Streetwise Professor

November 15, 2014

Perhaps Fittingly, a Post on the Land of the Looney Brings Out the Lunatics

Filed under: Climate Change,Commodities,Economics,Energy,Politics — The Professor @ 7:59 pm

Tweeting my post about Obama’s Keystone mendacity unleashed a vortex of leftist idiocy that was stunning even by Twitter standards. Between a visceral and unthinking hatred of Keystone, and the need to rally to the defense of their cult leader (who also has a visceral and unthinking hatred of Keystone), the lunatics felt compelled to swarm from the hive.

One idée fixe was that Obama was right, and the oil is just going to travel down Keystone (spilling huge quantities all the way!), be put on tankers, and sail on its merry way to furriners abroad, especially the Chinese. The fact that the terminus to KXL is located at the heart of the largest concentration of refineries in the US, and refineries tailored to refine heavy crude to boot, could not shake them from their conviction. Apparently refiners in Texas are just going to stand by the Houston Ship Channel and wave as tanker after tanker of oil that they could be refining passes them by on its way to distant markets with much less efficient refineries. It’s rather amusing that some people believe (I won’t say think) that 830kbd is somehow supposed to sneak past the world’s largest concentration of sophisticated refineries tailor-made to process it, and end up in China.

Nor could they be budged by the fact that large quantities of Canadian crude, including oil sands, are already being shipped (via rail, barge, and rail then pipeline) to PADD 3 refineries and refined here. (Canadian oil sands already represent the largest single source of crude imported to, and refined in, the US.) Nor could geography sway them: if you want to ship oil from northwestern Canada to China, going via the Gulf would be a pretty stupid way to do it. Far better to pipe it to Canada’s Pacific coast: indeed, Canada has suggested that’s what it will do if KXL is blocked, which indicates that even that is the 2d best alternative, the best being to refine it in the US. If heavy oil is to go to China, it’s cheaper to substitute Canadian oil for Venezuelan, and have the Bolivarians ship it to the Maoists. (One Einstein said that the expansion of the Panama Canal proves that the oil is destined for China. Er, no. Even after expansion, the Canal can handle only  ships with about 1/2 to 1/3 of the capacity of a VLCC that is the most efficient way to ship crude long distances.)

A few grudgingly conceded that it would be refined in the US, but that wouldn’t benefit Americans, because then the refined products would be snapped up by the voracious Chinese. That there is EIA data showing that 80 percent of US refinery output is consumed domestically, and that less than 4 percent of US refinery exports (and hence less than 1 percent of refinery output) goes to China (and most of that from PADD 5 on the West Coast) made not a dent. And irony is apparently lost on some people: Canada is the 2d largest importer of US refined products. Meaning that a gallon of Keystone crude is far more likely to wind up in a Canuck gas tank than a Chinese one.

One genius Tweeted a Guardian article saying that most of Keystone oil would be exported. Obama is right! QED! Except that the article clearly meant that it would be exported from Canada. Or would that be Cana-duh?

Nor did the fact that transport of oil by rail  is much more dangerous, and poses far greater environmental hazards have the slightest impact on those who are allegedly so sensitive to the fraught state of the planet.

Then it got really nuts. It became all about the Indians. Apparently the ogichidaag* of the Rosebud Lakota Sioux tribe have stated that the House’s approval of Keystone was an act of war:

“The House has now signed our death warrants and the death warrants of our children and grandchildren. The Rosebud Sioux Tribe will not allow this pipeline through our lands,” said President Scott of the Rosebud Sioux Tribe. “We are outraged at the lack of intergovernmental cooperation. We are a sovereign nation and we are not being treated as such. We will close our reservation borders to Keystone XL. Authorizing Keystone XL is an act of war against our people.”

In February of this year, the Rosebud Sioux Tribe and other members of the Great Sioux Nation adopted Tribal resolutions opposing the Keystone XL project.

“The Lakota people have always been stewards of this land,” added President Scott. “We feel it is imperative that we provide safe and responsible alternative energy resources not only to Tribal members but to non-Tribal members as well. We need to stop focusing and investing in risky fossil fuel projects like TransCanada’s Keystone XL pipeline. We need to start remembering that the earth is our mother and stop polluting her and start taking steps to preserve the land, water, and our grandchildren’s future.”

Yes. The Indians hate oil as a despoiler of land. They are all about sustainability and alternative energy. They would never have anything to do with the stuff. Never mind the 30mm bbl of oil produced on reservations, an amount that has spiked up in recent years, primarily because of the fact that the Three Affiliated Tribes on the Fort Berthold Reservation have been major beneficiaries of the Bakken boom.

Keystone’s alleged oppression of Indians brought forth a torrent of race-based idiocy, culminating in this gem.

And I thought Custer died for my sins.

It is also bizarre that Keystone turns prog Citizens of the World into ranting America Firster nationalists. Keystone just helps the Canadians! The Chinese! Apparently, the Chinese get the oil, the Canadians get the money, and ‘Mericans get the pollution. When @libertylynx pointed out that some good ol’ made in the USA Bakken oil would be shipped on Keystone (a true fact, as there will be a Bakken MarketLink on-ramp that will pump US oil into KXL), someone responded, YOU LIE!!! (yes, complete with caps and exclamation marks). Some people just can’t handle the truth.

And yes, of course I was accused of being a Fox News watching (not), Tea Party (not), Koch Brothers shill (not). And a racist by implication.

I was almost tempted to see if I could make things truly nuts by figuring out some way to bring gold bugs into the conversation. I decided against it, figuring that it would risk creating a singularity of stupidity that could destroy the universe. (I will tempt fate, probably tomorrow, by writing a post on recent Russian gold purchases, which will  bring out the gold bugs and the Russian trolls.)

I have very low expectations on the level of debate on Twitter. Subterranean expectations, in fact. But even given that, I was stunned at the level of insanity, stupidity, ignorance, and venom that the topic of Keystone unleashed. I guess it represents a convergence of prog bugbears (oil, capitalism, “climate change”, criticism of Obama), compounded by the trauma of a rout at the polls.

This may seem like a small thing, but I regretfully conclude that it is a harbinger of something bigger. Obama will spend the next two years dog whistling and throwing red meat to his rabid progressive pack as a part of his post-election, lame duck (or would that be lame loon?) guerrilla campaign. Since he can no longer play Moses, he will become Sampson. Keystone is just one of the columns that he will use to pull down the temple around our ears.

It is going to be ugly, ugly, ugly. And Elizabeth Warren is waiting in the wings.

*This is weird, since this is apparently an Ojibwe (Chippewa for you old timers) word for warrior, and not a Lakota word. The Ojibwe are/were a helluva long way from the Great Plains generally, and Nebraska or the Dakotas specifically. Indeed, it gets better! The Ojibwe and the Lakotas were inveterate enemies. (I am always amused at the romanticization of Indians by prog peaceniks: just who the hell were those warriors and braves fighting before the arrival of Europeans? Other tribes, of course.) The Ojibwe got firearms before the Lakota, and drove the Sioux into the Dakotas.


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  1. We’re so screwed. But, where did I hear that?

    The Pilot

    Comment by The Pilot — November 15, 2014 @ 10:35 pm

  2. @The Pilot. Does sound familiar.

    The ProfessorComment by The Professor — November 15, 2014 @ 11:50 pm

  3. I don’t think there was a thing in that previous article that I disagreed with. Very solid.

    I’m continually amused by the left presenting itself as the Defender of Science. What about economic science? Common sense?

    Comment by John Hall — November 16, 2014 @ 10:26 am

  4. Is Elizabeth Warren a Lakota?

    Comment by pahoben — November 16, 2014 @ 2:14 pm

  5. @pahoben. Cherokee.

    The ProfessorComment by The Professor — November 16, 2014 @ 2:43 pm

  6. New name–fauxkahontas

    Comment by The Pilot — November 16, 2014 @ 2:47 pm

  7. @Professor
    Oh of course I should have known from her appearance.

    I never did have a chance to give you a h/t for your post long ago about nuclear weapons and not being able to tell who was good and who was bad. You nailed it bro.

    Comment by pahoben — November 16, 2014 @ 3:11 pm

  8. Railways are not fit for large-scale crude transportation, unlike pipelines, and Bakken crude moved across the country in tank cars could be a disaster waiting to happen. That seems to me a pretty strong “green” argument for Keystone. The only one against that sounds superficially valid to me is Keystone will facilitate further development of Canadian oil sands, whose environmental imprint per barrel produced is possibly the worst of all types of crude (according to its opponents). As you say, if the XL is axed, Canadians will build a link to the Pacific and export their crude to the Far East. But since it’s a second-best option, perhaps its relative inefficiency will kill at least some oil sand projects?

    Comment by Alex K. — November 17, 2014 @ 1:59 am

  9. V. entertaining, in the ‘were I not laughing I’d be crying’ sense.

    Just to make you feel better – remember, these people are eligible to vote.

    Comment by Ex-Regulator on Lunch Break — November 17, 2014 @ 7:40 am

  10. Actually I prefer the “Lierwatha” – lest sexist and removes the image of her nude bathing at Gitchigumi – I am having my morning bagel.

    Comment by sotos — November 17, 2014 @ 8:50 am

  11. @Ex-reg. Don’t remind me! Glad you could see the humor in the idiocy.

    The ProfessorComment by The Professor — November 17, 2014 @ 9:41 am

  12. @Alex K. Lac Magantic is a disaster that already happened. But yes, another is just around the bend. This is one thing that is infuriating. Opposition to Keystone XL leads to increased reliance on rail, barges, and tankers, all of which are far more environmentally risky than pipelines. One of the Twidiots who freaked out at me said “but pipelines go through neighborhoods.” Railroads don’t?

    As for the imprint per barrel, I think that is vastly exaggerated. Even if it isn’t, a relatively small increment to CO2 times a relatively small sensitivity of global temp to CO2 (a number that is being ratcheted down regularly), it is still rounding error.

    As for your last point, it all depends on the elasticity of supply of oil sand production. I don’t know that number, but my sense is that supply is relatively inelastic, and that a differential of a couple of bucks between the netback value calculated assuming KXL operates and the alternatives (pipeline to the WC or the current use of rail) will have a very modest impact on output.

    The ProfessorComment by The Professor — November 17, 2014 @ 9:49 am

  13. Lost in all this is the fact that the Lac Magantic disaster was U.S. oil being shipped by a U.S. carrier to a U.S. port. It just happened to be passing through Quebec as that was the quickest route. 40 plus Canadians were killed. There is an irony here that we in Canada are advocating for a safer means of transport and we get this kind of response. Let’s not forget that Canadai is the U.S.A.’s best friend and that many Canadians died in Afganistan fighting for our joint security. I don’t remember seeing Saudi’s, Venezuelans, and Nigerians lining up to defend North American interests. In short we, or at least I, am feeling more than a little insulted by the Obama administrations characterization of Canada.

    Comment by Rob Lifton — November 17, 2014 @ 10:52 am

  14. Canadian preference would actually be to have a pipeline to the west coast in order to diversify the customer base: there are dangers in being overwhelmingly dependent on a market that has as much wired-in irrationality as the Streetwise Professor so winningly demonstrates. (Loved the “singularity of stupidity.”)

    Comment by Prime Number — November 17, 2014 @ 11:59 am

  15. I feel that Obama’s adamant vetoing of Keystone has been mainly motivated as his payback to the smarmy crony capitalist Warren Buffet, who has profited greatly shipping oil on his railroad(s). Placating his greenie donors pales in comparison. Warren’s got much more clout and donor money.

    Let’s all pray that with this new majority of Republicans that play their cards well in the months ahead.

    Comment by penny — November 17, 2014 @ 12:04 pm

  16. @Penny-The Buffett connection is surely one part of this, but his adamant vetoing is overdetermined, IMO. I’d add that Buffett also owns the Union Tank Car Co., which is the 2d largest producer of rail tank cars.

    The ProfessorComment by The Professor — November 17, 2014 @ 1:47 pm

  17. @Prime-Thanks! I’m all about winning. Me and Charlie Sheen 😉

    The Canadian Association of Petroleum Producers’ 2014 report made it clear that output is likely to tax capacity of US refineries to handle it. PADDs I & II already utilize about as much heavy oil as they can handle. PADD III (the Gulf) could absorb most of the expected output increases by displacing virtually all Venezuelan crude imports. It’s interesting that the report is pretty much silent on China, but if you look at the output numbers and the potential size of the US market, it would seem that going west makes sense, and is indeed almost imperative.

    The ProfessorComment by The Professor — November 17, 2014 @ 2:13 pm

  18. @Rob. Obama hates Canadians. I don’t think that’s an exaggeration. He hates them especially under a Conservative government. You have every right to be insulted, all the more by the fact that the insult is intentional.

    Being America’s friend and being Obama’s friend are very different things.

    The ProfessorComment by The Professor — November 17, 2014 @ 2:20 pm

  19. @The Professor, this was referenced by a writer at the Globe & Mail’s site and I have to agree that it’s pretty accurate. Your political landscape is absolutely brutal, it would be funny if it weren’t so sad.

    Comment by Canuckistan — November 17, 2014 @ 2:43 pm

  20. To add to the madness, the Canuck solution to the inability to pipe oil south for refining is to pipe diluted bitumen to the west coast, transfer it to ships for refining in the far east and pipe the diluent (second pipeline) back to alberta. Essentially none of the infrastructure for this wheeze currently exists and it’s hard to see what Canada stands to gain other than construction and maintenance jobs. Oh, and higher oil prices on this continent, probably.
    We (yes, I’m one of them) are told its not economic to refine the stuff in canada.
    Looking at this from the west coast, my guess is that this scheme may go ahead even if XL is built.
    Do we need tar sands oil? What are the impacts? A logical discussion here could include the consequences of not just atmospheric C02 but ocean acidification [I care most about the latter], a re-examination of whether we (Canada and US) should be ramping up coal exports [arguably even worse] in parallel with the bitumen sands development, and IF we do need this oil (after the above) ‘we’ should consider nuclear power as a carbon neutral energy source for the mobilization of oil from the bitumen. Wouldn’t that be a hot potato?
    I’m not holding my breath for any rational discussion of the short term issues.The electorate is too polarized.
    As for the longer-term (especially ocean acidification) issues, absent Klaatu (look it up) I’m about as optimistic as James Lovelock.

    Comment by MadScience — November 17, 2014 @ 2:53 pm

  21. @Canuckistan-Thanks for the heads up. Didn’t see it on the G&M website, but I did see that it was run in its entirety on the Edmonton Journal website. Have a link to the G&M reference?

    The ProfessorComment by The Professor — November 17, 2014 @ 3:15 pm

  22. @The Professor, See Scott Barlow’s column @

    Comment by Canuckistan — November 17, 2014 @ 4:54 pm

  23. Elizabeth Warren began her academic career in UH’s law school. The UH crowed loudly when she left for a Professorship at Harvard Law School.
    The Green element in North America hate the tar sands of Alberta. They lost that battle in Canada, and hence are fighting a rear guard action re Keystone, on the grounds that it is immoral for the USA to benefit from oil extracted in Canada under immoral conditions. I am not convinced that BO is strongly anti-Keystone. Rather, killing Keystone is very important to the American progressive community (Nation readers, Sierra Club fans, wind farm worshipers etc.), and BO was elected as the standard bearer of the progressives. They are deeply disappointed, what with endless war in the middle east, the failure to close Gitmo, the NSA surveillance of the internet, the Obama administration’s indifference to the horrors of the Rust Belt and to obtain an indictment in Ferguson, and the failure to jail anyone for the subprime mortgage mess. (Feel free to add to this list.) Like every President, Obama wants to leave a legacy. In particular, he wants to leave a legacy that flatters the dreamers making up his core constituency. So far, that legacy is limited to the ACA, which remains very precarious. Hence BO’s insistence on throwing a bone to the proto-Greens, making sure that there will be at least one breed of dog who will look upon the aging BO with love.
    At the same time, BO knows that inaction on Keystone, or a veto, will also kill Senator Landrieux’s political career. Unlike BO, she’s not a lame duck.

    Comment by myrick — November 17, 2014 @ 5:17 pm

  24. Thanks, eh.

    The ProfessorComment by The Professor — November 17, 2014 @ 6:50 pm

  25. @Canuckistan-Unfortunately, the article is pay-walled. I emailed Barlow to see if he’d send it to me.

    The ProfessorComment by The Professor — November 17, 2014 @ 7:08 pm

  26. @myrick. Don’t remind me of her UH connection: she was also a student here. Though her departure was, IMO, addition by subtraction. Her “scholarship” on bankruptcy was a joke. An AA hire, for sure, and she had to lie in order to qualify for that.

    The list of things that are freaking out the left is very long indeed. This has intensified the insanity over KXL.

    Hopefully Mary Landrieu is a dead duck, not just a lame one.

    The ProfessorComment by The Professor — November 17, 2014 @ 7:48 pm

  27. @Professor: thanks for the explanation. How come that a whole network of North American pipelines got built without much ado, including Keystone Phase I, II, III, but this particular one, Keystone XL, is causing so much brouhaha? Is is because it requires federal authorization and Obama is in charge? But the line from Hardisty to Wood River (Keystone I) would have needed it, too, yet it opened in 2010 – was it because GWB was still President when it got approved?

    Comment by Alex K. — November 18, 2014 @ 1:24 am

  28. (Assuming that the US oil export embargo is reversed) If international refineries are willing to pay a higher price (bc brent etc… is higher than US benchmarks) than gulf coast refineries then yes those refineries will just let that crude move on by them on its way to “china”. Obviously this would eventually lead to a closing of the international arbitrage with some combination of higher US oil prices and lower international prices.

    Comment by mjm123 — November 18, 2014 @ 8:34 am

  29. What do you think Elizabeth’s position is on the $30 billion new pipeline from Russia to China? Maybe she could get the EPA involved there? The EPA certainly know how to increase their jurisdiction.

    Comment by scott — November 18, 2014 @ 10:19 am

  30. @SWP

    I’m sure you’ve seen that BOTH candidates are now pushing Keystone, in view of the runoff in Louisiana.

    Of course, the obvious question is “what took Landrieu so long,” to which the answer is also obvious.

    It might be said that she is a dead duck hoping to resurrect herself.

    Obummer has vowed to continue to keep his “vow” to please both the rabid greenies and Buffett. Quite a combo.

    Comment by elmer — November 18, 2014 @ 10:22 am

  31. I generally agree – opposition to the pipeline is the epitome of “useful idiocy.” People patting themselves on the back for standing up to the big bad oil companies while Warren Buffet cheers them on. Nevermind the deluge of money flowing into his pockets from BNSF…

    The one issue I have is regarding the Indian reservations – it doesn’t seem accurate to conflate all plains Indian tribes and reservations. While many of them do profit off oil extraction on their lands, the Rosebud Sioux don’t seem to be one of them as far as I can tell. In fact they seem to be a tribe leading the way in renewable energy, which might explain why they don’t want to be involved with the oil industry.

    This isn’t to say the pipeline as a whole is a bad idea, but forcing its construction through the Rosebud reservation against their will isn’t right. Eminent domain is shitty enough as it is, and questionably legal in regards to an Indian reservation. The pipeline should be built, but it should go around reservations that object to it.

    Comment by Ryley — November 19, 2014 @ 10:25 am

  32. @mjm123. No. The entire reason that KXL was proposed was to bring heavy Canadian crude to US refineries able to process it. Gulf Coast refineries are the most complex in the world (per the Nelson index). They currently process Venezuelan and Mexican crudes, which will be displaced by Canadian flows. That oil will move elsewhere, though it will likely move at lower prices due to higher transportation costs and limitations on capacity outside of North America to process it. I would anticipate some capacity additions on the USGC.

    The export ban’s elimination would mainly affect light crudes that are currently in excess supply here.

    There will be a substantial reconfiguration of global oil flows if KXL goes through and the export ban dies, or is circumvented. But that reconfiguration will not see substantial quantities of Keystone-shipped crude leaving North America.

    The ProfessorComment by The Professor — November 19, 2014 @ 11:19 am

  33. @Alex K-My pleasure. Yes, it’s all a matter of timing. The Bush State Department approved Keystone Phase One in March, 2008. The paperwork for KXL was submitted to State in September, 2008, and it soon assumed a huge symbolic importance.

    The ProfessorComment by The Professor — November 19, 2014 @ 11:25 am

  34. @Ryley-As you note, the Rosebud Sioux are not endowed with hydrocarbons, unlike the tribes in North Dakota. But they claim that Indians/Native Americans as a rule are conservators of the land and would never countenance oil production. I was criticizing that generalization, which seems to be an effort to conscript other tribes into serving the cause of the Rosebud. In brief, they are talking their book, and their book is as you describe. Tribes act in their economic interest, and do not possess any unique moral authority on environmental or economic issues.

    I am generally quite skeptical, not to say cynical, about Romantic notions about Amerinds, and the political uses to which those notions are put. Fuzzy thinking, Romantic progressives are suckers for that shtick.

    The ProfessorComment by The Professor — November 19, 2014 @ 11:45 am

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