Thursday, September 24, 2015

The smart politics in Clinton's Keystone decision

So Clinton came out against Keystone:

We shouldn’t be building a pipeline dedicated to moving North America’s dirtiest fuel through our communities — we should be focused on what it will take to make America the clean energy superpower of the 21st century. For too long, the Keystone XL pipeline has been a distraction from the real challenges facing our energy sector — and the job-creating investments that we should be making to meet them. Building a clean, secure, and affordable North American energy future is bigger than Keystone XL or any other single project. That’s what I will focus on as president. 
That’s why today I am announcing a comprehensive strategy to modernize American energy infrastructure and forge a new partnership with Canada and Mexico to combat climate change across the continent....As President, I will immediately launch negotiations with Canada and Mexico to forge a North American Climate Compact that sets strong national targets to cut carbon pollution....

News coverage has been low-key, but some bunnies are giving credit to the Blue Green Alliance between enviros and unions. Dirty-oil types had been trying to split off union support with the promise of some thousands of temporary jobs and room-sized number of permanent jobs from construction and operation of Keystone. Blue Green says there are better and more permanent jobs through infrastructure improvements that Republicans prefer crumbled.

The other interesting-to-me politics is Canadian. I wonder if Hillary wanted Canadian voters to take this into consideration as they consider whether to retain their version of a Bush, that the Keystone bucks maybe aren't going to flow and offering Canadians a chance to do more on climate instead. Election in Canada is a month away, so now's a good time for her to add this information. Unclear what effect it will have, but worth the effort.

9 comments:

JonnieG said...

Timing is everything in politics (and just about everything). The chaos in the crude oil market has been kind to HC. The Saudis (and the rest of world markets) depressed the price down to ~$45/bbl to maintain dominance or whatever intended chaos. The forecast (whatever that means for the oil market) is for "recovery" to take years. In spite of the surprisingly low production (lift) cost of tar sands (~$20/bbl, I would have thought closer to twice that) transportation and other associated costs bring the break even to ~$40 to $50/bbl. Not good for the tar sand producers who have the double dilemma now. If prices remain unchanged they are and remain an "unprofitable" investment and investment capital will (and already is) moving away from future investment leaving their current business plans in shambles. If prices increase to $70/bbl where the rest of the world becomes profitable again ... and high quality oil from hydraulic fracking flows abundant again ... tar sands still remain a poor investment because their the huge sunk costs (the gargantuan facilities and infrastructure) cannot recapture the current lost profit. Drilling is nimble in response to commodity price swings so becomes a much more attractive investment.
So HC is reading the tea leaves and her strong position is not surprising. I suspect neither Canada nor any other investor really cares about the Keystone XL pipeline nor will any one in financial power stake their reputation on supporting it for the coming years, if ever. I think the "voters" sense this and are becoming less inclined to believe the Republican hype.
Some interesting reads:
http://www.bloomberg.com/news/articles/2015-09-03/canada-oil-sands-fork-over-billions-for-500-000-unneeded-barrels
http://www.ft.com/cms/s/0/5210a6e2-4074-11e5-9abe-5b335da3a90e.html

Lars said...

Unclear what effect it will have on the Canadian election? Well, it will cause discouragement and dismay among Conservatives, which is not only quite clear but a good thing in itself.

jrkrideau said...

I'm with Lars. Our unloved Prime Minister stakes a lot of prestige on the pipeline. With any luck the three other party leaders[I'm ignoring the
Bloc} can put in the boot occasionally when mentioning the Prime Minister's sterling economic management.

coby said...

I'm a little suspicious that we are being set up for Obama to approve, Hillary getting to soften the blow with the promise of future actions and the assurance that she would have nixed it, too bad it's already done.

coby said...

yes, I'm cynical...

Fernando Leanme said...

Meanwhile, Venezuela's dictatorship thrives selling the same volume of identical heavy oil blend to USA refineries.

Barton Paul Levenson said...

"The Saudis (and the rest of world markets) depressed the price down to ~$45/bbl to maintain dominance or whatever intended chaos."

BPL: I'm guessing part of their motivation was to decrease funding for ISIS, which relies on oil revenue. The Saudis can ride out low oil prices, but ISIS can't.

Fernando Leanme said...

The Saudi motivation seems to be their desire to hold market share, and possibly an agreement with the Obama administration to drive prices down to put Russia, Iran and Venezuela under pressure. ISIS oil sales are a minor issue, the market will now reset itself as production capacity declines (we are already seeing a steady trend towards lower worldwide oil production, I think there's a small chance we may have reached peak oil in 2015, which should eventually drive prices above $100 per barrel).

Nigel Franks said...

I don't understand why the Saudis get the blame. It was the USA that increased production by some 5 million barrels per day over the last few years. http://www.eia.gov/beta/international/

Why should the Saudis cut their production, when it was the USA that caused the oversupply?