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Reid, a Nevada Democrat, told reporters today that he was “trying to work something out” with Keystone backers, including Louisiana Democrat Mary Landrieu.
“But they keep moving the ball,” Reid told reporters. He said pipeline supporters are pressing for a binding vote rather than on a non-binding resolution to support the project.
This is such an embarrassment for the U.S. and another piece of evidence about how broken our political process is. The more I read about this the more I'm convinced the only thing that's really being debated or discussed is how best to get elected again rather than what's best for the country.
The more I read about this the more I'm convinced the only thing that's really being debated or discussed is how best to get elected again rather than what's best for the country.
Not sure which is the chicken and which the egg. The two sides don't seem to be able to agree on what's best for the country in ideological thinking and so focus on getting elected so that they and not the other side can get the strength to not care about agreeing.
One of the oft-cited reasons used by pipeline backers is the supposed safety of pipeline oil transportation versus rail car transportation. Usually these claims are backed by photos of fires and train derailments meant to shock and scare. It works because these are visible images everyone can relate to.
What to me is scarier is the images no one sees of pipeline breaks and spills which on average tend to be 10-50x greater in volume and can go undetected for long periods of time before they are noticed. How many of those pictures has anyone seen? We hear about a break and we may see a pile of soil but that's nowhere near as spectacular as a raging fire or a pile of crumpled train cars.
There is also the little matter of unknown and long-term pollution effects from either of these spills but more damaging from the pipeline because of the shear volume and unknown extent. Don't take my word for it, ask the folks in Prince William Sound, AK how they're doing some 25 years later.
....and the Canadians begin to lose patience. Again, the Canadians should just forget about it and build lines to the coasts to ship to customers in Asia and elsewhere in the world.
I'm neither strongly opposed nor strongly in favor of the Keystone pipeline. I do think that if it is going to be built that careful and thorough consideration should be given to it's placement or location. It's merits are not as glorious as it's backers claim nor are it's demerits as onerous as it's opponents claim. What I wonder about the opinions of those who post here supporting it is if you would be as emphatic and cavalier if it was going through your backyard.
The average homeowner would probably sell their property to the company to make way for the pipeline. I'm sure the company has calculated the costs of private versus public. Build it on the side of a public highway.
Wouldn't that be nice and I dare say if that were the case there would be little controversy. However, and with all due respect, you need to do a little research on where this pipeline is going and also where others have gone before. Many, many, many miles of them cross farmers fields and some along public right-of-ways abutting homeowner back yards who basically had no voice in said placement.
Last, but maybe not least, even public land belongs to you and I.
"I'm neither strongly opposed nor strongly in favor of the Keystone pipeline."
Are you sure? Because it kinda reads differently. Not meanly, just sayin' lol.
Everyone has a bit of a NIMBY-ee in them for something, even those who are so strongly opposed to pipelines. If I wanted to really think about it, I was not thrilled about gas pipes nearby for many years because the gas company in this area is awful and I wouldn't be surprised if they weren't doing all the maintenance they could be. I'm thankful I now live somewhere that's electric rather than gas.
I grew up living next to a railroad and would absolutely do that again, because I've liked railroads ever since I was a kid. Probably shouldn't have had a garden right by the train when I was a kid, but whatever was kicked off by the train to the dirt nearby probably didn't cause any brain daamanaage. In all seriousness, was a pretty successful garden. Would I live next to a pipeline if where I wanted to live was near/close to one? I think I probably would, especially if it was one of the larger companies. I mean, I'd rather rail because at least that's visually interesting, seeing what's being hauled and wondering to where, but it is what it is.
In terms of pipelines, I think a large part of it certainly is maintenance and care, which I think was an issue with the Arkansas Exxon pipeline spill last year (IIRC, the pipeline was old), which had video on youtube of oil running down a suburban street and - speaking of NIMBY - the oil was in their backyard (and front yard.)
Whether or not Keystone is above or below ground (I'd almost certainly say below) is a legitimate question, although any problems with it are problems above or below ground. Pipelines are capable of larger spills than rail, given the nature of x amount of oil in x amount of cars, but is the larger nature of pipeline spills due to the pipeline or the pipeline operator? I guess what I'm saying is that, while pipeline technology has improved, do the companies do all they can do to be alert (and are able to be alert) to the slightest hint of problems. Much like Target wasn't doing all it could do to protect credit cards, how much of the size of a pipeline spill is a pipeline operator not doing all it can do? But I'm rambling.
Rail is problematic and so are pipelines. Rail is somewhat more expensive than pipelines, but seems to continue to gain favor. Neither, however, is going anywhere, and it does not seem like there's a third option to transport energy.
Either way, you're not going to get any new rail in this country and it'll be too high a hurdle to get any major new pipelines (and I think Canada should just give up already at this point with Keystone - at this point I'm of the mindset that it isn't going to happen unless they try to mount some sort of major legal battle, which I'm sure will do absolutely wonderful things for the relationship with our neighbors to the North) built in this country. Those companies in both industries that dominate now are going to continue to do so. Those companies that own terminals/rail loading facilities are also going to do well (I've highlighted Gibson Energy.)
As for clean energy, not going to happen en masse anytime soon. Having some sort of an energy plan (or a long-term plan in general) in this country would be great, but ... well, there isn't. A plan would also take two sides willing to listen and work with each other to come to a conclusion, which seems damn near impossible the way this country is these days. ("You like the pipeline? You MUST LOVE FOX NEWS! I'll NEVER LISTEN TO A WORD YOU SAY." "You're against the pipeline? I'm NEVER GOING TO LISTEN TO YOU. GO WATCH MSNBC!") It's so tired.
Definitely sure that I am adamantly neutral. While I would be opposed to a pipeline through Yellowstone National Park or other environmentally sensitive areas for the most part I consider pipes as the better way to move the resource versus rail.
Of greater concern and ponderment to me is why all this oil in ND, MT and Alberta needs to be brought up and moved faster than the current safe capacity to do so. The stuff in the ground isn't going anywhere. Current operations are spilling or flaring off almost as much as gets shipped so what's the rush? I don't have a clue to all the inner workings on the industry so I'll take a pass but in my mind haste makes waste and all like that. With all the technology this country has it's just hard to believe that there aren't better solutions out there.
Personally the concept of using an enormous amount of energy to separate tar from sand and then build an extremely expensive pipeline to move this liquified tar to refineries that then use more energy to finally produce a usable fuel seem antiquated and very inefficient.
We tend to not want to commit to the harder decisions to harness newer viable solutions to our energy needs. Big Oil does not want to become little oil. Big Oil wants to get bigger and more important. Having politicians commit to expensive infrastructure projects is one way of insuring the permanance of the status quo.
Years ago when an energy alternative technolgy was surfacing ("Algae to Biodiesel" as I recall) I noticed how Big Oil stepped in with its deep pockets and bought up many of these energy alternative technologies and start ups.
Until ww look out 50 - 100 years and begin to foster a set of emerging energy solutions the spills and the clean ups (cover ups) will continue.
Until we begin to look out 50 - 100 years and begin to foster a set of emerging energy solutions the spills and the clean ups (cover ups) will continue.
I think the issue is, if you believe that big oil doesn't want to become little oil, one of the issues becomes stopping them lobbying not to be. You can say that about a lot of industries - energy, financial, etc. Cronyism and lobbying. Whether it be banks or energy companies or whoever, they have the money and therefore the attention and it's not getting any better.
Would I like to see more use of alternative fuels, more use of all manner of things? Sure. Nothing about what I see signals any sort of plan or progress. This country also likes status quo a whole lot. We don't plan and then something comes along and we have to scramble.
Long a bunch of energy companies, because I don't think anything's changing anytime soon.
Scott- thanks for the balanced perspective, and I agree with you on all points. (Well, if I agree it must be "balanced", right?)
Quite a while ago my old nemesis MJG and I disagreed over the intrinsic safety of pipeline vs rail, his perspective as usual being to reduce the matter to a mathematically miniscule percentage of oil spilled vs oil shipped, completely disregarding the fact that pipeline spills typically involve much larger amounts of oil than rail spills.
Subsequently there have been an increasing number of train derailments. While involving less spillage than a pipeline rupture some of the train episodes have occurred in populated areas, causing horrific deaths, injuries, and property damage. As John Maynard Keynes is reputed to have said, "when the facts change, I change my mind".
Allowing for the facts that transport of oil by rail has increased enormously, and is likely to continue to do so, that the tanker cars are obviously deficient from a safety perspective, and that rail lines frequently do pass through populated areas, I have indeed changed my mind on this.
My reservations regarding pipelines have nothing to do with esthetics, and everything to do with the fact that many of those spills seem to share some common factors: a very large amount of spillage per incident compared to rail spills, frequent serious damage to the environment (although generally without death or injury to humans), and a pathetic record of negligence, from both maintenance and operational perspectives.
Being a cynic by nature, I have no hope that pipeline operators are about to recognize their safety obligations any time soon, and so still have strong bias against that transport method. This leaves me rapidly running out of options, but reluctantly leaning towards pipelines. Examining that history, once again we see both moral hazard and perhaps a bit of "too big to fail". Not being a great fan of government regulation unless absolutely and demonstrably necessary, I reluctantly conclude that pipelines, with extremely severe civil and possibly criminal penalties for negligence, may be the least of the two evils.
American jails are bursting with inmates whose drug-related offense was mostly self-destructive, yet we rarely see anyone doing time for serious and major commercial offenses against the common good. That needs to change.
"Allowing for the facts that transport of oil by rail has increased enormously, and is likely to continue to do so, that the tanker cars are obviously deficient from a safety perspective, and that rail lines frequently do pass through populated areas, I have indeed changed my mind on this."
I know the two Canadian rails are in the midst of updating/requiring newer, safer tankers to transport oil (and are already charging customers more for use of cars built before 2011) and have a number of other measures that are or will be in place. As for the US rails, I know some of them are in the same process of changing cars, such as Berkshire's BNSF. However, Canada has been quicker to act on new laws/standards (http://www.nytimes.com/2014/04/25/business/trailing-canada-us-starts-a-push-for-safer-oil-shipping.html?_r=0).
New car costs will be passed on to customers. Will that lead some to take another look at pipelines? Perhaps. Still, oil by rail offers some flexibility that pipelines don't.
I haven't looked at it in detail, but given the supposed demand, I'm a little surprised that ARII (American Railcar) had a terrible quarter today. The other rail car producer, Trinity (TRN) had a much better quarterly report yesterday. I think both companies stand to benefit, although TRN seems to be going more smoothly lately.
"More than 94,000 tank cars are used to transport crude oil and ethanol in service in Canada and the United States. About 14,000 of them were built after 2011 based on the new industry standard, referred to as CPC-1232, and comply with the new Canadian rules. And 55,000 of those have been ordered through 2015, according to Thomas D. Simpson, the president of the Railway Supply Institute, a trade group for rail-car suppliers and owners."
Rail does certainly go through heavily populated areas and freight also shares track with passenger rail in a number of instances.
If a train spilled frac sand though, that would be the only potentially good train spill scenario. Your town has a new beach, albeit just probably not one by water.
"Being a cynic by nature, I have no hope that pipeline operators are about to recognize their safety obligations any time soon,"
You know, I was pondering something similar the other day. As a shareholder in a number of companies, I certainly like investing and like when companies do well. However, I've seen so many instances of penny pinching lately and you get to a point with a public company where it's just taken one step too far and it has the reverse effect, as an incident/problem causes all of the benefits gained by cost cutting to go out the window and then some.
Was Target doing all it could do to protect customer data? You have Michaels (the arts and crafts store) getting hit again. I do worry that companies are cost cutting to the benefit of earnings per share - it becomes whether or not there's a line/point of no return with that where safety (data or otherwise) becomes more and more an issue.
This also, I think, sort of plays to Mark's statement above: "Of greater concern and ponderment to me is why all this oil in ND, MT and Alberta needs to be brought up and moved faster than the current safe capacity to do so."
"Subsequently there have been an increasing number of train derailments. While involving less spillage than a pipeline rupture some of the train episodes have occurred in populated areas, causing horrific deaths, injuries, and property damage."
See the incident in Canada last year.
Yesterday's CSX incident doesn't seem to be doing that much to stock. If it was down more considerably, I'd consider adding it. I think at some point I'll own at least a little of all of the rails.
It is all a cost/reward issue. Rail cars can be made safe to carry higher volatile oil so even derailment will not cause an explosion. We have lots of dangerous stuff being carried on our roadways including radioactive stuff but we don't hear accidents causing radioactive contamination.
Note that the pipelines being proposed does not do anything to the shipping of US fracking oil to either coasts, only the shipment of Canadian oil to the Gulf area. So, the pipeline is not going to prevent the need to guarantee safety of rail transportation.
Unfortunately, as @Mark as pointed out, people react to risk they can see than the risk they cannot. So pipelines seem safer.
It is the duty of government to look at all sides and make the analysis in greater depth including mitigating risk. This requires arriving at cost/risk compromises that will make it more expensive than the industry might like and not as risk-free as safety proponents would like but even that compromise is better than the extreme positions being taken. Lobbying and influence completely distort this process.
There is also a fundamental difference in policy between people who want progress at any costs and those who want progress at minimal risk. Capital and corporations have no ethical or moral obligations. They respond only to costs (including fines) and regulations that they cannot avoid.
But it all boils down to the inability of people to understand insurance or in basic terms attaching a cost to a probabilistic event that may or may not happen. There is a risk overhang on the general population in any industry, whether it is fire risk, pollution risk or financial risk. We have not figured out a way to attach a cost to that and set up regulations that allow the negative outcome of that risk to the parties that caused the risk.
The pipeline vs train debate is just an argument between risk we can see with risk that we haven't seen manifested yet.
In the financial industry, some of the new regulations try to control the risk overhang but of course that has a cost when no negative effect may come of it. Industry in general does not like this "unnecessary" costs.
Same thing with oil industry. Like the financial industry, they want the profits for themselves but the losses/costs to be borne by the society. This is fundamental to American capitalism.
It is like teenagers that want the freedom to drive a car but do not want the restrictions that parents want to impose to prevent or minimize damage of trouble they can get into with the car.
Other countries take one of two approaches. The country imposes regulations to prevent or reduce the risk overhang even if they are probabilistic events which reduces profits or they make the industries pay parts of their profits into a sovereign wealth fund that is the cost of the risk overhang the country takes to let that industry exploit its resources. Both of these will be considered anti-American since the rules are made by Capital in this country.
"But it all boils down to the inability of people to understand insurance or in basic terms attaching a cost to a probabilistic event that may or may not happen."
The general public may have this inability but you had better believe that the owners and operators of these transport facilities know exactly what they are doing. Their safety design and maintenance procedures reflect the bare minimum investment necessary to operate, with no provision for safety factors that can be eliminated.
"We have not figured out a way to attach a cost to that and set up regulations that allow the negative outcome of that risk to the parties that caused the risk."
This is exactly what I meant with respect to the concept of "moral hazard" or "TBTF". The operating environment for this sort of transport should be made so tight that any preventable spillage results in very severe penalties, civil and if warranted, criminal. If the expenses of proper design and maintenance drive up the cost of the product, so be it.
The "cheap and dirty" practices exposed by the BP oil rig disaster are operationally equivalent to the attitudes and practices involved in the transport side. BP was made to suffer the consequences, and there is no reason that the transport side should be treated any differently.
Those costs are already there in one form or another, but sometimes not at all obvious. They should be shifted so that they are both transparent and properly underwritten by the providers and users of the product involved.
There will be no change on this issue until a new President is elected that favors the pipeline. Warren wants the railroads to handle the oil and that's that.
The sad fact of the matter is that you are probably correct. The issue will most likely not be decided on a rational examination of commercial responsibility to the general public, but rather on a personal caprice influenced (as usual) by the application of free speech in the form of lots of money.
There will be no change on this issue until a new President is elected that favors the pipeline. Warren wants the railroads to handle the oil and that's that.
I am confused. Are you talking about moving Canadian oil to the Gulf in which case which railroad can provide an alternative for this? Or are you talking about moving oil from US fracking fields to either coasts in which case which pipeline is the alternative to the railroads currently doing this?
I'm interpreting John's remark as a generality... just a commentary on the overall stupidity of the way major decisions are made in this country, heavily influenced by major transfusions of cash to whomever is in a position to influence those decisions.
I purposely avoided submitting on this topic because I anticipated it would be both a highly explosively and emotionally charged debate. I was on-target in that regard.
For the record, I have favored and continue to favor the proposed pipeline work. I quoted Richard Branson in a recent post “Screw it. Let’s do it”. There have been more than sufficient studies to identify the risk/reward tradeoffs. Let’s just get the men to work and the oil to flowing. Several of the MFOers (Scott especially) have advanced the favorable arguments much more definitively than I can.
It has become an unhealthy habit of Old Joe to reference earlier exchanges that he instigated and I responded to when pushed. His criticisms of my investment focused postings were always language and style related and never, never about the substance of the investment assessments. That’s a fair summary of our history that he has acknowledged recently.
I only enter this fray now because Old Joe once again used an ancient controversy as a mechanism to incompletely misrepresent my supposed thinking on this matter. I certainly incorporated the size of any oil spill in my thinking. He continues to portray my positions on all subjects to be a one-dimensional mathematical assessment. Investing and other hard decisions are never simple arithmetic and equations.
It is true that I do advocate collecting relevant data and completing a statistical analysis as one part of any assessment. But my total evaluation never stops with that statistical analysis. It is but one factor in a much more complex process that always includes behavioral aspects.
Denials notwithstanding, I need not have accessed this exchange to project that both Old Joe and Mark are opposed to the pipeline project. They are true, committed environmentalists. I suspect we are all more or less in that same camp. However, I do believe that both Old Joe and Mark are nearer to one end of that spectrum than most of us. In the past they have described themselves as “tree-huggers”.
That’s perfectly understandable; however, my level of enthusiasm just don’t go quite that far. I respect but do not agree with their stance on the pipeline project.
A dispassionate, reasoned debate over the pipeline is welcomed; ad hominem name-tagging is not necessary. It is often the defensive default option when a heated argument is heading South.
Otherwise this is a grand discussion. I’m impressed by the overall quality of the posts. Also, the subject matter has recorded an impressive statistical reply quotient; 24 submittals with only about 115 viewings is a remarkable reply ratio. That's a measure of the intensity of the interest.
"It has become an unhealthy habit of Old Joe to reference earlier exchanges... "
Goodness, an uncalled-for ad-hominem attack! (See below.) "Unhealthy" because you in your sole wisdom have determined it to be so?
"His criticisms of my investment focused postings were always language and style related... That’s a fair summary of our history..."
While it is true that I have not infrequently agreed with certain of his positions, this statement is "fair" only If we fail to include my many challenges to the basic reliability of academic financial modeling frequently used as foundations for MJG commentary.
"Old Joe once again used an ancient controversy..."
Please note the typical subtle attempt to derogate my position by arbitrarily defining a matter of months as "ancient".
"In the past they have described themselves as “tree-huggers”."
Please note the lack of context and citation for this statement.
"I respect but do not agree with their stance on the pipeline project."
Since my "stance" on this project has been summarized above and need not be repeated, MJG may "respect but not agree", but remarkably fails to suggest what his criteria (if any) for safe transport might be. By default then, he supports the "business as usual" scenario, with no additional safety requirements necessary. He may believe this to be acceptable: I certainly do not.
"ad hominem name-tagging is not necessary"
Yes, it's always convenient to be immune from someone quoting you. Note however from MJG's commentary that he obviously does not feel that this restriction should apply to him.
"Otherwise this is a grand discussion. I’m impressed by the overall quality of the posts."
Again note the typical subtle attempt to derogate some of the posts as less than "quality".
cman recently made a brave if futile attempt to dissect MJG's "style" in a lengthy and quite devastating analysis. Of course since that was a week or so ago it also qualifies as "ancient history" and is therefore irrelevant. It is interesting to note that I am anything but alone in failing to appreciate the sanctimonious, smug, and frequently misleading qualities of this particular "style".
"Canadian Pacific Railway's crude oil shipping business will likely see its revenue double to 10% of the rail's overall total in the next two or three years, its chief executive said."
"The risk of derailment and other safety issues associated with shipping crude led CP to consider getting entirely out of the business of shipping crude by rail about a year ago, he said.
The company’s board discussed ending transporting oil and other hazardous material, such as chlorine and ammonia, through communities in the U.S. and Canada, he said. The board decided to continue moving the products as it believed it would do a safer job of transporting the materials than other alternatives, in particular trucking.
“All things in, someone’s going to do it, [so] we will,” Mr. Harrison said in an interview with The Wall Street Journal after the company’s annual general meeting in Calgary."
Gee MJG, you are only about 50% off base in your comments. Not bad.
I do think that this has been a good discussion so far w/o the alluded to name-tagging ad hominem or otherwise. However, I also think you are attempting to distort both my position and comments by categorizing me as a committed environmentalist and a "tree-hugger" and therefore as one with a hidden objective rendering moot said positions and comments. I actually have a substantial financial incentive for seeing this resource used as two of my heaviest positions are in companies that stand to benefit from doing so. Nice try but strike one.
Committed environmentalist - guilty! Tree-hugger - guilty! But lets put that in some context shall we. I have spent the better part of my life in the woods and natural wonders of this country and owe my livelihood as a carpenter and wood-worker to the forests of this nation. I have grown them, doctored them, studied them, cut them and used them pretty much all my days and like a good servant of the earth I respect and give thanks for where they come from. Every time I reach for the Charmin I thank a tree and the earth that nourished her. However, I emphatically deny your allegations of my position on this pipeline matter as having anything to do with my environmental bent other than careful consideration of the possible ecological damage to sensitive areas which I stated right from the start of this discussion. Strike two.
For a little more background on my stance I'll refer you to this interview/viewpoint in a recent StarTribune article. You will note that 40 years after the fact that the effects are still evident and the oil companies fail to deliver on their promises.
Moving on. Really! Richard Branson is your choice for expert opinion and/or expertise in this matter!? What possibly does he know about crude oil pipelines pray tell. What does he have to say about all of the lives, property destruction, and decimation of small town serenity that has been witnessed in areas where fracking and the oil boom are currently taking place? What about all the waste manifested on the environment there and of the natural resource itself? Well Kate Upton says "no" so thats who I'm going with. Strike three.
Comments
What to me is scarier is the images no one sees of pipeline breaks and spills which on average tend to be 10-50x greater in volume and can go undetected for long periods of time before they are noticed. How many of those pictures has anyone seen? We hear about a break and we may see a pile of soil but that's nowhere near as spectacular as a raging fire or a pile of crumpled train cars.
There is also the little matter of unknown and long-term pollution effects from either of these spills but more damaging from the pipeline because of the shear volume and unknown extent. Don't take my word for it, ask the folks in Prince William Sound, AK how they're doing some 25 years later.
Regards,
Ted
http://www.reuters.com/assets/print?aid=USBREA3T0YW20140430
http://business.financialpost.com/2014/04/30/keystone-xl-nafta-challenge/?__lsa=0351-d854
Ottawa mulls Keystone XL challenge under NAFTA after U.S. dodges decision again.
Nothing virtual about what I said.
Last, but maybe not least, even public land belongs to you and I.
Everyone has a bit of a NIMBY-ee in them for something, even those who are so strongly opposed to pipelines. If I wanted to really think about it, I was not thrilled about gas pipes nearby for many years because the gas company in this area is awful and I wouldn't be surprised if they weren't doing all the maintenance they could be. I'm thankful I now live somewhere that's electric rather than gas.
I grew up living next to a railroad and would absolutely do that again, because I've liked railroads ever since I was a kid. Probably shouldn't have had a garden right by the train when I was a kid, but whatever was kicked off by the train to the dirt nearby probably didn't cause any brain daamanaage. In all seriousness, was a pretty successful garden. Would I live next to a pipeline if where I wanted to live was near/close to one? I think I probably would, especially if it was one of the larger companies. I mean, I'd rather rail because at least that's visually interesting, seeing what's being hauled and wondering to where, but it is what it is.
In terms of pipelines, I think a large part of it certainly is maintenance and care, which I think was an issue with the Arkansas Exxon pipeline spill last year (IIRC, the pipeline was old), which had video on youtube of oil running down a suburban street and - speaking of NIMBY - the oil was in their backyard (and front yard.)
Whether or not Keystone is above or below ground (I'd almost certainly say below) is a legitimate question, although any problems with it are problems above or below ground. Pipelines are capable of larger spills than rail, given the nature of x amount of oil in x amount of cars, but is the larger nature of pipeline spills due to the pipeline or the pipeline operator? I guess what I'm saying is that, while pipeline technology has improved, do the companies do all they can do to be alert (and are able to be alert) to the slightest hint of problems. Much like Target wasn't doing all it could do to protect credit cards, how much of the size of a pipeline spill is a pipeline operator not doing all it can do? But I'm rambling.
Rail is problematic and so are pipelines. Rail is somewhat more expensive than pipelines, but seems to continue to gain favor. Neither, however, is going anywhere, and it does not seem like there's a third option to transport energy.
Either way, you're not going to get any new rail in this country and it'll be too high a hurdle to get any major new pipelines (and I think Canada should just give up already at this point with Keystone - at this point I'm of the mindset that it isn't going to happen unless they try to mount some sort of major legal battle, which I'm sure will do absolutely wonderful things for the relationship with our neighbors to the North) built in this country. Those companies in both industries that dominate now are going to continue to do so. Those companies that own terminals/rail loading facilities are also going to do well (I've highlighted Gibson Energy.)
As for clean energy, not going to happen en masse anytime soon. Having some sort of an energy plan (or a long-term plan in general) in this country would be great, but ... well, there isn't. A plan would also take two sides willing to listen and work with each other to come to a conclusion, which seems damn near impossible the way this country is these days. ("You like the pipeline? You MUST LOVE FOX NEWS! I'll NEVER LISTEN TO A WORD YOU SAY." "You're against the pipeline? I'm NEVER GOING TO LISTEN TO YOU. GO WATCH MSNBC!") It's so tired.
Of greater concern and ponderment to me is why all this oil in ND, MT and Alberta needs to be brought up and moved faster than the current safe capacity to do so. The stuff in the ground isn't going anywhere. Current operations are spilling or flaring off almost as much as gets shipped so what's the rush? I don't have a clue to all the inner workings on the industry so I'll take a pass but in my mind haste makes waste and all like that. With all the technology this country has it's just hard to believe that there aren't better solutions out there.
We tend to not want to commit to the harder decisions to harness newer viable solutions to our energy needs. Big Oil does not want to become little oil. Big Oil wants to get bigger and more important. Having politicians commit to expensive infrastructure projects is one way of insuring the permanance of the status quo.
Years ago when an energy alternative technolgy was surfacing ("Algae to Biodiesel" as I recall) I noticed how Big Oil stepped in with its deep pockets and bought up many of these energy alternative technologies and start ups.
Until ww look out 50 - 100 years and begin to foster a set of emerging energy solutions the spills and the clean ups (cover ups) will continue.
Would I like to see more use of alternative fuels, more use of all manner of things? Sure. Nothing about what I see signals any sort of plan or progress. This country also likes status quo a whole lot. We don't plan and then something comes along and we have to scramble.
Long a bunch of energy companies, because I don't think anything's changing anytime soon.
Quite a while ago my old nemesis MJG and I disagreed over the intrinsic safety of pipeline vs rail, his perspective as usual being to reduce the matter to a mathematically miniscule percentage of oil spilled vs oil shipped, completely disregarding the fact that pipeline spills typically involve much larger amounts of oil than rail spills.
Subsequently there have been an increasing number of train derailments. While involving less spillage than a pipeline rupture some of the train episodes have occurred in populated areas, causing horrific deaths, injuries, and property damage. As John Maynard Keynes is reputed to have said, "when the facts change, I change my mind".
Allowing for the facts that transport of oil by rail has increased enormously, and is likely to continue to do so, that the tanker cars are obviously deficient from a safety perspective, and that rail lines frequently do pass through populated areas, I have indeed changed my mind on this.
My reservations regarding pipelines have nothing to do with esthetics, and everything to do with the fact that many of those spills seem to share some common factors: a very large amount of spillage per incident compared to rail spills, frequent serious damage to the environment (although generally without death or injury to humans), and a pathetic record of negligence, from both maintenance and operational perspectives.
Being a cynic by nature, I have no hope that pipeline operators are about to recognize their safety obligations any time soon, and so still have strong bias against that transport method. This leaves me rapidly running out of options, but reluctantly leaning towards pipelines. Examining that history, once again we see both moral hazard and perhaps a bit of "too big to fail". Not being a great fan of government regulation unless absolutely and demonstrably necessary, I reluctantly conclude that pipelines, with extremely severe civil and possibly criminal penalties for negligence, may be the least of the two evils.
American jails are bursting with inmates whose drug-related offense was mostly self-destructive, yet we rarely see anyone doing time for serious and major commercial offenses against the common good. That needs to change.
Regards- OJ
I know the two Canadian rails are in the midst of updating/requiring newer, safer tankers to transport oil (and are already charging customers more for use of cars built before 2011) and have a number of other measures that are or will be in place. As for the US rails, I know some of them are in the same process of changing cars, such as Berkshire's BNSF. However, Canada has been quicker to act on new laws/standards (http://www.nytimes.com/2014/04/25/business/trailing-canada-us-starts-a-push-for-safer-oil-shipping.html?_r=0).
New car costs will be passed on to customers. Will that lead some to take another look at pipelines? Perhaps. Still, oil by rail offers some flexibility that pipelines don't.
I haven't looked at it in detail, but given the supposed demand, I'm a little surprised that ARII (American Railcar) had a terrible quarter today. The other rail car producer, Trinity (TRN) had a much better quarterly report yesterday. I think both companies stand to benefit, although TRN seems to be going more smoothly lately.
"More than 94,000 tank cars are used to transport crude oil and ethanol in service in Canada and the United States. About 14,000 of them were built after 2011 based on the new industry standard, referred to as CPC-1232, and comply with the new Canadian rules. And 55,000 of those have been ordered through 2015, according to Thomas D. Simpson, the president of the Railway Supply Institute, a trade group for rail-car suppliers and owners."
Rail does certainly go through heavily populated areas and freight also shares track with passenger rail in a number of instances.
If a train spilled frac sand though, that would be the only potentially good train spill scenario. Your town has a new beach, albeit just probably not one by water.
"Being a cynic by nature, I have no hope that pipeline operators are about to recognize their safety obligations any time soon,"
You know, I was pondering something similar the other day. As a shareholder in a number of companies, I certainly like investing and like when companies do well. However, I've seen so many instances of penny pinching lately and you get to a point with a public company where it's just taken one step too far and it has the reverse effect, as an incident/problem causes all of the benefits gained by cost cutting to go out the window and then some.
Was Target doing all it could do to protect customer data? You have Michaels (the arts and crafts store) getting hit again. I do worry that companies are cost cutting to the benefit of earnings per share - it becomes whether or not there's a line/point of no return with that where safety (data or otherwise) becomes more and more an issue.
This also, I think, sort of plays to Mark's statement above: "Of greater concern and ponderment to me is why all this oil in ND, MT and Alberta needs to be brought up and moved faster than the current safe capacity to do so."
"Subsequently there have been an increasing number of train derailments. While involving less spillage than a pipeline rupture some of the train episodes have occurred in populated areas, causing horrific deaths, injuries, and property damage."
See the incident in Canada last year.
Yesterday's CSX incident doesn't seem to be doing that much to stock. If it was down more considerably, I'd consider adding it. I think at some point I'll own at least a little of all of the rails.
It is all a cost/reward issue. Rail cars can be made safe to carry higher volatile oil so even derailment will not cause an explosion. We have lots of dangerous stuff being carried on our roadways including radioactive stuff but we don't hear accidents causing radioactive contamination.
Note that the pipelines being proposed does not do anything to the shipping of US fracking oil to either coasts, only the shipment of Canadian oil to the Gulf area. So, the pipeline is not going to prevent the need to guarantee safety of rail transportation.
Unfortunately, as @Mark as pointed out, people react to risk they can see than the risk they cannot. So pipelines seem safer.
It is the duty of government to look at all sides and make the analysis in greater depth including mitigating risk. This requires arriving at cost/risk compromises that will make it more expensive than the industry might like and not as risk-free as safety proponents would like but even that compromise is better than the extreme positions being taken. Lobbying and influence completely distort this process.
There is also a fundamental difference in policy between people who want progress at any costs and those who want progress at minimal risk. Capital and corporations have no ethical or moral obligations. They respond only to costs (including fines) and regulations that they cannot avoid.
But it all boils down to the inability of people to understand insurance or in basic terms attaching a cost to a probabilistic event that may or may not happen. There is a risk overhang on the general population in any industry, whether it is fire risk, pollution risk or financial risk. We have not figured out a way to attach a cost to that and set up regulations that allow the negative outcome of that risk to the parties that caused the risk.
The pipeline vs train debate is just an argument between risk we can see with risk that we haven't seen manifested yet.
In the financial industry, some of the new regulations try to control the risk overhang but of course that has a cost when no negative effect may come of it. Industry in general does not like this "unnecessary" costs.
Same thing with oil industry. Like the financial industry, they want the profits for themselves but the losses/costs to be borne by the society. This is fundamental to American capitalism.
It is like teenagers that want the freedom to drive a car but do not want the restrictions that parents want to impose to prevent or minimize damage of trouble they can get into with the car.
Other countries take one of two approaches. The country imposes regulations to prevent or reduce the risk overhang even if they are probabilistic events which reduces profits or they make the industries pay parts of their profits into a sovereign wealth fund that is the cost of the risk overhang the country takes to let that industry exploit its resources. Both of these will be considered anti-American since the rules are made by Capital in this country.
Teenagers rule.
The "cheap and dirty" practices exposed by the BP oil rig disaster are operationally equivalent to the attitudes and practices involved in the transport side. BP was made to suffer the consequences, and there is no reason that the transport side should be treated any differently.
Those costs are already there in one form or another, but sometimes not at all obvious. They should be shifted so that they are both transparent and properly underwritten by the providers and users of the product involved.
It is issues in the state of Nebraska and it's courts which are the current cause for a delay in the decision making process.
I purposely avoided submitting on this topic because I anticipated it would be both a highly explosively and emotionally charged debate. I was on-target in that regard.
For the record, I have favored and continue to favor the proposed pipeline work. I quoted Richard Branson in a recent post “Screw it. Let’s do it”. There have been more than sufficient studies to identify the risk/reward tradeoffs. Let’s just get the men to work and the oil to flowing. Several of the MFOers (Scott especially) have advanced the favorable arguments much more definitively than I can.
It has become an unhealthy habit of Old Joe to reference earlier exchanges that he instigated and I responded to when pushed. His criticisms of my investment focused postings were always language and style related and never, never about the substance of the investment assessments. That’s a fair summary of our history that he has acknowledged recently.
I only enter this fray now because Old Joe once again used an ancient controversy as a mechanism to incompletely misrepresent my supposed thinking on this matter. I certainly incorporated the size of any oil spill in my thinking. He continues to portray my positions on all subjects to be a one-dimensional mathematical assessment. Investing and other hard decisions are never simple arithmetic and equations.
It is true that I do advocate collecting relevant data and completing a statistical analysis as one part of any assessment. But my total evaluation never stops with that statistical analysis. It is but one factor in a much more complex process that always includes behavioral aspects.
Denials notwithstanding, I need not have accessed this exchange to project that both Old Joe and Mark are opposed to the pipeline project. They are true, committed environmentalists. I suspect we are all more or less in that same camp. However, I do believe that both Old Joe and Mark are nearer to one end of that spectrum than most of us. In the past they have described themselves as “tree-huggers”.
That’s perfectly understandable; however, my level of enthusiasm just don’t go quite that far. I respect but do not agree with their stance on the pipeline project.
A dispassionate, reasoned debate over the pipeline is welcomed; ad hominem name-tagging is not necessary. It is often the defensive default option when a heated argument is heading South.
Otherwise this is a grand discussion. I’m impressed by the overall quality of the posts. Also, the subject matter has recorded an impressive statistical reply quotient; 24 submittals with only about 115 viewings is a remarkable reply ratio. That's a measure of the intensity of the interest.
Best Wishes.
"Unhealthy" because you in your sole wisdom have determined it to be so? While it is true that I have not infrequently agreed with certain of his positions, this statement is "fair" only If we fail to include my many challenges to the basic reliability of academic financial modeling frequently used as foundations for MJG commentary. Please note the typical subtle attempt to derogate my position by arbitrarily defining a matter of months as "ancient". Please note the lack of context and citation for this statement. Since my "stance" on this project has been summarized above and need not be repeated, MJG may "respect but not agree", but remarkably fails to suggest what his criteria (if any) for safe transport might be. By default then, he supports the "business as usual" scenario, with no additional safety requirements necessary. He may believe this to be acceptable: I certainly do not. Yes, it's always convenient to be immune from someone quoting you. Note however from MJG's commentary that he obviously does not feel that this restriction should apply to him. Again note the typical subtle attempt to derogate some of the posts as less than "quality".
cman recently made a brave if futile attempt to dissect MJG's "style" in a lengthy and quite devastating analysis. Of course since that was a week or so ago it also qualifies as "ancient history" and is therefore irrelevant. It is interesting to note that I am anything but alone in failing to appreciate the sanctimonious, smug, and frequently misleading qualities of this particular "style".
"The risk of derailment and other safety issues associated with shipping crude led CP to consider getting entirely out of the business of shipping crude by rail about a year ago, he said.
The company’s board discussed ending transporting oil and other hazardous material, such as chlorine and ammonia, through communities in the U.S. and Canada, he said. The board decided to continue moving the products as it believed it would do a safer job of transporting the materials than other alternatives, in particular trucking.
“All things in, someone’s going to do it, [so] we will,” Mr. Harrison said in an interview with The Wall Street Journal after the company’s annual general meeting in Calgary."
http://on.wsj.com/1fxGSEC
I do think that this has been a good discussion so far w/o the alluded to name-tagging ad hominem or otherwise. However, I also think you are attempting to distort both my position and comments by categorizing me as a committed environmentalist and a "tree-hugger" and therefore as one with a hidden objective rendering moot said positions and comments. I actually have a substantial financial incentive for seeing this resource used as two of my heaviest positions are in companies that stand to benefit from doing so. Nice try but strike one.
Committed environmentalist - guilty! Tree-hugger - guilty! But lets put that in some context shall we. I have spent the better part of my life in the woods and natural wonders of this country and owe my livelihood as a carpenter and wood-worker to the forests of this nation. I have grown them, doctored them, studied them, cut them and used them pretty much all my days and like a good servant of the earth I respect and give thanks for where they come from. Every time I reach for the Charmin I thank a tree and the earth that nourished her. However, I emphatically deny your allegations of my position on this pipeline matter as having anything to do with my environmental bent other than careful consideration of the possible ecological damage to sensitive areas which I stated right from the start of this discussion. Strike two.
For a little more background on my stance I'll refer you to this interview/viewpoint in a recent StarTribune article. You will note that 40 years after the fact that the effects are still evident and the oil companies fail to deliver on their promises.
http://www.startribune.com/business/256628821.html
Moving on. Really! Richard Branson is your choice for expert opinion and/or expertise in this matter!? What possibly does he know about crude oil pipelines pray tell. What does he have to say about all of the lives, property destruction, and decimation of small town serenity that has been witnessed in areas where fracking and the oil boom are currently taking place? What about all the waste manifested on the environment there and of the natural resource itself? Well Kate Upton says "no" so thats who I'm going with. Strike three.