Is the Sandpiper Pipeline a Good Idea?

pipeline-picEnbridge, a Canadian energy services contractor, is moving ahead with plans to build a pipeline from the Bakken oil fields in North Dakota to Superior, Wisconsin.  An Enbridge fact sheet is here.

This project — along with others like the Keystone pipeline or the Polymet mineral mines in Minnesota — move along with the promise of jobs and economic growth easing the way, making it all too easy for these projects to proceed without really weighing the costs and risks against the claimed benefits.

It might not be popular to worry about the environment the way we did a generation ago, but real concerns about environmental safety — and the easing of regulations protecting the environment — should be a first test.  In today’s news is a story about the 25th anniversary of the Exxon Valdez disaster.  Prince William Sound still has not fully recovered and oil can still be found on the beaches there.  Spills, if not full out disasters, are inevitable.  Do we really want to start shipping oil on Lake Superior?

And never mind the worries about global warming and the wisdom of seeking safer long-term energy solutions before we do even more harm to our future.

But let’s look at the promised benefits:  Jobs and economic growth.  If you read Enbridge’s fact sheet carefully, even they hedge a bit.  They tells us “Communities will also enjoy potential high-paying construction and manufacturing jobs, retail sales, food and lodging purchases, and equipment and materials purchases during construction.”  They wisely tell us these are “potential” benefits and will happen “during construction,’ neither of which is a long-term benefit.

Lake Superior

Lake Superior (Photo credit: chelsey.baldock)

Enbridge also touts the benefit of tax revenues.  Really?  We’re talking about a subsidized, low-tax industry in the United States.  Scattered here and there along the pipeline might be a facility or two which might garner some property tax revenue, but for the most part political leaders fall over each other in a race to give incentives to projects like these.  The tax claims are dubious at best.

And where do we think these revenues and economic growth will go?  It is true that this pipeline will service American oil fields, unlike the Keystone boondoggle, but there is no guarantee that the profits will stay local or even stay in the United States.  Again, the oil industry is a highly subsidized tax evader, enjoying a tax code that favors corporate profits at the expense of nearly $70 billion in tax revenues annually.  Companies like Enbridge are not even American businesses.  Where do you think these profits will go?

Finally, the argument that this oil will help reduce our dependence on foreign sources is one that needs to be put to rest once and for all.  We are in a global oil market.  As long as that is true, what we produce here has indirect effect on our independence and the price of oil.  One could even imagine a scenario where Bakken isn’t economically viable and production stops.  This has happened before.  If the cost to raise a barrel of oil exceeds the relative price of oil so it is not longer profitable, that oil production will cease.   There’s plenty of talk about the staying power of America’s new oil production, but few people are paying attention.  It is another one of those inconvenient truths.

We need to pay attention and put pressure on our political leaders to slow down and consider the potentials risks and costs against the promised benefits.  They don’t seem to add up.  We know too well that the oil companies have enormous political power and resources and essentially endless cash to spend on both.  This alone should be enough to get people to act.  Regrettably, it is easier to turn and let things go.  But that is not in our best interest.

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2 thoughts on “Is the Sandpiper Pipeline a Good Idea?

  1. Gary Farland

    The pipelines are necessary to the oil companies because the U.S. and Canada have become net exporters in a big way of distilled oil products like gasoline and especially diesel fuel. It is still illegal to export crude oil. So the question is why should the U.S. be exporting oil products when the price has been driven so high here? Of course, it is due to the monopolistic futures markets for internal gasoline.


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