Is There Anything Behind the Delay of the TransCanada Pipeline?

Here in Nebraska we seem to be the hub of fixation about the the proposed building of the TransCanada pipeline through our natural aquifer. You can find lots of information on the Nebraska Watchdog website.

For those that need to be brought up to speed... A group here in Nebraska called Bold Nebraska which is known for their liberal and environmental point of view, have worked very hard on delaying this pipeline. Some have accused them not of being against the pipeline, but rather against the type of oil production that would be used to extract the oil that would be transferred in this new pipeline. And some just accuse them of being anti-oil overall.

If you're following along this far...

Now comes some interesting information from a post on a blog called Econbrowser. They discuss TransCanada and the pipeline including the delay:

An alternative is a new pipeline extension proposed by TransCanada that would carry oil from Canadian oil sands all the way to the Gulf. That's another option that would clearly cut the Brent-WTI spread, but which has yet to receive U.S. approval.

The above is discussing how to move oil from Oklahoma to the gulf where the spread in the Brent and the WTI is so high. Here's what they mean:

For most of the last decade, there was very little difference between the price of West Texas Intermediate traded in Cushing, Oklahoma and that for North Sea Brent in Europe. But a $10-$15 spread between the two developed at the end of January and has remained ever since.

The new gap is essentially a geographic difference between the price paid for oil in the central United States and that paid on the U.S. coasts and anywhere else in the world. For example, Chevron is currently offering $123.25 for a barrel of Louisiana light sweet, $17 more than it is willing to pay for Oklahoma sweet. A year ago the differential was only $3. That gap means that U.S. refiners on the coast are paying a huge premium to buy imported oil, when there are plenty of inland domestic producers who'd love to sell it to them at a significantly lower price.

And here's the $64,000 question they ask:

...why are producers selling the product in Oklahoma when there's such a much better price to be obtained at the Gulf?

Meaning, if you own oil in Oklahoma why don't you move it to Louisiana and sell it there? Pipeline. There isn't enough of it. And as quoted above, The TransCanada pipeline is one pipeline that would help relieve this price pressure and allow the companies in the midwest to get that higher price.

So, it seems that Bold Nebraska is causing problems in curing this price difference. More on that in a bit.

Next question to ask. Is there another way to ship oil around the country? You bet. Think Tagert Transcontinental. Or rather Burlington Northern. Yep, trains. They've been used for a century to move oil. Trains are big business. Matter of fact we learn here that new infrastructure is already being built (from Econbrowser, again):

U.S. Development Group opened a new 60,000 b/d crude-by-rail unit train terminal in St. James, Louisiana for this purpose last summer, and plans to double the capacity and build two more. Savage Companies and Kansas City Southern plan a huge new terminal for Port Arthur, Texas for completion in 2012:Q2. A dozen other rail facilities for transporting oil from North Dakota and surrounding areas are also under construction. Jim Brown speculates that this may have been part of what Warren Buffett saw that others didn't when he decided to buy Burlington Northern railroad last year.

Perhaps now we're starting to see what all this delay on a pipeline is all about. Understand that this next piece is still speculation and is not based on fact, just questions that should be asked. Maybe the Nebraska Watchdog can go fetch it.

1) Is the delay of the TransCanada pipeline being done on purpose to allow more time for a railroad infrastructure to develop and mature that would cause the need for the pipeline to be removed?

2) Is Warren Buffet and Burlington Northern behind this delay? Are they pressuring our Governor and our Washington delegation to put the brakes on for this pipeline project? (Note: This will include the State Department due to Canada/US relations. Hillary Clinton is in support of the pipeline, much to the chagrin of Bold Nebraska.)

3) Who is Bold Nebraska? Are they acting as the populist front against this pipeline and just who is bank rolling them? Does Buffet money make its way to them?

I think all three questions are good questions that need to be asked. As for the third question it wouldn't be surprising to see a do-gooder being duped and made as lackeys for an issue. I'm sure most of Bold Nebraska feels good about what they do. Too bad they can't see that they're being played like the anti-nuke crowd was in the 1970's. Who benefited by us not building any more reactors? The Bush family and Big Oil. Go figure. The great swindle and hoodwink is here again. What's it feel like to be had, Bold Nebraska?

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Comments

[Eric Parks]

Classical liberalism regarded those laws best that afforded the least discretionary power to executive authorities, thus avoiding arbitrariness and abuse. The modern state seeks to expand its discretionary power. Everything is to be left to the discretion of officials. - Ludwig von Mises

[Peter Sarpy]

I wonder what are the chances that the folks at Bold actually care about Nebraska water? Is the risk of water-soluble tar-sands oil leaking into the Nebraska water really a risk?

I mean really, folks... TC has tens of thousands of miles of pipeline, and only a couple hundred leaks annually. IF the Keystone II does leak, it really won't matter, will it? We all know oil and water don't mix, right? So cleaning up an underground oil spill should be easy.

Of course, the fact that this is water-soluble oil MIGHT make it more difficult.

I wonder how bad it would really be to have an oil spill in the acquifer?

On the other hand, TransCanada has a pipeline in eastern Nebraska, running through Cedar County and south. Maybe they should just run their second pipeline there?

[Triple Hash]

Peter,

Water? You think this is about water? Do you hear your master, overlord laughing at you right now?

This is about oil and the transportation of said oil.

Tell you what, this weekend at the Berkshire meeting, you ask Warren B. how much money he'll make if the pipeline isn't built.

That's what this is about. Pull your head out.

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