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Robert Rapier

Robert Rapier

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KeystoneXL Pipeline Could’ve Weakened OPEC's Bargaining Position

  • KeystoneXL could’ve weakened the bargaining position of OPEC and Russia this year.
  • The U.S. would be less vulnerable to OPEC supply cuts and price swings if KeystoneXL would’ve been completed.
  • The U.S. can’t afford to have policies that are hostile to North American energy companies.

The U.S. is rapidly depleting our Strategic Petroleum Reserve (SPR) and is now begging Saudi Arabia and OPEC not to cut oil production. This is a result of the unintended — but predictable — consequences of U.S. energy policy that is often hostile to our domestic energy companies. Our energy policy is often undermined by well-meaning but naïve people. They fought for years against the on-again, off-again Keystone XL pipeline, which was ultimately canceled by the Biden Administration.

The cancellation of the Keystone XL pipeline was naïve because of the belief that by canceling it, the oil wouldn’t be developed and it would help in the fight against climate change. Meanwhile, alternatives would come to the rescue, rendering the pipeline completely unnecessary.

I understand why people made that argument. It seems intuitively correct. But, that is not how the world works.

The reality is that if oil demand was still there when Keystone XL could have delivered oil from our friendly neighbor to the north, that would have added to global oil supplies. It would have transported oil from Canada and from the Bakken Formation in the U.S. It would have moved more oil than we get from either Russia or Saudi Arabia — and nearly as much oil as we got from OPEC last year.

Related: Venezuela’s Oil Exports Plunge In October

That means it would have weakened the bargaining position of OPEC and Russia when it came to withholding oil from the market (or in Russia’s case, sanctioning them).

If not for all the holdups on the pipeline extending back to the Obama Administration, the pipeline expansion would probably have been completed by about now. It wouldn’t have solved the issues with Saudi and Russia, but it would have reduced their power.

Some have misread my support of the Keystone XL pipeline. This has nothing to do with a desire to keep us addicted to petroleum. To the contrary, I want to see that addiction end.

My thoughts on the pipeline were to build it, and if the demand is still there when it comes online, we will have increased our access to a safer, more secure source of petroleum. Let a private company risk billions of dollars to build the pipeline, creating many jobs in the process. At the same time, we should work hard to ensure that we don’t need it.

We can’t afford to have policies that our hostile to North American energy companies. Such policies will hurt development here, and if oil demand doesn’t phase out as quickly as anticipated, then it puts us in the position we are in now: Draining our Strategic Petroleum Reserve in an attempt to control prices, while begging Saudi Arabia and OPEC to produce more oil.

If nothing else, look at the support of our domestic energy production as an insurance policy against being held hostage by foreign producers whose interests do not align with those of the U.S.

By Robert Rapier

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Leave a comment
  • Mike Lewicki on November 02 2022 said:
    It starts with a visit to Canada Robert!
  • John Smith on November 04 2022 said:
    Let's assume that the pipe is built and is flowing with tar sands oil...what's to suggest that OPEC wouldn't factor the XL exports when it decided to cut production? Suppose OPEC provided 90M barrels/day and they decide to cut down to 85M/day. Your assumption that we'd be insulated is misguided; assuming that OPEC still provided 90M barrels/day and these tar sands provided 5M, OPEC could have made a deeper cut (so now they'll export only 80M/day), and if Canada decided to increase its flow, OPEC would respond by cutting more.
  • Bakken Bob on November 08 2022 said:
    The KXL would not change the out put of Canadas tar sands nor would it increase the amount coming to the US just the way its transported. 2021 was a record year for oil imports from Canada.
  • John Galt on November 08 2022 said:
    The path away from fossil fuels lies through innovation and investment. Innovation and investment require a robust global economy. A robust global economy requires plentiful, reliable, and inexpensive supplies of fossil fuels.

    This isn't rocket science. Joe Biden and Democrats declared war against fossil fuels. They're winning.
  • steve Clark on November 29 2022 said:
    The article is 100% correct...North American energy stability must be our #1 concern and the elected officials have to do a better job in securing energy stability for our local economies.

    Keystone and the clean energy from Alberta would have done that for all of us and it was a silly, politically motivated move by the Democrats and Biden to suspend the KXL license.

Leave a comment




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