After listening to the debate on the Keystone Pipeline construction and hearing about all those jobs it would create, I thought there must be something wrong with it as it sounded to good for a President of the United States to reject in the middle of a weak economy and high energy prices.   So I began to find out just what reasons could be behind what seems to be a straight forward … cut and dry issue.  After all, it did  seem odd that a company official would go out of his way to say that “if the U.S. does not want the oil, he would be happy to sell it to the Chinese !” Because I would think that if he could do that, he would and there would be no issue here for building a pipeline that is very expensive to build. They don’t create jobs from the goodness of their hearts, they do it to make money. But at who’s expense ?

I did not have to search long, as the answer was immediate as my first search to Wikipedia.com to see just where this pipeline was to be constructed.

Before telling you what I seen and please wait till I explain a few things before you go have a looksy for yourself.

As of Sometime on March 13, 2012 I have a quote for oil prices and are as follows:

WTI ( West Texas Intermediate ) US Traded Oil,  at $ 106.88

Brent ( Brent North Sea ) Europe Traded Oil, at $ 125.34

Now you can see if you owned oil in the nations mid-section, you might want to sell it overseas for a additional $20 per barrel. the oil itself is extracted from tar sands in such remote places in Canada that it is hard to get it anywhere and that is why  China has not contracted for it yet.

This Keystone Pipeline has been built already. What they now want to do is expand it.

Phase one was completed in June 2010 and runs from Hardisty, Alberta Canada to Steel City Nebraska and to Wood River Illinois where the refineries are. It has a flow capacity of 590,000 barrels of oil per day.

Phase 2 was completed in Feb 2011 and runs from Steel City Nebraska to Cushing, Oklahoma.

Now the big argument as of late is  the Phase 3 XL & Phase 4 XL extensions.

Phase 3 proposal is to start at the Cushing, OK area and proceed to Port Arbor & Huston Texas.

Does that make sense to anyone ? Take oil from where to is hard to get at and take it to where it is most abundant ?

No it absolutely does not ! And the only reason for taking it there is to sell to the Chinese or anyone willing to pay more for it.

What good does it do the U.S. to open more drilling oil fields if the oil is shipped overseas ?

What about Phase 4 XL

To help with the volume problem that the Canadian Oil Sands Company has getting the oil out of their country, they want to build a extra line, west of the original line that ends up in Cushing OK again.

As far as jobs created if constructed:

Good paying construction jobs that will last but a few years at most & a few jobs to maintain the system once complete.

Jobs lost if constructed:

Well, it hard to calculate just how many jobs in trucking and railroad would be lost as that is how they currently move the stuff around but I would venture out on a limb and say probably two to every one that would have been created.

It would create a very nice looking bottom line for those invested in the oil sands of Canada ! They only needed $40 a barrel to be profitable. If completed, they should be able to get near the Brent price for it and the US shortfall should push prices here to that level as well.

OK, here is the wiki link

You can see if this happens, it will raise the price of oil in the United States and Canada.

Want to have a impact on prices, promote these ideas:

Oil Company’s should not be allowed to bid on their own future oil contracts. There is no market auction in the world that I know of where the Owner is allowed to bid on their own items up for auction.

Investment Banks ( largest oil players in world) that own oil commodities and oil tanker company’s, should not be able to give advise on the subject to clients without “disclosing how much oil the bank is holding outside of market inventories“. This in itself would change everything.

When the oil rush is on, (created by a scare) the investment banks who buy “spot oil” and stuff it into oil tankers and leave it off shore where it is subject to pirates, takes that inventory off the market and creates a shortage where they have been advising the average investor to buy and then the bank sells you that cheap spot oil in the futures market for a 20 to 30 percent premium.

The condition is called con-tango and in our modern case it is created by the banks. Problem is, there is no stopping it except a total collapse of the system. i.e. the $100 a barrel drop when the housing market imploded. Oil was trading at $ 150 per barrel and there was no shortage of production as it relates to consumption. Stockpiles were full.

Since it has re-started, I can see nothing to stop $200 a barrel oil this year unless the world takes action to regulate how it is traded and who may bid. That would mean it is not going to happen until the market collapses. 

I still have visions of MAD MAX movie in my head with Master Blaster… You Want heat, Be nice to Master Blaster

In any case, this is not a free market price. There is no shortage of oil or oil production. Just those who profit from those who speculate. The end consumer looses no matter what.

If you are one who thinks opening up more fields for oil drilling would help, ask yourself now how the price can go so high when there is no shortage and also ask yourself the following:

Why the oil fields we opened for drilling in the past dozen years are not being drilled in any meaningful way. Just enough to keep from loosing contracts (use it or loose it). It might help if no one company could get a exclusive on a oil field and especial offshore fields. Then many company’s would have a opportunity to drill if others were not extracting enough. That is a free market.

Oil company’s never miss a high price opportunity to force the public to force the government to open up for more drilling fields that they lock-up contracts for and do little to nothing with them. Why would they want to produce more, it would flood the market and the price would go down. Self defeating. They only want to make sure no others can drill and extract that oil and move prices lower.