KEYSTONE, THE MAGIC PIPELINE

BY STEVEN HAYWARD IN ENERGY POLICY, KEYSTONE PIPELIN

Oh goody—dueling studies about the Keystone pipeline!  Wonk heaven.

First comes a study that says failing to build the Keystone pipeline will result in an increase in greenhouse gas emissions for the simple reason that if Canadian oil isn’t transported by pipeline, it will be shipped by rail (and by tanker if shipped overseas to other eager customers), which will produce higher greenhouse gas emissions than a pipeline.

But another new study concludes just the opposite—that the Keystone pipeline will result in a significant increase in greenhouse gas emissions above what the State Department’s assessment found.  Guess which study is getting more media attention?  What’s that?—You don’t need to guess.  Of course.

So what about this second study?  It comes from the Stockholm Environment Institute, and right away you wonder what interest a bunch of Swedes would have in a North American infrastructure project.  Or maybe they’re just suffering a green version of the Stockholm Syndrome?  Yes that’s it: turns out the Stockholm Environment Institute has a U.S. chapter based in America’s Stockholm—Seattle.

Recall that the State Department’s assessment that Keystone would have no effect on global greenhouse gas emissions was based on the sensible premise that the Canadian oil is going to come out of the ground and find its way to the market.  You’d think this would be obvious to everyone, but environmentalists persist in the charming fantasy that if only they block Keystone, Canadian oil will stay in the ground.  (I hear some of these folks still believe in Santa Claus too.)

The Stockholm study is only 18 pages long, and is almost laughable.  Strike “almost.”  It finds Keystone would increase greenhouse emissions in several possible ways, one of which being the assumption that cancelling the pipeline will result in Canadian oil staying in the ground.  Yeah—and Sweden might turn militaristic and intervene in Ukraine, too.  But another way it might result in higher greenhouse has emissions is by contributing to lower oil prices, which will increase demand and consumption of oil.

Now hold on just a moment. One of the arguments we always hear from environmental opponents of expanded Alaskan production or new energy infrastructure like Keystone is that it would have little or no effect on oil prices.  But this study’s findings depend on the, um. . . denialof this central environmentalist tenet.  Wow—Keystone turns out to be a magic pipeline after all: it will destroy the planet, lower oil prices all by itself, and make environmentalists even more incoherent at the same time.  Still, it is nice to see at least a few environmentalists discover the law of supply and demand might apply to oil after all.  They’re now ready to proceed from economic kindergarten to the first grade.

If you want to appreciate the full moonbattery of this study, take in the flow chart below (click to embiggen) which shows one train of causation holding that rejecting Keystone will cause other world leaders to reject new hydrocarbon infrastructure, thereby leading to higher energy prices and diminished consumption, and ergo, lower emissions.

This is not econometric modeling; this is the political modeling of wishful thinking.  Too bad wishful thinking isn’t an energy source.  If it was, we could just use the good wishes of environmentalists to run our power plants.

http://www.powerlineblog.com/archives/2014/08/keystone-the-magic-pipeline.php