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The Politics of Pipelines

“The Supreme Court of the United States, in a case analyzing treaties, once said, ‘Great men, like great nations, must keep their word,’” Ducheneaux explains. “Of course, we are in a strange political atmosphere, where truth telling and honor is maybe not the most paramount thing.” Telling the truth is quite difficult for this administration, but personal financial gain has been paramount. Rex Tillerson, the now former Secretary of State, retired from his career as the CEO of Exxon Mobil to take the position with the U.S. Department of State. This is a department that, among many other things, negotiates, interprets and terminates treaties and agreements.

Much like Tillerson, the POTUS himself has financial interests in oil. He not only owned Exxon Mobil stock, he held stock in the company building the DAPL. Trump’s 2016 federal disclosure forms show his stock in Texas-based Energy Transfer Partners. In November 2016, the CEO of Energy Transfer Partners, Kelcy Warren, told NBC News: “I’m 100 percent sure that the pipeline will be approved by a Trump administration…I believe we will have a government in place that believes in energy infrastructure.”

Although he sold his stake in the company before taking office, Trump has been the recipient of generous political contributions from Warren. Warren made $1.53 million in campaign contributions to super PACs (committees that raise unlimited amounts of money from corporations, unions and individuals in an effort to influence the outcome of state and federal elections). He contributed $252,300 to individual campaigns and the GOP, according to the Center for Responsive Politics, and $100,000 to The Trump Victory Fund (a joint fundraising committee that includes Trump’s campaign, the Republican National Committee and some state parties). President Trump became the 45th president of the United States on January 20, 2016; by January 24, Trump had signed executive actions to advance both the Keystone XL and Dakota Access pipelines. The White House has also not confirmed whether Trump still owns shares in Phillips 66, which has a one-quarter share of the DAPL.

Trump and his administration have become so cozy with the oil giants that the Independent Petroleum Association of America will be having their “Congressional Call-Up” this year at the Trump International Hotel in Washington, D.C. That said, American politicians aren’t the only ones lining their pockets with oil money. Foreign interests are lining up to profit from the impending pipelines and fracking. TransCanada Corporation, for example, is a Canadian company that solely owns the Keystone Pipeline System. The portion of the Keystone Pipeline residing within the United States includes 1,084 miles of new, 30-inch diameter pipeline in North Dakota, South Dakota, Nebraska, Kansas, Missouri and Illinois. In 2011, the second phase of Keystone included a 298-mile extension from Steele City, Nebraska, to Cushing, Oklahoma. In addition, eleven new pump stations were built to increase the oil capacity of the pipeline from 435,000 to 591,000 barrels per day.

Phase three was completed in 2014, which has the capacity to deliver up to 700,000 barrels of oil per day to Texas refineries. Phase four, also known as Keystone XL (KXL), will potentially add 510,000 barrels per day, increasing the total capacity up to 1.1 million barrels per day. That is a huge payday for a foreign company, if the company can secure land easements from the land owners in its path. According to a post by the Harvard Environmental Law Program, the State of Nebraska has “rejected TransCanada’s petition to use an alternative route closer to the original proposed route.” The rejection took place in December of 2017, and many opponents of the pipeline see the vote against an alternative route a win.

The Benefits of Big Oil For Americans

If we continue to follow the money, in an attempt to look past the ways in which the pipelines benefit politicians and foreign interests, can we find benefits, financial or otherwise, for the American populace? President and TransCanada Corporation CEO Russell K. Girling argued that “the U.S. needs 10 million barrels a day of imported oil,” but according to a study done by Danielle Droitsch of Pembina Institute, “a good portion of the oil that will gush down the KXL will probably end up being finally consumed beyond the territorial United States.” The study also explains how the project will increase the heavy crude oil price in the Midwestern United States by diverting oil from oil sand deposits from the Midwest refineries to the Gulf Coast and export markets. So not only will the oil running through these pipelines not be going to the American people, it will cause American oil prices to rise.

Rep. Ed Markey (D) of Massachusetts asked if TransCanada would support legislation that required Canadian oil and products refined from oil, such as diesel, to be sold only in the United States, “so that this country [the U.S.] realizes all of the energy security benefits your company and others have promised?” To which Alex Pourbaix, President and CEO of TransCanada responded simply, “No, I can’t do that.” Pourbaix refuses to agree to requests like that of Rep. Markey because KXL was never intended for the U.S.

According to a report prepared by Ensys Energy for the Department of Energy, Canadian oil import growth (the oil imported to the US from Canada and its pipelines) will go on at “almost identical” levels through 2030 with the existing and new pipeline capacity, as well as rail shipments, whether or not Keystone XL is built, as Keystone XL is an export pipeline for international buyers. This would decrease the US energy supply and increase the cost of oil in the American Midwest, which is why President Obama denied permission to build the Keystone XL, stating it did “not serve the national interest at this time,” and that there were unresolved concerns, including energy security, economic effects and environmental impacts. In other words, Americans would see no return or growth in imported oil due to KXL, but will continue to bear the burden of its presence.

Even so, politicians, the media and much of the public were polarized on the topic. Mitt Romney insisted that “[t]he president demonstrates a lack of seriousness about bringing down unemployment, restoring economic growth, and achieving energy independence,” and Newt Gingrich said the decision “weakens America’s national security and kills thousands of well-paying American jobs.” As mentioned above, study after study has shown that KXL will not contribute to America’s energy independence. The question, then, remains: Will the continued development of these pipelines contribute to enough economic growth and well-paying jobs for Americans to neutralize the rise in oil prices?

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