Keystone XL Pipeline: A Line in the Sand?
The Keystone XL Pipeline, a large-scale project proposed to transport oil from Canada's tar sands to the U.S., is an issue at the forefront of climate change action and debate. This panel discussion features Wally Broecker, “the grandfather of climate science"; Peter Byck, director of Carbon Nation; John Hofmeister, former president of Shell Oil; and ASU geographer Mike Pasqualetti.Related Events: Keystone XL Pipeline: <br>A Line in the Sand?
Rob Melnick: Thanks. My name is Rob Melnick. I’m Executive Dean of the Global Institute of Sustainability. I welcome you to today’s event. This is a great turnout for a Friday afternoon when it’s actually quite lovely out, unlike the weather lately. I think it really underscores the importance of this event, and the importance of why we do a series called Case Critical. As some of you, not all of you, know, we do lots of different event series where we bring guest speakers into town to talk about critical issues of sustainability. The Case Critical series, I think, is among the most important, if not the most important, because the subjects that we decide to engage in and have you engage in as well with us are the ones that are really in the news, are on the front lines, are critical decisions about our future.
Today we’re gonna be talking about the Keystone XL Pipeline. Obviously it’s been in the news. It’s an enormously controversial project, one fraught with all sorts of questions and challenges and perhaps rewards. That’s for the panel to decide. I’m really here to introduce our moderator today, Peter Byck. Peter and I have been corresponding a lot lately. We hope, in the very near future, Peter is going to be actually joining the Global Institute of Sustainability and the Cronkite School of Journalism, to work with us on communicating sustainability and communicating concepts of sustainability and storytelling around sustainability, which we think is a critically important aspect of understanding how we can shape our future.
Peter has over 20 years experience as a director and editor, most notably I think many of you have seen the Carbon Nation film and/or video in one form or another. It’s been very, very widely regarded, and we think very highly of Carbon Nation, and we look forward to future installments in Carbon Nation 2.0, Peter, and the work you’ll be doing with us and with your regular professional crew in the future.
I love the tagline for Carbon Nation, which is described as a climate change film that doesn’t care if you believe in climate change or not. That’s very refreshing, because it’s not a beat you over the heat with climate change, it’s a, here are the stories behind climate change, and some of the ways that people have looked at climate change and look at it today.
Anyway, Peter is extremely well connected and well spoken, and has done presentations on climate change and Carbon Nation literally all over the globe, so if you would please welcome Peter Byck, who is our moderator today.
Peter Byck: Thank you. Alright, well it’s a pleasure to be here. Let’s just get right to it. On the far end, on your all’s right, is Wally Broecker, professor at Columbia University’s Earth Institute. Just found out that on June 15, 1952, he showed up for a summer internship, and he’s been there ever since [laughter] . Often considered the grandfather of climate science, he helped to develop the idea of a global conveyer belt, linking the circulation of the global oceans, and made major contributions to the science of the carbon cycle and the use of chemical tracers in isotope dating and oceanography. There’s lots more here, but I think we should get right to it, so we’re just gonna go on the short introductions.
Then, right next to Wally is Mike Pasqualetti, who’s the professor of the School of Geographical Sciences and Urban Planning and Senior Sustainability Scientist at the Global Institute of Sustainability where you are right now, at the Arizona State University. He has served as an advisor in an advisory capacity to the US Department of Energy, US General Accounting Office, National Academy of Science, Natural Resources Defense Fund, the State of Arizona, the US State Department.
Then right to my left and right over here is John Hofmeister, distinguished sustainability scholar at the Arizona State University’s Global Institute of Sustainability; again, where you are right now. He is the author of a book called Why We Hate the Oil Companies: Straight Talk from an Energy Insider. I’ve read it. I recommend it. I’ve got a lot of notes I’ve written in it that I wanna ask you about at some point. Upon retirement as president from Shell Oil Company in 2008, John founded and now heads the not-for-profit nationwide membership association, Citizens for Affordable Energy. This Washington DC public policy education firm promotes sound US energy security solutions for the nation, including a range of affordable energy supplies, efficiency improvements, essential infrastructure, sustainable environmental policies, and public education on energy issues.
As you can see, everybody here has their cred. We’re talking about tar sands or oil sands, depending on who you’re talking to. I was corrected when I was talking to the folks in the Alberta government, when I was researching some stuff for Carbon Nation. They immediately said, “No, we prefer oil sands.” I said, okay, that’s fine. I keep going back and forth. The proper name is bitumen. Is that pronounced?
John Hofmeister: Bitumen.
Peter Byck: Bitumen. It’s a mix of clay, sand, water, and oil. To get that oil out of there is a very energy-intensive process. I thought we’d take a step back. The tar sands basically are in Canada, in Calgary, and it’s the boreal forests that the tar sands are underneath. That has to be ripped up, literally. It’s important to understand that. That area is all peat land, as well. That peat land sequesters carbon on an annual basis in numbers that I haven’t been able to find yet. Huge amounts of carbon are sequestered in that peat. We’re losing that carbon sequestration ability. We’re also losing all the carbon that the peat’s been sequestering. That’s being released as it’s being dug up.
I also was wondering what do they do with all the materials after they dig it up. That lifecycle assessment, I haven’t seen included in how carbon intensive, the carbon intensity of the oil sands. Right now, the government told me it was 50 percent more carbon than, say, oil coming from Venezuela or Saudi Arabia. I’m sure that can be debated. I haven’t seen anything about the peat lifecycle assessment being included in that, so that might really push this in a whole different ballgame.
Who would like to basically describe how the bitumen is made into oil? You wanna give that a go, John?
John Hofmeister: There’s two ways, and it is changing rapidly to one way. It’s basically mined with open pit mining. This bitumen is anywhere from 50 to 100 feet deep. It’s not very deep, so it can be mined. It then has to be what’s called upgraded. Heat is applied to separate the oil molecules from the sand and rocks and so forth. It’s the sand and rocks that become the debris that sit above the land, until the land is reclaimed, at which point it’ll be buried again. It is energy-intensive to upgrade the bitumen. The upgraded liquid is then refined as oil. It goes from the mine to the upgrader to the refinery to the pipeline to the market. That’s basically how it proceeds.
Peter Byck: I’ve been asking this question a long time, and Mike, why don’t we go with you on this one. Is there a clean way to get fossil fuels out of the ground?
John Hofmeister: I said there were two ways. I forgot the second one. Sorry.
Peter Byck: You said it was fastly going to one way.
John Hofmeister: It is going to the new way. The new way is called SAGD production process. This is steam-assisted under the ground. It eliminates the mining, so you basically drill a normal hole into the earth, 100, 150, 200 feet. You apply steam. The steam causes the molecules to come off the rock in C2, so on-site, and then you pump it out as a liquid. That’s a much more energy-efficient, and a much less I’d say, from a biosphere standpoint, much less destructive.
Peter Byck: Is that, when I was up in Alberta, when they were telling me that they’re seeing deer walking around the pipes, and how beautiful it is where they’re getting the—
John Hofmeister: SAGD.
Peter Byck: The SAGD, so that’s—
John Hofmeister: It does not disrupt nature and the natural course of life in the area.
Peter Byck: Right, so you’ll see some posters of that. Mike, let’s talk about my other questions to you about, can you get fossil fuels in a clean way? Besides, not even talk about burning them.
Mike Pasqualetti: From oil sands? You’re talking about from oil sands. In a clean way, I don’t know what you mean by clean way. We have to define that, I suppose. As easily and as cleanly as you can the conventional oil? No, you can’t. I might say, just to put this in context, we’re talking about 170 billion barrels of oil. Third after Saudi Arabia and Venezuela, and it’s right next door, which makes it extremely attractive. You can bring it here in pipelines. And we’re on friendly terms with the Canadians, usually. They’re happy to give it to us. We’re happy to buy it. They’re happy to rip up part of Alberta to get it to us. Someone from Alberta right there.
Getting it out cleanly. We can talk about that, because there’s a lot of aspects of this that one would say is not very clean. But you have to take it in larger context, and that is, where do you get the other oil that you’re gonna be using, if you’re not gonna be using this oil? What’s gonna happen if we approve the pipeline, versus what’s gonna happen if we don’t approve the pipeline? We can get into all that later.
Peter Byck: Wally, do you want the president to approve the Keystone XL Pipeline?
Wally Broecker:I come at this in a different way. I think there are two aspects. One is, what’s gonna happen to that stuff? Is it gonna be burned? That’s the part I worry about, and I think that, if we don’t burn it here, it’ll be burned in China. As far as CO2 going to the atmosphere, it’s likely to largely end up there, unless the miracle of non-carbon energy comes along before it’s depleted.
I have a colleague, Jim Hanson, who feels that the way to attack this problem is to try to prevent coal from being mined and the tar sands from being mined. I think that’s wrong. That’s never gonna win, because coal and tar sands are worth so much money. That’s like tilting at windmills. We’ll be rolled over. My strategy would be to work to get a price on carbon, and not try to monkey with the playing field of fossil fuels. In other words, let them fight that out, but charge everybody per carbon atom they take out of the ground.
I must say, I don’t know enough about the pollution problems that you just mentioned and so forth; although I’m probably the only one in this room that’s flown over, and at low altitude, the tar sands. We were up there to study a flood that occurred about 9500 years ago, when one of the proglacial lakes broke loose and went through that area. It carved a huge channel and took away the overburden from the tar sands. If it wasn’t for that flood, the tar sands would all be buried. Now part of them are exposed, and you can go at it.
I saw the huge trucks, and the huge conveyer belts, and the big ponds. They’re ripping up the landscape, no doubt about it. Whether it can be reclaimed satisfactorily, I don’t have any idea, because I’m not in that business. I think that, if the pipeline is to be stopped, the basis should be the pollution, not trying to prevent that carbon from being burned. If we don’t burn it, China’s gonna burn it.
Peter Byck: Fair enough. Just to give everyone a sense of scale, like what Wally was just talking about, there are toxic waste ponds that have already been formed from the mining that’s happened. Right now, it’s about 65 square miles of toxic waste ponds up in Calgary, in Alberta. That’s, for the math-challenged, it’s six and a half miles by ten miles. It’s massive on every scale you can think of it. The pipeline itself is a 1700-mile pipeline. It’s a seven billion dollar project. It’s gonna bring about 700 to 800,000 barrels of the heavy tar sands oil per day from Alberta. The goal is to get it all the way to the refineries in the Gulf Coast. That’s about half of what we get from the Middle East right now. It’s a real game changer in what’s happening to what kind of oil we use.
It’s in two parts. The first part’s connecting Cushing, Oklahoma, which is a real bottleneck of oil right now, to the Gulf Coast. The other part is coming across the border. Can you talk about Cushing, Oklahoma?
John Hofmeister: Cushing is a city in northern Oklahoma which, for years and years, decades, has been a collecting point for oil produced, really from Colorado, all over the Dakotas, all over Kansas, Arkansas, Texas. It’s a point at which it can then be distributed by a pipeline into whatever direction. Some of the Cushing oil goes up to Illinois by pipeline, to refineries in Illinois. Some of it goes to Louisiana. Some of it goes to Texas. It’s really there to sort of centralize the distribution of crude oil process, and if you fly over it, you’ll just see literally hundreds of these big storage tanks. Cushing, there was a worry, probably 10, 12 years ago, that Cushing was way, way larger than it would ever need to be. Now Cushing isn’t large enough, because of the shale oil that’s being developed all over the region.
Peter Byck: You’ve got shale oil. Talk about this, cuz this is right in your wheelhouse. The amount of oil from the shale and the tar sands is equal to more than we’ve ever, ever used, right?
Mike Pasqualetti: Asking me?
Peter Byck: I am asking you. I read your paper. [Laughter]
Mike Pasqualetti: That’s dangerous. What we have here, the Bakken formation, where they’re getting oil out, it’s 600,000 barrels a day, more or less. That’s more than Ecuador, which used to be a member of OPEC, maybe still is. They keep changing. The oil sands—I wanna point out a couple things. You mentioned that it was 600 square miles—or no, 65 square miles. That’s one and a half times the size of San Francisco, to give you a sense of it.
But only 20 percent of that oil on the oil sands is minable. 80 percent of it is below the surface. In that case, they’d drill a hole 2, 300, 400 feet down. They’d pump down steam, 350 degrees Celsius. They force the disassociation of the bitumen from the sand, and it drips down to the pipelines, and they pump it out. It takes a lot of energy to get the energy out. There’s a lot of sulfur produced. If you’ve ever been up there—I have flown over that area as well. I had a grant from the Canadian Embassy to look into the oil sands three or four years ago. There are gigantic building-sized blocks of sulfur there, cuz they haven’t figured out what to do with it, except to store it. There’s a lot of issues associated with pulling it out, and there’s an enormous amount of material on the web. Maybe you can get it.
Whether or not you wanna put an oil pipeline in to bring it to the Gulf Coast is an interesting question. I kind of look at it, a line in the sand. Wasn’t that the name of this? A line in the sand reminds me—this is kind of the ANWR of the lower 48. All the opposition to opening up the Arctic National Wildlife Refuge consolidated on that one small part of ANWR, this section 1007, 1002. They wanted to develop that, and every time government decided that they wanted to perhaps develop it, the environmental organizations would group together and they’d go in and they’d try to lobby against it.
That’s what’s happening now with the Keystone, and for similar reasons. It’s not necessarily just the pipeline. It wasn’t necessarily just ANWR. It was that it sets things in motion. It gives momentum to the continuation of carbon-based oil, carbon-based fuels in the future, and pushes us in—as these people see it—might be in the wrong direction.
We can talk about all those various things, but a line in the sand, to me, is that this is a watershed kind of event. That’s how a lot of people, including Jim Hanson, who was arrested many times over this, have been taking it. In fact, the director of the Sierra Club was arrested a few weeks ago, same thing. Some of the biggest public protests in recent memory have been over this. This is that line in the sand, this is the ANWR of the lower 48.
Peter Byck: There’s a big selling point of this, that it’s gonna make oil cheaper here in the US. Then you hear from other people that are like, absolutely not. It’s not gonna make oil cheaper. A lot of that is built around, right now, the heavy crude that is coming into the Gulf is coming from Venezuela. Canada’s having to sell—to compete with that—is having to sell their crude for a lot less, about $33 less a barrel. You can correct anything I’m saying here. Once the pipeline gets built, Canada’s gonna be able to charge us as much as Venezuela, and therefore, prices are actually gonna go up. John, I was gonna ask you, is any of that true, accurate, close?
John Hofmeister: I don’t think that oil sands oil will make oil more affordable, because oil is traded on a global market. What it will do is it will make it more available. It’s the availability and the close proximity to the US market and the US production capacity that incentivizes US oil and gas companies to want access to the oil sands oil.
In 2007, I signed, as part of a seven billion dollar project at Shell, I signed the final documents that would double the size of a refinery in Port Arthur, Texas, specifically to refine oil sands oil, in order to have more available product in the United States. People talk about, it’s for export. That’s made up by somebody. I signed it for more oil for the United States’ marketplace. It would displace Saudi oil. If this is a joint venture between Saudi Aramco and my former company, Royal Dutch Shell, and so the refinery is now doubled in size.
Part of the agreement was that by mid-decade or later this decade, we would start substituting OPEC oil with Canadian oil. Saudi Arabia, or Saudi Aramco was fine with that, ultimately, because there are Asian markets opening up all the time and growing rapidly for that Saudi oil. And because my former company is global, it was willing to take Saudi oil into refineries in Asia, and just moved from one part of the world to another. It’s availability that I think is really the upside.
Peter Byck: Yeah, so the cost isn’t. Wally, I’m wanting to come back to you. What are your thoughts on the oil business, on using fossil fuels? You’ve been studying climate for so long. Are we anywhere close to what you hoped we’d be in the way of lowering our carbon needs and our carbon intensity in 2013, as when you started studying climate decades ago?
Wally Broecker: Yeah, our strategy has not worked at all.
Peter Byck: I think you're gonna get agreement there.
Wally Broecker:In 1990, I think there were 20 billion tons of CO2 produced a year. Last year it was 30. That’s half again more, during the same time that Kyoto was designed to reduce it. We had a meeting here on February 2nd that Larry Krauss, a physicist, and I organized. We invited 23 people from the outside, who are all prominent names in carbon science or carbon policy. Jim Hanson was one of them. We met, and I think the consensus was that, in this interim, when we’re gridlocked here—no big thing’s gonna happen for a couple decades, I think—that we should look at an emergency solution, something that could be done very large scale on a shorter time scale than putting in, changing all our infrastructure to solar and nuclear. That is carbon capture from the atmosphere.
Most of the participants agreed that that should be explored. So far, only about 25 million dollars have been spent on it. No prototype has ever been built, although it’s clear that there is a way to do this that’s probably economically feasible. Our plea was for governments to put some money into that, to find out how much it would cost. It would be done in modular units that could be built by the millions, because we’re talking about, all we do all day is create CO2, in a sense, one way or another. To change the world in any way is a huge, huge enterprise. I don’t know. Is that enough?
Peter Byck: That’s great [laughter] .
Wally Broecker:I’d talk all day.
Peter Byck: We want you to. That’s why you’re here. Mike, give us a little history of the XL Pipeline over the last couple years. How it was going, it was gonna happen and then Nebraska governor said hey, wait a second, and then the Obama administration said, okay, hey we’re gonna think about it. Now John Kerry’s the Secretary of State. Why is it in the Department of State? All those things.
Mike Pasqualetti: The pipeline is going to go down to this middle part of the country, and then the oil will go south to the refineries. But it was going to go through the sand hills of Nebraska, which was considered to be the source area for the Ogallala Aquifer. It got a lot of attention because of that. There are pipelines all over the country. There’s hundreds of thousands of miles of pipeline, including miles to the pipelines through the sand hills.
It was the election year. What President Obama decided to do was punt it down the road a little bit, kick the can down the road a little bit, and not vote on it and not approve it or not disapprove it before the election. Of course, Hilary Clinton was happy that he kicked the can down the road, because he has to sign it cuz it’s an international arrangement. Now it’s in—
Peter Byck: That’s why it’s Department of State, because it’s international?
Mike Pasqualetti: It’s international. John Kerry now will have that kind of responsibility, and he’s wondering which way Obama will go. There’s a lot of arguments in both directions, about which way they should go. Clearly, the—
Peter Byck: What do you think?
Mike Pasqualetti: How I think it’s going to go?
Peter Byck: No, what do you think? [Laughter] If you were the president.
Mike Pasqualetti: Should do?
Peter Byck: Yeah.
Mike Pasqualetti: I think he should take that hard step and not approve it.
Peter Byck: You do?
Mike Pasqualetti: Yep. But I don’t think that’s gonna happen. You can’t fix this problem all at once. Yes, oil stands produce two and a half times more CO2, and the NC2 type, which is the underground, which is gonna dominate, produces even more CO2. It’s gonna produce a lot more CO2, but trying to solve the problem by not approving the pipeline is not gonna solve the problem. Approving it is also gonna put us on the wrong track, in terms of what we should be doing as a country and as a people.
Just because the oil would go to China otherwise isn’t a convincing argument to me not to approve—or to not approve it. Just because it could go to China, yes, that’s true, but you don’t make your decisions. It’s like me saying, you look like you’re gonna get killed by somebody cuz you’re an annoying guy. I’m gonna kill you now, instead of letting somebody else do it. That justifies it [laughter]. You don’t take your actions because of somebody else. I would hope he would take that hard decision, but I don’t think that’s gonna happen. It will probably be approved, and we’ll probably move in that direction.
You’ve gotta ask yourself: where is that oil really going? Is that gonna solve some of our problems? We’ve gone from over 60 percent of imported oil—this was five or six years ago—down to about 43 percent now. Part of that, a lot of that, energy efficiency, the recession, the Bakken formation in Montana. The question is—and I can’t tell you the real answer to this, although there is out there in the web all sorts of information about this—is that oil really going to go the United States, or in fact are they passing it through and gonna refine and export it outside? I dunno. Maybe John knows exactly where that oil’s going. I don’t.
John Hofmeister: I would approve it instantly, because of the national security risk of not approving it. We’re depending upon imports for—I agree, Mike—about 43 percent of our oil. If those imports were jeopardized because of the complete unpredictability and the volatility of the Middle East—something happens in the Straits of Hormuz. It’s not just Middle East oil I’m worried about. It’s also, when you look at the long-term prospects of the future basins for production. Arctic Circle, oil production very, very expensive, very, very hard to do. It’s gonna be the 2030s before we produce oil in the Arctic Circle. I’m quite sure.
If you look at some of the Brazilian deposits, the pre-salt Brazil, the metal melts, because you’re so close to the magma of the earth. The metallurgists are trying to figure out how to harden metal in ways we’ve never hardened it before, in order to get the pre-salt production. That’s years and years away.
Then you’ve got east Africa, which is promoted as the next sort of big development of the world. East African has absolutely no infrastructure, no rule of law. Nobody would put money into production over there. They are exploring, but not ready to produce.
When you look at the global demand for oil still rising, you look at 17 million automobiles a year being sold in China, many of them first-time buyers, you’re look at a growing demand of oil that’s gonna get us from 88, where we are today, to 92, to 95, to 100 million barrels a day. Where’s it gonna come from for this country? We can increase our domestic production probably another three million barrels a day, if we’re really serious about it. But that’s still not enough, because we use about 17, 18 million barrels a day. And that’s in a recession, or just barely better than a recession. We were up around 20 million barrels a day a few years ago.
The availability issue becomes a national security issue, because our protection of assured supply. Then there’s the economic security issue, and of course there’s an environmental security issue. I’m all for, and I’m published, and I speak on it all the time, I am all for the elimination of the internal combustion engine. That’s not happening. It’s just not happening. Until we can substitute for the internal combustion engine, we’ve gotta have that oil. Our whole society is predicated on personal mobility. If suddenly personal mobility was not available, how do people get to work? How do they live? How do they grow up? There’s a whole other range of issues—and I completely agree of CO2, and putting a price on CO2, because that will help us move in another direction. Whatever that price may be, it’s a start.
Peter Byck: How many people drove here today? How many people have flown in the last two weeks? I’m using oil all the time, myself. I always thought that Obama was going to sign this, and he just delayed it so he could, as part of the election process. I understand that. What I’m worried about is, is he using this as a great time to leverage negotiations? Imagine if he said he’ll sign it if Congress says we will have a 20 year tax credit for wind and solar. If he could use this as a leverage point right now to get really good things, so that all of the people who are gonna be really upset about it can think, at least he’s thinking about the big picture, too. It is gonna be made.
It’s too much money. The oil companies can’t see straight. It’s so much money, so much potential there with the natural gas. It’s just too much. I understand it, and I wish it weren’t so. I wish there was cleaner ways of making oil. This is absolutely incredibly dirty way of making oil. It’s happening, and it’s gonna happen.
Mike Pasqualetti: I might say that my economist friends would argue a little different than John. They would say, look, if oil is in short supply, the price of oil is gonna go up. As the price of oil goes up, you’re gonna start making different decisions. You’re gonna be making different decisions in the right direction.
Peter Byck: That’s the same issue of putting a tax on carbon. It’s gonna be the same place. Can you talk more about why you would put a price on carbon, and more about what that actually means?
Wally Broecker: The idea would be, my idea would be, anybody that takes carbon out of the earth has to pay to get rid of the CO2 that’s produced. It would be like we went from garbage in the streets to garbage collection, sewage in rivers to sewage plants. We cannot any longer use the atmosphere as the wastebasket for CO2. My, in an idealistic way, would be to say, if you produce fossil fuels, along with that, money has to be set aside to put an equivalent amount of CO2 away. If one country did it, they could charge any imports. They could put a tax on that.
Peter Byck: But the countries who don’t do it?
Wally Broecker: We may never get a—but hopefully the US and China will eventually be an example of good behavior. When that’ll happen, I don’t know. The problem with all this is, this transition, as we can see—I wrote the paper that made me the father of global warming in 1975. It’s been almost 30 years since then. Almost nothing has happened. We’ve learned more about solar and wind, but the amount of implementation hasn’t changed very much. I think in 1975, 85 percent of our energy come from fossil fuels. I think now it’s 84 percent or something. It’s almost the same, probably within the error in estimating it.
When that’ll happen, who knows. I think it’s only when the really bad side of global warming starts to show up that people will start to do something. I push removal from the atmosphere, because it’s my opinion that if we don’t do that, it’s gonna get sufficiently warm, and all of the impacts on food production and so forth are gonna force people to wanna artificially cool the planet by adding SO2 to the stratosphere.
We know how to do that. It’s ten times cheaper than solving the problem directly. The temptation is gonna be very large. I happen to think that is a very dangerous thing to think about, but we’re pushing ourselves in that direction. That’s why the meeting we had here on February 2nd was called Dealing with the CO2 Emergency. I think it’s more than a problem now. It’s an emergency.
Peter Byck: I had a couple of questions. The pipeline’s gonna cost seven billion. Is any of that gonna fall on the taxpayers of Canada and the US, or is TransCanada gonna pay for that whole thing?
John Hofmeister: It’ll be paid for by the people who use the pipeline to transmit oil. They buy a percentage of the off-take of the pipeline. That’s what pays the seven billion dollars.
Peter Byck: Are there any tax write-offs or all those things around that?
John Hofmeister: No.
Peter Byck: Does Canada import oil itself?
Mike Pasqualetti: They’re pretty independent, I believe, aren’t they, John?
John Hofmeister: I’m trying to think.
Mike Pasqualetti: They might here and there, but on the margins.
John Hofmeister: It would not—remember Canada only has the size of the population of California. It’s a huge country, but it’s only the size of California. I’m not aware that they import oil. They may import some from the US, because of just the way in which oil is distributed geographically, there’s oil going in all kinds of directions. To say they don’t import any, I don’t think I can say that.
Peter Byck: Why wouldn’t they wanna have their own refining, so they could sorta close the loop on the whole process, and therefore not need to pump it to their west coast if we say no, or to the Gulf Coast if we say yes?
John Hofmeister: That’s a very good question. People have raised the prospect of, why don’t they refine it in Alberta and ship it as finished product? The reality is, the oil industry realizes full well that it’s a product that’s not gonna be needed for the next hundred years. We will have alternatives. The thought of building multibillion dollar refineries from scratch to refine this oil, when you have refineries, huge, huge, refining capacity, on the Gulf Coast, which can totally utilize that oil, it’s so expensive to build refineries.
The margins in refineries are so low, because you're always maintaining it. You’re always putting more money into it. You’re always getting increased regulations, so you spend money on reducing emissions. It’s just not a very lucrative prospect. Let’s fully utilize existing refineries, or tack on additions to existing refineries, instead of building brand new green field refineries, which, actually, 50 or 100 years from now won’t be needed.
Peter Byck: Just to say it, they’re spending seven billion dollars on this pipeline. What kind of refinery would seven billion dollars buy you?
John Hofmeister: Probably 300,000 barrels a day.
Peter Byck: You’d get halfway there. That’s a lot less headache.
John Hofmeister: You’d need two.
Peter Byck: You’d need two.
John Hofmeister: But instead, for a lot less.
Peter Byck: That’s just one user. You’ve got Enbridge as well.
John Hofmeister: Yeah, but when you look at the total economics, no one in the industry wants to invest in a brand new refinery. You probably couldn’t build it with the environmental regulations that would be laid upon it. You can expand existing—cuz you have this whole issue of CO2, of greenhouse gas emissions and attainment requirements, the criteria for any kind of expansion. The expansion I’m talking about in Port Arthur, Texas, I think we counted 500 permits to be able to build that refinery, federal, state, and local permits. We had teams for three years just working on permits. It’s not just the cost. It’s really the endeavor, and the time it takes to make it happen.
Clearly, this pipeline got totally politicized. I agree, Mike. It got totally politicized. It was a no-brainer for years. Everybody just said, let’s get it in, let’s get it designed. The sand hills became an issue only very late in the game, because there are tens of thousands of miles of pipeline all over the Ogallala Aquifer that nobody ever talks about. TransCanada’s probably one of the most reputable pipeline companies in the world. They know what they’re doing.
It really was—and I hear the story differently from different people—the particular demonstration that led to the delay was Bill McKibben and Daryl Hannah and the Sierra Club in November, 2011, putting a 10,000 person linked-arm demonstration around the White House on a Sunday morning, which the president had to look at when he flew over it to play golf that morning. Along with that came a threat that this is gonna, if you approve this pipeline, it will affect your campaign contributions. That’s when it really—
Peter Byck: Then it becomes a different kind of no-brainer, I guess [laughter] .
John Hofmeister: Right, exactly. Exactly. I think we’ve made a lot of, I think it’s created a very helpful conversation on both sides of the issue, because it helps to bring out, what are the problems here? And help people to understand more fully what’s at stake, and why do we continue on the path that we’ve been in on in the 20th century into the 21st century, when we do know that we have alternatives? I’ll come back to how we move on from there later.
Peter Byck: I’m gonna talk about alternatives. We waste a lot of oil. We waste an enormous amount of oil. We waste almost as much oil as we wanna bring in from the XL. There’s one study I saw that, if you look at the oil needed to produce the food that we use—the fertilizers, the transportation, people driving to the grocery store—and then the food that we throw away and don’t use, we buy and waste, that equals almost a million barrels a day of oil. Just that. There’s your XL Pipeline plus right there.
Traffic jams—how many people have been in a traffic jam in the last week? They’re saying about 45 million barrels of oil in a year is wasted with us just idling in a traffic jam. Remember when Obama was saying, fill your tires, make sure the pressure’s right? He got a lot of guff for that? That’s about basically equals another 28 million barrels, is what we’d save, just in this country. There’s an enormous amount of waste. The fact that we just keep asking for more, but we’re not taking care of what we’re wasting, I think is a big issue. I wish that was being spoken about more.
Now I wanna get to the actual safety of the bitumen itself, going through the pipeline, and what are added issues with that particular type of oil. From the stuff that I’ve read, and let’s start with—this is from the NRDC, so full disclosure. If you like them, great. If you don’t like them, here’s information from them. One of the issues is that, because it’s thicker, you have to operate the pipeline itself at a much, much higher temperature—about 158 degrees Fahrenheit—and a much, much higher pressure—about 1400 pounds per square inch. Most pipelines they say are at normal atmospheric pressure and at normal temperatures. Mike, you wanna talk about this at all, this piece of this?
Mike Pasqualetti: John’ll know a lot more about it than I do. I know they have to heat up the oil to move it along the pipelines, and perhaps it is more caustic, if you get a leak. There have been leaks. Some of them haven’t been cleaned up. I’m kind of more concerned with the more basic problem of, do you actually have to build the pipeline at all?
One issue is, is the oil that’s gonna be transported to the Gulf Coast actually gonna go into for US use or not? The other is, does Canada actually need more pipelines? A lot of people would say they already have excess capacity on their pipelines into the United States. Another is, do you actually need that oil, or are we moving in the wrong direction here? People would say, you can save energy. Energy efficiency is faster, safer, more cost-effective than anything else. It’s the low-hanging fruit, so why don’t we do all those things first and put the money into that, before we go into doing these other things?
There’s many alternatives to this. You should be asking the question, do you actually even have to be considering this? A lot of people would say you don’t have to be considering even putting in this pipeline. You can avoid this completely by doing a whole variety of other things for even less money. There’s issues there. There’s environmental issues at everywhere along the line. In Canada, I’ve seen it, you’ve seen it, probably John you’ve been up there. It is devastating. It’s a very huge, big scar on the landscape and the boreal forest. NC2, they’re still doing seismic lines across it, and still pads for setting off their explosives and so forth. There’s still a lot of impact. It still will have impact on the environment, maybe not as much as the service mining, but it’s there, and it’s sulfur.
I’ve seen plans where they said, we’re gonna have this SAGD. We’re gonna need a lot of steam. Where are we gonna get that steam? Now they’re talking about building gas pipelines up to the delta of the Mackenzie, and bringing natural gas down to help produce the steam that’s gonna go into the wells to produce the oil sands. It just goes on and on.
Let me just put this all into context. USGS and many other agencies have done estimates of how much oil there is in the world. Maybe there’s a trillion and a half barrels around, depends on whose estimate you take. USGS said about a trillion. Then another one came up with another 500 billion. Another came up with another 500 billion. All it does is move the curve out another 15 or 20 years. By the end of the century, no matter how much you use, the heavy oils, the oil shales, the oil sands, whatever you use, you’re still gonna have to face the problem, sooner or later, that you’re not gonna have decent supplies of oil.
What we’re doing is, we’re moving from conventional oil to what you could collectively call dirty oil. Is that the move that we wanna make? Some people would not agree with that, some people would.
Wally Broecker: Yeah, but the point you have to raise is—I was talking to Mike Crow yesterday. He said, we were talking about more availability of fossil fuels. He said, great. The world isn’t gonna run out of energy. That’s a consideration. We’ve raised it before, if you couldn’t drive your car. We’ve been implementing alternate energy so slowly that somehow that has to get really goosed up and get moving. Otherwise, maybe we will run out of fossil fuels; although, I don’t think it looks like it. People seem to be continually finding, with technology, ways to get at stuff they couldn’t get at before.
Mike Pasqualetti: We’ll continue to get more and more and more stuff.
Peter Byck: I don’t think we’ll run out before we stop using it.
Mike Pasqualetti: It’s not a matter of how much there is, how much you’re willing to pay. If somebody says, how much do you have in reserve? I always say, how much you wanna pay?
Peter Byck: Back to the safety piece. There is a big issue of whether the bitumen is safer or not. There’s a lot of issues within it. The National Academy of Sciences is actually studying that right now, and there’s gonna be a report in July of this year. Some of the other issues are just the fact that it’s got high concentrations of acid. It’s got a lot of sulfur. Are all these things corroding the pipes, and the temperature and the pressure and stuff like that? Another just piece of information related or not related is the largest on-land oil spill in the US was an Enbridge pipe in Michigan. It was tar sands oil. It was 840,000 gallons of diluted bitumen. That went to the Kalamazoo River watershed. There is a history of this kind of oil leaking. A lot of times, it’s hard to detect, because a lot of the detection devices aren’t really made for the types of oil this is. I’m really on thin ice here.
John Hofmeister: It was a very old pipeline, and Enbridge knew it. Enbridge was in the process of replacing many sections of the pipeline. This went broke before they got to it. It did make a mess. No question about it. Any oil spill is a mess. I think it’s an argument that the NRDC is grasping at straws to make, with respect to the pipeline. As Mike said, we have hundreds of thousands of miles of pipelines crisscrossing this country. You rarely, rarely hear about spills.
There are all kinds of pipelines. There’s high pressure gas pipelines, where you’re taking high sulfur gas from out of certain parts of the geology, which is very corrosive. If you have a corrosive pipeline, you have maintenance responsibilities as to what you do to it.
I’d like to come back to, do we really need to produce this oil, because it is a fair question. Here’s the reality. In the early 1990s, 20 years ago, Canada, at the national level, in Parliament, led by the Prime Minister at the time, determined that the oil sands reservoir of oil would become a strategic national resource, and would become part of the economic growth of the nation, which exports so many different natural resources, whether it’s wood, whether it’s other kind of metals—
Peter Byck: Maple syrup [laughter].
John Hofmeister: So Canada decided, as a sovereign nation, that it would develop these resources, and it would do it in a way that would be best for the people of Canada, including first nation people, that it would take time, because they would require not only that, as the oil was being produced that it be done safely and appropriately, but the reclamation was a part of the whole process from the beginning. Knowing that it would be dirty, it would be disgustingly dirty—there’s no way to describe it, other than disgustingly dirty, as is most excavation.
I think they have copper mines in Arizona, don’t you? Not particularly a nice neighborhood to live in. There’s no reclamation that I’m aware of to fill in those big copper pits. The pits of, the lakes that you described, they’re all gonna go away. That’s part of the deal. They have to go away. They are shrinking rapidly. So whatever the size was, it’s not that today. It’s shrinking. We as a nation don’t have standing, with respect to the development of the oil sands. We can express our opinion, but we just don’t have standing.
Peter Byck: They sure are very interested that we buy it, so they’re giving us standing. I would think, if I was Canadian, I would say, screw them. Let’s build our own refineries. Then we don’t need 'em. Kind of, that would be—
John Hofmeister: But the same international oil companies don’t wanna build the refineries, so they’re not going to.
Audience: Unless they don’t get the pipeline.
John Hofmeister: They’ll send it to China. I’ve talked to the oil minister, Joe Olive—no, what’s his first name? I forget. Mr. Olive, Minister Olive. He’s been to Beijing. They’re ready to sign a deal between the Canadian national government, and they will solve the British Columbia problems.
Peter Byck: They also have the same protest problem going west from Alberta as well.
John Hofmeister: That’s just a matter of money to BC, to fix that problem. Cuz the leader of British Columbia has already set the price. Alberta province is not willing to pay that price. It’s between two provinces. They’ll sort it out.
Wally Broecker: One might ask, with these protests, how they tip the balance of public opinion, because the people who are against this, the naysayers, are really well funded. The more you annoy them, the more effort they’re gonna put in to making us look foolish. That’s a consideration, because since 2008, there’s been a tremendous change in public opinion, and that’s been financed, right? It didn’t just happen.
Peter Byck: The public opinion’s been financed—
Wally Broecker: Somebody is, the Koch brothers and so forth, are funding huge campaigns to change the public attitude against global warming. That’s gonna go on. That’s why I say, we can’t roll over these big industries. They’re too powerful. There’s too much money involved. Can’t control Wall Street. It’s the same kind of thing.
Peter Byck: I was just at a conference last week—yesterday—at UC Davis. It’s about getting our soils to be the carbon sinks that they naturally are, and how we’ve turned off a lot of the systems and reversed a lot of the systems, so a lot of our soils are actually expiring carbon right now, as opposed to inhaling it and sequestering it. To my studies and what I’m excited about, it’s really that that’s gonna save us. I don’t see stopping the tar sands. I don’t see stopping the fracking. I live in Kentucky, strip mines [cross talk] —
Wally Broecker: No, no, no, no [laughter] . There’s something like 3,000 gigatons of carbon waiting to be burned. There is no way in hell you could store more than 100 or 200. I’m a geochemist. I spent my career on this. That is not the solution, nor is growing trees. Too bad it isn’t. It would be nice if it was that simple. Just doesn’t match.
Peter Byck: A lot of the stuff I’m seeing is surprising a lot of the scientists. I’d love to show you the stuff that I’m seeing, to see if it would surprise you. It’s worth us sitting down and talking about.
Wally Broecker: I’ll listen.
Peter Byck: Before now, people have been saying you can’t bring up the soil carbon by a percent in decades. You can’t do it. I’m seeing people doing it in years. I’d love to get the stink test, see if what I’m seeing is completely crazy or if you might go, wow.
Wally Broecker: It’s the total. Of course they can increase their amount of organic carbon in their soils, but that is not that big a reservoir. You’d have to make it ten times bigger or something, which is not gonna happen.
Peter Byck: Stay tuned on this. We’re gonna have another conversation about this [laughter] , cuz I gotta get the opinions.
Mike Pasqualetti: It’s interesting that a lot of this discussion about the pipeline is circulated around the carbon. No one solution is gonna get you there. You could put up thousands, millions and millions of wind turbines and hundreds of square miles of solar, and you could retire coal plants, and you could double the efficiency of automobiles. You could do everything that you can think of doing, and you’re still not gonna get there. The only way you’re gonna get there is—
Wally Broecker: If you could collect the carbon—
Mike Pasqualetti: The only way to get there is to collect it and store it.
Wally Broecker: If you could take out of the atmosphere the equivalent amount you put in, you could, that would solve the problem. It would be putting it underground.
Mike Pasqualetti: It would stabilize, it would stop us from going up so fast.
Wally Broecker: No, you could put in more of these units, and take it down. It’s just a matter of how many you wanna operate.
Mike Pasqualetti: My point is, you can’t, there’s no one thing that’s gonna get you there.
Wally Broecker: That’s true.
Mike Pasqualetti: You’re gonna have to do a lot of things. What you can do is you can incrementally do things.
Wally Broecker: But that’s what we’ve been doing.
Mike Pasqualetti: I’m talking about, you don’t approve—
Wally Broecker: That’s Socolow’s wedges. That’s not working. Forget it.
Mike Pasqualetti: No, that’s exactly right. They don’t work.
Peter Byck: The idea of going to a low carbon economy, it’s just interesting, and I’d like to get your all’s opinions, if you’ve experienced this. When I’ve met folks in Alberta, and they talk about the tar sands, the oil sands, they’re very defensive, very, very defensive. Then when I meet the folks at oil companies like Shell, who’ve been shifted over to the wind division, they’re incredibly happy people [laughter] . If you just look at it on a human level, there’s something there, that we’re happier when we’re using less carbon, when we know the problem. I was just wondering, have you seen that in your dealings at Shell? Have you seen people become happy when you pushed them over into the wind division?
Mike Pasqualetti: I was waiting for this.
John Hofmeister: Shell only recruits happy people [laughter] .
Peter Byck: Do they stay happy?
Mike Pasqualetti: Only if they’re in wind, yeah.
John Hofmeister: I could take you to literally any part of my former company. I could take you to an offshore platform in the middle of the Gulf of Mexico, and the people are so proud to be doing what they’re doing, applying the technology that they’re applying, to keep America free and safe and economically secure. It’s not just Shell. It’s any oil company. People out there on the rigs, they are American heroes, in many respects. This is a very high-risk occupation, as we saw, unfortunately, with the Deep Water Horizon. They go through safety training over and over and over again. Whether it’s people maintaining pipelines, people working in control rooms in refineries, maintenance workers who are putting in new emission control devices and so on, it’s a very happy industry in total. I’m not just speaking of Shell.
Wally Broecker: But—
John Hofmeister: They enjoy the work.
Wally Broecker: But—
John Hofmeister: They enjoy the work. But to say that there’s a difference—I mean, yes. In the wind business, people loved it. People in the biofuels world—we did a lot in the biofuels—they were having a good time, because they saw it in a larger sense. New graduates always wanted to migrate to the less carbon-intensive part of the company, which they can do once they get into the company. I think it’s something about working on the future. It’s purposeful work. At some point, I’d like to come back to the fact that we’re not getting anywhere near where we need to be, and what we can do about that process.
Wally Broecker: But let me ask you one thing. Why has no oil company looked seriously into air capture? That would be a huge industry. It would be 15 percent, probably, of the fossil fuel industry. They don’t do it—
Peter Byck: The air capture of carbon.
Wally Broecker: It’s very puzzling.
John Hofmeister: I think it’s—
Wally Broecker: The total amount that’s been spent—and I know this—is no more than 25 million dollars in ten years.
John Hofmeister: I’ve read your article that promotes the carbon capture approach. What my former company has done and is doing is looking more at capturing carbon at the source. For example, Shell, my former company—I’m not trying to sell you Shell here, but the whole process of coal gasification with carbon capture and sequestration, that is on offer. I personally was selling coal gasification technology with carbon capture and sequestration. I offered Ed Markey as part of the US Climate Action Partnership framework for cap and trade, I personally offered Ed Markey emissionless refineries. I said I need 30 years. Can’t do it in three years or six years.
Wally Broecker: You mentioned automobiles. If you could take CO2 out of the air, you could make artificial gasoline for a rather small price, and therefore you could keep the automobile, and all you’d be doing is putting carbon, CO2 and water, in the air. You’d be taking the same amount of CO2 back out again.
Peter Byck: Talk a little bit more about that. Get into details of what you just said, making gas from air. Go deeper into that.
Wally Broecker: I’m a self-appointed advocate of Klaus Lackner, who’s at Columbia University. He’s one of the most brilliant people I’ve ever dealt with. He is much into this whole energy thing. He’s the one that figured out how you could economically pull CO2 out of the air. I believe him, that he could do that.
Peter Byck: Is that with the baking soda, the trees? The artificial trees?
Wally Broecker: He has a plastic material. It’s got embedded islands that are chemically active. When exposed to Phoenix air, the plastic, the CO2 that went, the air that just blows through these mattress kinda things would kick off water vapor and replace it on the plastic very efficiently. Then if you pour water on the plastic, or put it in cold steam, the CO2 comes back off again. It’s a reversible reaction.
He believes that you would make modules. This is a big advantage over power plants, because they would be mass-produced and could be shipped in individual containers and put anywhere in the world. You don’t put 'em near cities. You put 'em out in remote dry lands, where people would be happy to have income and won’t worry about the eye sore. It’d be like windmills. If you put 'em near cities, everybody’d complain. Plus, you have to bury the CO2, so if you wanna do that under Ohio, you’re gonna have all kinds of legal battles. If you wanna do it under the middle of Australia, you’d probably have no trouble. You would put these things where you want to bury the carbon.
Peter Byck: So the bottom line is—
Wally Broecker: The last thing is, once you got into this whole thing and learned how to do it on a large scale, you could then—another way to use this is pull CO2 out of the air, combine it with hydrogen made in a nuclear plant or a solar plant, and make gasoline. Then we can keep our wonderful automobiles, and not have to go to battery-operated automobiles. Maybe we’ll do that anyway. It’s an interesting though.
Peter Byck: Basically, the concept behind that is, especially if you go with Jim Hanson’s pieces, we put too much up there already. There’s too much CO2 in the atmosphere right now. Even if we went completely renewable today or last year, we’re still gonna heat up, cuz we have too much up there. We have to suck down more than we ‘re putting up there. That’s the concept.
Wally Broecker: Yeah.
Peter Byck: That’s where the land use piece that I’ve been looking at is really very cool. Stay tuned, cuz I wanna get your feedback on this stuff. I really do. John, you were just seguewaying us to, I think, a positive way of approaching the future, and why aren’t we going fast enough. I think you and Mike can probably talk about where we wanna go, and how can we get there.
John Hofmeister: I can envision a 50-year journey to a carbon-free energy system. We can’t get there from here. The main reason we can’t is not that the technology won’t enable it. We have all the technology that could make the energy system carbon-free that we need. We can get it even better, with nanotechnology applied to solar industry, which we don’t quite know how to master yet. The issue is that we play politics with energy all the time. Politics and energy is oil and water. It just does not mix.
We have a political process called a democracy. In the democracy, all kinds of people have the right to a vote, which they should, and all kinds of people have the ability to disagree. The real problem is that we have political time operators, which is the time between now and the next election. We have political time operators trying to make decisions that apply to energy time, when energy time is measured in decades, not election cycles. Whether it’s going all the way back to Richard Nixon’s commitment to energy independence, and all of his seven successors since then proclaiming the same thing, none of which have a clue what they’re saying or how to get there.
The political process is ungoverned. You have the federal system, you have the state—or, you have the national system, the state system, and the local systems. Each can go their own way, depending on who we elect as our representative, including the president. We have allowed ourselves to create so much governance that it’s impossible to manage the governance. 13 cabinet agencies control energy in the executive branch. 26 congressional committees and subcommittees and the federal level. 800 federal judges can decide what they wanna decide. Then you have 50 governors, 50 state legislatures, 50 state court systems. Then you get into real serious governance problems when you get into cities, counties, and townships. They all have a voice as well.
With that kind of a governance model that we have established, you can’t get anything done. You just can’t. Maybe you can get, finally, after three years, get 500 permits to add on to a refinery that already exists, if you’re willing to go through that much trouble. We have to address the governance. If we don’t address the governance, we’re gonna be sitting here, our grandchildren are gonna be sitting here, saying the same thing that we’re saying, that we just can’t get anything done.
What I advocate is changing the governance model to the system that we use in our monetary system. We do manage our monetary system. We didn’t used to. In the 19th century, we had an unmanaged monetary system. It went into default twice in the first decade of the 20th century. Then we got the Federal Reserve Act in 1913. Since then, this independent, regulatory agency governs the monetary system, and it works. People don’t like it. It’s not popular. The chairman of the Federal Reserve has to make some pretty ugly decisions that the president would never make—any president, republican or democrat would not make it. Jimmy Carter would not make the decisions to deal with inflation that Paul Volcker made. Paul Volcker fixed the double-digit inflation of the 1980s. He was appointed by Jimmy Carter. Jimmy Carter knew he might lose the election with Paul Volcker’s induced recession to kill inflation.
You have this independent agency model, and I think we need the same model for energy that deals with supply. We decide what are the sources of supply we’re going to develop. It deals with efficiency, which is demand. Deals with infrastructure, which has to be built, and deals with the environmental limits that we will set, connected to the supply side. If we don’t do this, we’re just not gonna get anything done. Nothing against President Obama. Nothing against President Bush. They tried. They did what they could.
You notice the president went silent on climate change for two years. Now all of a sudden it’s an important topic. What is that all about? Where’s the credibility here? One of the reasons he won’t get much outta Congress is he lost his credibility. From the person who said this is the day the seas stop rising and the earth cools, to total deafening silence. That really hurt him in ways he probably doesn’t understand. That’s what incentivized the Koch brothers and others to go the other way, unfortunate.
Peter Byck: I’m not sure Obama’s inaction inecntivized the Koch brothers to keep going [laughter] down the road that they are. I just heard a little story about grandpa Koch the other day. It was a very interesting story.
Mike Pasqualetti: Lemme just jump in here a little bit.
Peter Byck: Jump in for a second, and then we wanna open it up to questions.
Mike Pasqualetti: I know we wanna ask questions, or answer questions. John’s talking about, of course, establishing a national energy policy, which everybody says they’re gonna do and nobody’s done for, as you say, seven administrations. Energy independence by 1976. 1776—we weren’t even independent then, probably.
I wanna get back to the pipeline itself. The question on the table here is, is that a good idea or is that not a good idea? What’s interesting about the discussion that we’ve had, to me, is that it’s raised all these other issues. It’s tied up in first nations and indigenous peoples. It’s tied up in emissions. It’s tied up in water quality. It’s tied up in land use. It’s tied up in which direction we wanna head into the future. It’s tied up in all these things. It is the reason that it is attracting so much attention, because there’s so many things attached to it. We’re not gonna solve the energy supply problem, the energy demand problem, by making one single decision. There’s gonna be a whole series of things.
What we have to do is establish a direction that we wanna move. I don’t think this pipeline moves us in that direction. To approve us would move us, I think, it would be to kick the can down the road once again, I think. Yes, it might be difficult to not have it, but I think what you do is, you start to value the commodity at its true cost. You start to put a price on your energy that you are really, that is really valuable to you at that price.
We hide the value. We hide the value of our energy all the time. Gasoline that might be $4 a gallon now in some places in the United States or even more, it’s not really what we’re paying. We’re paying a lot more than that, if you include the military protection of our supply lines, by several dollars a gallon more. We pay for it in our federal income tax, but we don’t pay for it in our gasoline tax. If we start to pay the true cost of our energy, we’ll start to see things that are going to be evening out.
Peter Byck: I agree. I agree completely. Let’s open it up for questions.