Op-Ed

Give oil pipeline issue its due: Misleading cartoon detracts from debate

Typically, I enjoy Joel Pett's cartoons, but the one published Dec. 29 about crude-oil economics shows that he is a far better cartoonist than illustrator of economic facts.

The cartoon juxtaposed calls for more domestic drilling and construction of a tar-sands pipeline with what Pett labeled, "Record U.S. oil exports." The inference being, if the United States is in fact exporting oil at record volumes, why do we need more drilling, much less a pipeline from Canada to the U.S. Gulf Coast?

That is incorrect and misleading. The United States is not exporting record volumes of oil.

The United States has a long history of exporting refined petroleum products to Mexico, Latin America and Canada; however, we have not exported record levels of crude oil. The first nine months of 2011 represents the first time since 1949 the United States has been a net exporter of refined petroleum products such as jet fuel, heating oil and gasoline. The United States imports about 60 percent of its crude oil.

Our ability to export refined product at these record levels is the result of several factors: reduced consumption in the United States, federally mandated use of ethanol (a terrible economic and energy policy) and U.S. refineries' ability to quickly shift operations to handle different types of crude oil and thus shift product lines quickly to meet market demands.

In the last six years, the United States oil industry has increased oil-well completions 45 percent, reversed a long-term trend of declining output by increasing production by 8.5 percent and reducing imports by 14 percent. Almost 25 percent of the increase in crude oil was attributable to new production in North Dakota from the Bakken Shale. The United States will experience additional growth from the Eagle Ford Shale in Texas, the Marcellus Shale in West Virginia and Pennsylvania and the Utica Shale in Ohio.

This trend of increased self-reliance is important for reducing our trade deficit and increasing our national security.

In December, the U.S. Commerce Department announced that the trade deficit had dropped to the lowest point in 2011, in significant part because of a 5 percent reduction in imported oil.

To understand the impact, calculate the value of the increase in daily oil production in North Dakota since 2005, roughly 400,000 barrels per day. At $100 per barrel, that new oil production creates annual revenues of about $14.6 billion, or roughly 4.5 percent of the current annual trade deficit relating to crude oil and petroleum products.

The nation from which we currently import the most oil is Canada, much of it produced from the Alberta tar sands. While an argument can be made that the crude is higher in sulfur and its extraction has a worse impact on the environment than OPEC oil, it is a reliable source from a long-term, dependable ally. The United States becomes less susceptible to supply disruption resulting from turmoil in the Middle East.

The pipeline Pett vaguely referred to is the Keystone XL pipeline, a 1,700 mile project designed to bring crude from Alberta to the Gulf Coast region.

Although approved by the Environmental Protection Agency, final approval was delayed by the State Department at the directive of President Barack Obama because of "environmental concerns" until after the 2012 elections. In December, enough Democrats voted with Republicans to give the president 60 days to finalize the decision. Last week, Obama rejected the application to build the pipeline, declaring his decision was not based upon the merits of the pipeline, but because the deadline was arbitrary.

Our need for a more secure source of oil became imminently clear Dec. 28, when Iran, in response to the threat of a U.N. boycott of its oil exports, threatened to close the Strait of Hormuz. Iran had begun a 10-day naval exercise in the strait to underscore the threat. The Iranian navy is no match for the U.S. Navy's 5th Fleet; however, 15 million barrels of oil flows through the strait daily — 16 percent of the world's production. Any disruption would have a dramatic impact on price.

The United States has a tremendous thirst for energy, a responsibility to protect the environment and a duty to place our military in harm's way only as a last resort. This topic deserves a serious debate above the agenda of partisan politics and is worthy of the development of a national energy policy that embraces and recognizes the need for contribution by all types of energy. To minimize the issue as Pett did in his political cartoon serves only to further polarize and politicize, rather than to educate the public.

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