Keystone XL -- and soon.

It has nothing whatsoever to do with "American energy independence." That line is just propaganda, a lie.

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Investigative historian Eric Zuesse is the author, most recently, of They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST'S VENTRILOQUISTS: The Event that Created Christianity.

 

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Investigative historian Eric Zuesse is the author, most recently, of  They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010,  and of  CHRIST'S VENTRILOQUISTS: The Event that (more...)
 

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