Thursday, January 29, 2015

Five Reasons why Keystone XL benefits the U.S.

1. Building modern infrastructure creates jobs and stimulates the U.S. economy

We’ve always said that directly connecting the world’s third largest oil reserves (Canada) with the world’s most sophisticated refining hub (Untied States) would bring about strong economic benefits and contribute to a modern, safe and efficient energy infrastructure, including jobs, economic stimulus and energy security.

But we aren’t the only ones saying it.

President Barack Obama told a crowd in Louisiana that improving infrastructure needs to be a national priority, saying “America is relying on old stuff, we need new stuff.” The president also highlighted the need for investment in the “fastest, most reliable infrastructure” including “modernizing energy grids and modernizing pipelines.”

We agree. Keystone XL Pipeline represents more than a $5 billion private sector investment in a state-of-the-art energy infrastructure project projected to create approximately 9,000 jobs for the construction industry and make energy transportation efficient, reliable and most importantly, safe.

2. Taxes paid by TransCanada provide counties much-needed revenue to pay for infrastructure

When President Obama spoke at the Port of New Orleans he highlighted the need to fix old roads and bridges. The president gave an example of how trucking companies are rerouting their deliveries “to avoid traffic and unsafe bridges” and that “those costs get passed on to consumers.” Contrast that with the investments that TransCanada makes in its energy infrastructure to make sure that our systems operate safely and reliably. Over the past three years, TransCanada has invested an average of more than $900 million in our pipeline integrity and maintenance programs.

TransCanada is also proud of the investments it makes in communities in the form of taxes and other contributions. The taxes TransCanada pays helps counties afford infrastructure improvements to roads, bridges and schools without taxpayers shouldering the burden of increased taxes.

For instance, Dennis Houston, the president and CEO of the Norfolk Area Chamber of Commerce told Congress:

“Our community has been developing a new industrial highway around our current industrial park as we expand the park itself. This new industrial highway will help Norfolk create and attract additional new jobs. It was funded by Madison County, the City of Norfolk and Stanton County. One million dollars was invested in our economic development infrastructure by Stanton County is a direct result of tax dollars collected by the county for the TransCanada Keystone Pipeline pumping station.”

In Saline County, Neb., the extra tax revenue from TransCanada’s existing Keystone Pipeline was used to repay $4 million used to build a new school. Saline County Board of Supervisors Chairman Willis Luedke said additional revenues from Keystone XL would go to funding the construction of a bridge over the Big Blue River.

A Nebraska-based policy study entitled “Why Nebraska Counties Benefit” by the Platte Institute for Economic Research found that Keystone XL will have a substantial tax impact, generating $134.6 million in state and local levies in Nebraska alone:
$58.6 million in property taxes
$39.1 million in sales taxes
$20.1 million in individual income taxes
$3.3 million in corporate taxes

3. Supports U.S. Manufacturing

Low energy prices are a benefit to everyone, especially U.S. manufacturers — and to all of us for the goods and services we consume. The International Energy Association’s 2013 World Energy Outlook recommends that countries should look to use “indigenous sources” of energy to improve efficiency and reduce transportation costs. The report states:

“Policymakers can also boost energy competitiveness by supporting indigenous sources of energy supply, including renewables, nuclear power and unconventional gas. Regardless of the composition of energy supply, efficient and competitive markets can minimize the cost of energy to an economy . . . Lower gas and electricity prices in 2012 in the United States, relative to Europe, equated to estimated savings of close to $130 billion for the entire US manufacturing industry.”

Remember, Keystone XL is not only about transporting Canadian oil, which would displace higher-priced Venezuelan crude oil. Keystone XL will safely transport growing oil production from North Dakota and Montana, as well as provide market access for crude at Cushing, Okla. . This will contribute to maintaining stable energy prices and boosting the competitiveness of U.S. Gulf Coast refiners. This benefits all of our pocketbooks.

4. Keystone XL Pipeline enhances Energy Security

Energy security is about safe, reliable access to diverse and abundant energy resources. It’s also about having the choice of how those resources will be procured, used and distributed. A new comprehensive report from energy research organization IHS CERA, titled “Critical Questions for the Canadian Oil Sands,” shows that the oil sands play an important role in the energy security of the United States. The report states:

Increasing supply from Canada allows the United States to reduce its dependence on more distant supplies of oil by tanker, often from regions that are less stable and more susceptible to disruption. Pipeline and rail links between the United States and Canada constitute a “hardwired” link of Canadian oil to the US market — very different from waterborne shipments that can be diverted, even while en route.

The [Gulf Coast] region currently relies on heavy crude oil from Mexico and Venezuela. Mexico has struggled to maintain its heavy crude output to the USGC. Between 2005 and 2012, imports of Mexican heavy crude to the United States have declined by about half . . . There is also some uncertainty surrounding future supply from Venezuela, stemming from a recent history of declining production. Canadian heavy supply offers an alternative to less certain heavy crude suppliers.

As the United States imports growing volumes of heavy crude, year after year, it just makes sense to create a stable link from the United States’ most reliable trading partner to the north.

5. Keystone XL supports American Energy Independence

North American energy independence is a goal that is realistic and attainable. The IEA World Energy Outlook makes several important predictions in its latest World Energy Outlook report. Two predictions that stand out are:
The United States is the world’s largest oil producer for much of the period to 2035.
The net North American requirement for imported crude oil all but disappears by 2035, and the region becomes a large exporter of products.

The most optimistic outlook pegs Canadian oil production at 3.9 million barrels per day by 2020. The United States’ production is set to hit an astonishing 11.1 million barrels per day in 2020. The White House celebrated the news on its blog stating that:

“The oil and gas boom has also substantially reduced the trade deficit. The real (inflation-adjusted) trade deficit in petroleum products fell to a record monthly low in June. [The first six months of 2013, the petroleum deficit is on pace to set a new annual low this year, after adjusting for price changes.] And through June, 2013, the petroleum share of the real trade deficit in goods has fallen from over 40 percent in 2009 to 25 percent since then, a pattern that will improve as foreign imports continue to fall and domestic production continues to rise. Economic news like this is just one more reason for us to celebrate the resurgence of domestic oil and gas production.”

By creating a “hardwired” link between booming domestic U.S. production and growing supplies of Canadian oil and the U.S. Gulf Coast, Keystone XL will be critical in helping the United States decrease its dependence on oil from less-friendly, less stable regimes in a safe and environmentally responsible manner. It’s about making sure that oil production is connected to the right markets with the right infrastructure at the right time – and that’s what Keystone XL is all about.

Editor's Note:

The above is a statement on the TransCanada website. I post it here because I am in full agreement with their statement because their facts are solid and check out to be true.

Tom Correa

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