We typically appreciate the work of the Washington Post “Fact-Checker” but his “Fact-Check” last week on TransCanada’s Keystone XL commercial ignored the facts. He gave TransCanada three Pinocchios for producing an ad which simply points out the obvious: the Keystone XL pipeline could significantly reduce the United States’ reliance on oil from unstable or unfriendly regions. To his credit, Fact-Checker updated his piece this morning with a letter from TransCanada which does include the facts. Let’s have a look:
North American Energy Security
One of Fact Checker’s main problems with TransCanada’s ad is as follows: “After all, this is an ad for Canadian oil. And last we had noticed, Canada was still a foreign country.” Fact Checker goes on to say:
The United States currently imports more oil from Canada than it does from the entire Persian Gulf, according to the U.S. Energy Information Administration. Moreover, oil from the tar sands of Canada is expected to replace crude from Venezuela (which one could argue is not a friendly country) or Mexico. The Middle East is really not part of the equation.
Of course the Middle East is part of the equation. The International Energy Agency (IEA) released a report earlier this year which found that North America will provide 40 percent of new energy supplies by 2018, largely due to the development of oil sands, while contributions from the Organization of Petroleum Exporting Countries (OPEC) will drop to 30 percent. That means that North America could become “all but self-sufficient” in its energy needs by 2035.
That’s not all: the New York Times has also reported on the importance of greater energy security from increased oil sands production, writing: “Canadian oil production is also rising fast because of the development of western oil sands, and experts say an increase in production of 200,000 barrels a year can be expected over the next decade…” The article goes on to explain: “Such price stability will bring with it winners and losers. Several producing countries like Venezuela, Nigeria and Saudi Arabia, which depend heavily on oil earnings to finance their governments and social programs, may be in for a shock. That could strengthen the position of the United States and even China…”
Further, a recent IHS CERA report called Canadian oil sands a “key pillar” for North American energy security:
Over the past decade the Canadian oil sands have moved from the fringe to become a key pillar of global oil supply. This growth has made oil sands the single largest source of U.S. oil imports and also a key source of global supply growth that could account for 16 percent of all new oil production by 2030. Today, the output of just Canadian oil sands-excluding all other Canadian oil production-is greater than the output of five out of the 12 members of OPEC.
As General James Jones, former national security advisor to President Obama, said just last week, we need the Keystone XL pipeline and the oil sands resources it would bring, because, “With Canada’s friendship and partnership we have a North American possibility that is really dramatically different than anything we could have envisioned in the last ten years.”
It’s probably safe to say that everyone understands that the United States and Canada are separate countries. Rather, the crucial point is tied to North America – that is, how using both the United States’ incredible shale resources combined with Canada’s vast oil sands supply could lead to North American energy security in a matter of decades. In its letter to Fact Checker, TransCanada provides the facts:
On the matter of energy security, we have never tried to claim that Canada is not a “foreign” country. We have consistently explained that as the largest oil consumer in the world, the U.S. imports between eight and nine million barrels per day of crude oil – about 60 per cent of its need – from other countries including Canada. Even with growing shale oil production and flattening demand, both the International Energy Agency and the U.S. Energy Information Administration project the United States will continue to be a net oil importer for decades to come. Canada is already the top supplier of oil to the U.S., at more than two million barrels per day. Keystone XL will increase this by more than 700,000 barrels per day and will also provide refineries with greater access to domestic U.S. oil production from the Bakken. Keystone XL is not about energy versus the environment – it’s simply about where Americans get their oil. Persian Gulf countries and Venezuela contribute three million barrels per day of imports. These countries are far less stable and more expensive sources of foreign oil than Canada, which is America’s largest trading partner and ally.
It’s also worth remembering that Canada has long been our most reliable and best trade partner – in fact, for every $1 of goods we purchase from Canada, nearly 90 cents is returned by Canadians buying US goods. It only makes sense to continue strengthening our partnership as both our countries work together to achieve energy security.
Gas Prices
On gas and oil prices, Fact Checker argues:
For all the claims about energy security, it’s important to remember that TransCanada has not claimed the pipeline would lower gasoline prices. “The price of international oil prices has no impact on the operation of our pipeline and we do not profit from changing market changes,” TransCanada says in a fact sheet. “Prices are set on a global level.” In other words, if oil prices spike because of unrest in the Middle East, the impact will still be felt in the United States.
Here again, Fact-Checker appears to have missed some key reporting and studies. Thanks to increased energy production in North America, Americans have not suffered from dramatic price shocks tied to disruptions in unstable nations of the world. As an October New York Times article explained, this was primarily because of the American shale revolution combined with the development of Canada’s vast oil sands resources:
Most important, the country is better prepared for any shocks if the instability in the Middle East and North Africa escalates much further. United States gasoline inventories are up nearly 10 percent from a year ago, while demand is up by only about 1 percent. Mostly because of a frenzy of shale drilling and expansion of oil sands production, the United States and Canada are producing two million barrels of oil a day more than when the turmoil in the Middle East and North Africa broke out two years ago. That, along with the decline in consumption since 2007, has meant that the Strategic Petroleum Reserve and other inventories now have the capacity to replace about nine months of imports, about 40 percent more than only five years ago.
A recent report from IHS CERA supports this finding, stating: “as oil sands production expands…it can help boost global spare capacity, which can help moderate global prices, which in turn affects US gasoline prices” (p. 4). As we previously mentioned, several other new outlets came to the same conclusion.
Keystone XL Jobs
Ironically, Fact Checker criticizes TransCanada for citing the State Department’s job figures even though, just a few months ago, Fact-Checker said that’s exactly what President Obama should have cited for his job numbers. As Fact-Check stated then, “Ordinarily, we would expect the president to cite an estimate from his own State Department…” Fact Checker then goes on to criticize TransCanada’s job numbers, not for this ad, but for previous estimates. In in its letter to Fact Checker, TransCanada explains the clear job creating potential of Keystone XL:
As one of the largest infrastructure projects currently planned for the U.S., Keystone XL will see $5.3 billion of private-sector money put to work in the American economy. Of course it is difficult to calculate all of the impacts and spin-offs this investment will have on local communities, but TransCanada has always been very clear that building Keystone XL will require at least 9,000 skilled workers during two years of construction. We have been building pipelines across North America for more than 60 years, so we have a very clear understanding of what is required in terms of labor and materials. For example, we said we would employ more than 4,000 people to build the southern portion of Keystone XL, the Gulf Coast Pipeline. We are now just finishing this project and have confirmed that we put 4,844 people to work. For broader estimates that include spin-off jobs that the project will support, we believe the Department of State’s independent estimate of 40,000 is credible.
On that point, perhaps the Washington Post editorial board put it best:
[P]ipeline skeptics dispute the estimates of the number of jobs that the project would create. But, clearly, constructing the pipeline would still result in job gains during a sluggish economic recovery.
No matter where you look for a jobs estimate it’s pretty clear that Keystone XL is a job creator. And you don’t need to take our word for it – just ask the thousands of labor union members rallying across the country to tell President Obama to approve Keystone XL for the jobs and energy security it would bring.
