“Scandals” Put the U.S. On Hold

The Benghazi cover-up allegations, the Internal Revenue Service targeting right-wing organizations, the Justice Department’s secret snooping of Associated Press phone records — the scandals bring the certainty that the government will grind to a halt. They have entirely changed the subject for months to come and will neatly segue into preoccupation with the mid-term elections. After that our now two-year process of choosing a president will begin. While Democrats cringe in despair,
Curiously detached and unaware
Republicans have won a trifecta of distractions to guarantee that Obama’s agenda — whatever that may be — will founder and nothing will be done to resolve the nation’s systemic problems for another three-and-a-half years.

Yes, the deaths of Americans in Benghazi most certainly warranted thorough investigation. Yes, The IRS selectively ferreting out only conservative non-profit applicants to stall or prevent granting them tax exempt status is a scandal and an outrage. Yes, heads should roll for Justice spying on the press and inhibiting press freedom, a continuation of the Obama administration’s sorry record of prosecuting those who probe his secret government.

But politicians and politics have turned these important matters into a circus, distorting them for political gain. Do we need five committees in the House of Representatives vying for publicity by churning the heavily plowed ground of Benghazi? One count has it that half the members of the House are tied up in these committees. Each member waits for the spotlight to come his or her way, their chance to make statements posing as questions while staffers alert their districts’ television nightly news stations. We taxpayers are paying their salaries for all this self-promotion.

Benghazi

That the administration performed cosmetic surgery on the Benghazi “talking points”, sensitive to the risks for each branch, gives Republicans a legitimate claim of cover-up. The e-mails that could have been released long ago show how the State Department and CIA removed references to extremist threats to keep the truth from the American public. Add to that Thomas Pickering, co-chair with Admiral Mike Mullen of the Accountability Review Board that was assigned to review Benghazi, saying they did not think it necessary to question Hillary Clinton or even her two closest aides because they felt mistakes were made at lower levels. He lamely deemed it sufficient that “we had questioned people who had attended meetings with her”, which fed into the Republican narrative that the former Secretary of State had been shielded from accountability for what she was indeed responsible for: the indifferent attention to the security of our embassies and consulates in the danger zones of the world.

Fixing that has not been the concern of the Congressional committees, either. It was a bigger show to obsess over why neither the tiny special forces team in Tripoli nor fighter jets at Aviano were dispatched, long after it was established that neither could have reached Benghazi in time or made a difference.

And no one seems to ask the State Department why Ambassador Stevens chose to go to the most hazardous end of Libya, awash with weapons where al Qaeda has gained a foothold, was allowed to waive extra security at a loosely guarded consulate, and went on the anniversary of 9/11 just when the Arab world was incensed over some half-wit’s anti-Islam video on YouTube.

Republicans are obviously using Benghazi to lay the groundwork to undermine Hillary Clinton’s assumed run for the presidency in 2016. We will see Benghazi over and over in attack ads as the elections near. Karl Rove’s Super PAC, American Crossroads, is already out with an ad blaming her. Representative Steve King (R-Ia) tells us, “If you link Watergate and Iran-Contra together and multiply it times maybe 10 or so, you’re going to get in the zone where Benghazi is”. James Inhofe (R-Ok) concurs: “Of all the great cover-ups in history — the Pentagon papers, Iran-Contra, Watergate”, Benghazi “is going to go down as most egregious cover-up in American history”.

Really? 25 officials went to jail over Watergate, and President Nixon was forced to resign. Of course Inhofe suggests that President Obama could be impeached.

This hyperventilating is rank dishonesty for crude political advantage. Fox News, talk radio and bloggers have been delivering that message for eight months to good effect. The outfit Public Policy Poling found that 41% of Republicans think Benghazi is the “biggest political scandal in American history”. Never mind that Americans don’t know their own history and, said the poll, half of them could not find Benghazi on a map.

IRS thumb on the scales

Benghazi was screw-ups and cover-ups. The truer scandal is the IRS exercising political prejudice. There was valid concern leading up to this past election that groups were cheating to be awarded non-profit and therefore tax-free status by claiming only to be involved in “social welfare” activity, as the law requires, while in fact engaging in political issue advertising. Testing those claims was the IRS’s job. But after it was revealed that the IRS targeted only right wing groups, using keywords like “tea party” to find them in its haystack, and without the balance of challenging left-wing groups in equal measure — that can rightly be called scandalous.

And they went beyond, looking for groups that “criticized the government and sought to educate Americans about the U.S. Constitution”, reported the Washington Post.

This is how trust in government is destroyed. We all deal with the IRS and we are therefore left to wonder whether the government, which now listens in on everything we do, is choosing those who criticize the administration for retaliation by its auditing weapon.

So, no question that this corrupting of the IRS should be thoroughly investigated. But here again there are already three overlapping Congressional committees that want to go before the cameras to wow the folks back home. And we have George Will beginning a column by already reciting from the articles of impeachment against Richard Nixon — hint, hint — this despite the lack (so far) of any connection between Obama and the Cincinnati IRS malefactors. Or is it now grounds for impeachment if the President doesn’t know about everything in this enormous government, even in agencies such as the IRS where he is not supposed to meddle? For George Will the answer is apparently “yes”. He finds “amazingly convenient [Obama’s] failure to superintend the excesses of some executive branch employees beyond the Allegheny Mountains”.

Much will trickle out from the affected non-profits, many of which were stalled in their application by letters from the IRS with dozens of questions betraying bias, such as one asking a group “to submit a letter…saying it would not protest Planned Parenthood”, as reported by The Weekly Standard. We can expect this story to go on and on.

How to head it off? Appoint an independent counsel. Every administration should have one. We had Ken Starr for Clinton’s, Patrick Fitzgerald for Bush’s. That’s should strike fear enough in this administration. But only if the deal is (a) shut down all Congressional committees; they would collide with the counsel and (b) restrict the counsel to the IRS matter alone, so we do not give birth to another Ken Starr, who went from looking for foul play in the death of deputy White House counsel Vince Foster, to the fired White House travel agents, to Clinton’s Whitewater real estate investments, to a sexual harassment suit by one Paula Jones, and to the affair with Monica Lewinsky — searching for whatever could be found to get that president impeached.

AP phone records

The First Amendment forbids laws “abridging the freedom of speech, or of the press”. That the Justice Department secretly snooped on the phone traffic of 20 phone lines of the Associated Press and its reporters constitutes just that. It abridges by preventing the press from investigating the secrets of government by tipping off sources that the government is watching. Sources go silent. It abridges by making members of the press wary, prone to second thoughts about the consequences of aggressive reporting (they have families) if they believe the government is monitoring their activity. Are news gathering organizations other than the AP wondering whether Justice is tracking them as well? This is how we someday arrive at a point where we read and hear little more than what the government wants us to know.

Gary Pruitt, the president and chief executive of the AP, called the Justice Department’s misconduct “a massive and unprecedented intrusion” into its news gathering activities, writing the following to Attorney General Eric Holder:

“These records potentially reveal communications with confidential sources across all of the news gathering activities undertaken by The AP during a two-month period, provide a road map to A.P.’s news gathering operations, and disclose information about A.P.’s activities and operations that the government has no conceivable right to know.”

Holder would not even reveal why his department purloined the phone records. It is about one of “the top two or three most serious leaks that I’ve ever seen” is all he would say. It is presumed to be an AP article of May 7, 2012 on the foiling of an al Qaeda plot to bomb a U.S. airliner. A search at AP yielded no results, but an article describing the plot and referring to the AP story is here. CEO Pruitt said that the AP had held up the story for several days “until the government assured us that the national security concerns had passed” and says the White House was about to go public with the story. Why therefore is this a leak. Moreover, CIA Director John Brennan says the plot posed no threat to Americans.

A year ago we wrote an article titled “Obama Has a Problem With the First Amendment“, recounting that his administration’s “attempts to silence federal employees and prosecute them under the Espionage Act have exceeded every administration in history”. Justice’s brazen act takes this a step further.

There is a process for approaching the press: an open request for information followed by arguing for it in court if a request is refused. Justice followed no such protocol. It just grabbed what it wanted in secret. Charged with upholding the Constitution of the United States, it has violated the Constitution’s First Amendment. Michael Steele, the spokesman for House Speaker John Boehner, said, “The First Amendment is first for a reason. If the Obama Administration is going after reporters’ phone records, they better have a damned good explanation.” There is no damned good explanation. Eric Holder should be fired.

Just How Dirty Is Canada’s Oil?

Canada’s Alberta Province tar sands are a viscous bitumen, described as peanut-butter thick, that releases more carbon dioxide than other forms of oil. Just how much more is debated. We’ll get to that.

The first strike against the oil is that to get at the sand requires felling the natural carbon reservoir of the original boreal forests. The doubling to 1.8 million barrels of tar sands production daily that is projected by Canada’s environmental ministry over the coming decade leads to cutting down some 740,000 acres of trees that will release their carbon into the atmosphere.

two recovery processes

Bitumen near the surface is strip mined. The deeper bitumen is drilled for. Strip-mining uses the world’s largest dump trucks to carry the sludge to nearby separation plants, where the tar sand is crushed and about 3 to 4 gallons, or about 11.5 to 15 liters, of water are used for every gallon of oil produced to separate the bitumen from the sand. It is, however, a region well endowed by lakes and rivers.

Natural gas is used to cook the strip-mined bitumen to release its oil. In drilling, a great deal more natural gas is burned to produce steam that is injected into a well under high pressure to melt its dense oil-bearing bitumen enough for it to flow to the surface.

In either process, liquid chemicals are added to convert the softened bitumen to “dilbit”, industry parlance for “diluted bitumen”, the consistency needed for the substance to flow through a pipeline.

A strip-mine in Alberta
Waste water — a residue of sand, water, contaminants and bitumen that slipped past the filters — is sent to “tailing ponds” that so far occupy 170 square kilometers (66 square miles) in the area. The mixture is toxic and leaks into the water table and streams, or so it is alleged by the Natural Resources Defense Council (NRDC), an environmental group, but that is denied by Canada. The companies try to frighten migrating birds away from the ponds with scarecrows and propane cannons. That did not work in one case where 1,600 migrating ducks landed on the ponds and died.

Can anything be done to reduce what is undeniably an ugly process. There are improved
experimental practices in the works. One pumps water into separate wells surrounding a production well. Electrodes are placed down-well and current heats the sand until the bitumen eventually softens enough to be pumped up and out. Another way is to burn bitumen down-well, which melts the bitumen around it. But it is an industry resistant to change, say the companies developing these techniques.

So, just how dirty?

Gauging by how much the greenhouse gas emissions of Canadian tar sands oil exceed other forms of oil depends on where along the life cycle of the oil one takes measurements. The extraction processes in isolation are what raise the most alarm. They triple the greenhouse gas emissions of regular drilling, according to the NRDC. At current production levels, the organization says these processes produce every day the greenhouse gas equivalent of 12 million cars, burning enough natural gas to heat six million homes.

The nonpartisan Congressional Research Service (CRS) undertook a survey of published studies and concluded that the “well-to-tank” stage of Canadian oil — that is, extraction up to the point just short of the oil being burned — results in 70% to 110% higher greenhouse gas emissions than for the weighted average of transportation fuels consumed in the United States.

But across the “life-cycle” of this oil, 70% to 80% of its emissions are produced by its burning at the end point and that shrinks the weight of the more elevated extraction emissions.
The industry therefore prefers take the measure of the entire “well-to-wheels” life cycle of the oil from the removal of bitumen from the ground to when it is finally burned in a furnace or vehicle. That produces a more favorable comparison to other forms of oil because it brings in factors that are likely to be the same for all types of oil. All have to be transported, for example, at an equal cost of carbon dioxide emissions.

IHS CERA, a prominent global industry consultancy based in Colorado, originally reported that, well-to-wheels, the Canadian oil is only 5% to 15% dirtier than the average crude oil consumed in the U.S. But it then found a way to revise that downward to only 6% by basing the comparison “on the actual composition of oil sands exports to the United States instead of an overall range for oil sands produced in Canada”.

Some measurements leave out the extraction cycle and focus only on what the U.S. would experience, on the grounds that the tar sands oil would be extracted anyway. But in its final usage the oil derived from tar sands is nevertheless more carbon intensive. The Congressional Research Service estimates that, depending on amounts imported, the Keystone XL pipeline would increase U.S. greenhouse gas emissions by 3.7 to 20.7 million metric tons annually. That’s the equivalent of “approximately 558,000 to 4,061,000 passenger vehicles” compared to more conventional oil.

Well-to-wheels, the CRS rates Canadian tar sands oil as 14% to 20% higher in greenhouse gas emissions compared to oil from other sources. They say that well-to-wheels emissions from Canadian oil sand crude are from 9% to 19% higher than Middle Eastern sour, 5% to 13% more emission-intensive than Mexican Maya, and 2% to 18% more intensive than various Venezuelan crudes.

Over to you, Mr. President.

Think You Can Take It To Court? Think Again

Does Social Security Pay Us More Than We Paid In?

The implicit “deal” of Social Security is that we are forced to set aside money to pay for our elderly years, but we eventually get the money back. At least, that’s how we the people view the transaction. There are now claims, though, that because of longevity, we are getting back more than we put in, and that is what threatens the viability of the system.

The fact is, the reverse is more likely to be true. Past recipients have certainly been getting back more than paid in — far more, the older the person. And not just because of collecting benefits for more years. The other reason is that the older the person, the lower the rate of tax they were paying into the system in their early working years. The combined rate of Society Security payroll taxes paid by an employer and someone now 80 was only 4% in 1955, for example. Today workers and employers pay 12.4%. The Urban Institute, which has studied the matter, says someone who retired in 1960 would have gotten back more than eight times what they paid in.

As for someone signing up for social Security today, first the question of how much over a lifetime a typical worker has paid into the system. Say that person began working at age 22 at an annual salary of $8,000 or so in 1968 dollars and experienced uniform pay increases (however unlikely) ever since, arriving at $75,000 a year on retirement. Given the rates for all those years, that person and his or her employer(s) will have paid $167,700 is Social Security payroll taxes (Medicare is a separate subject).

But those are nominal dollars. The government cannot relieve us of $1,000 decades ago and then expect to hand us $1,000 back. With each year’s contribution adjusted to today’s dollar, the value of that $167,700 parked with the government amounts to $260,400.

Then there’s the question of how much is owed us for the use of that money. Surely we should impute earnings to our money that the government has used for its own purposes all these years. Inflation has already been accounted for in the conversion we just made to 2013 dollars. Because interest rates already factor in inflation, most economists would say that an additional 2% a year is a reasonable minimum assumption of what our money should have earned. Compounding that 2% for those 45 years means the $260,400 account should show that the government owes our prototype taxpayer $401,500.

That’s quite a sum. And if we assume that this individual could have done better with the money — say 3% a year — then $509,700 would be the number.

How much that person then receives depends on other variables — whether he or she opts for benefits at ages ranging anywhere from 62 to 70, how long one lives, etc., so we must deal with averages.

What sample averages say is that, for the first time, certain circumstances will cause retirees to receive less than they paid in. The Urban Institute calculated the example of a two income couple, each earning an average of $44,600, who opted for Social Security at 65. They had paid in what, with inflation and reasonable interest added, should be valued today at $600,000. But they can expect to receive only $579,000 in return.

That’s something of a special case — benefits are reduced when both spouses receive benefits, different income levels produce different results — but the trend of getting less than paid in is sure to accelerate in coming years as new enrolees will be those who have been paying the higher 12.4% payroll tax rate — which reached that level in 1990 — for more years than those who went before.

The Flap Over Obama’s Proposed Benefits Cuts

He thought he was just being conciliatory: still hopeful that if he gives a little to placate the Republicans, maybe he’ll get a little back. So President Obama’s recent budget proposal put forth his hopes — spending on infrastructure, pre-school education, manufacturing research, and so on — but in return he put Medicare and Social Security into play. The cuts to Medicare didn’t cause a stir, because they were reduced payments to health providers, not beneficiaries. What has Democrats in an uproar was his willingness to cut Social Security benefits. “A shocking attack on seniors” said one, and others are asking “Is Obama really a progressive”?

Why is Social Security even a consideration in budget negotiations? Democrats insist it is independent, self-funding and adds nothing to the deficit. Well, yes, in an accounting sense, but the cash-basis government does have to come up with money to repay what for decades it has borrowed from the Social Security “trust fund”. Historically, Social Security has run a surplus. The money it has taken in as payroll taxes has exceeded benefit outlays. But the government has hoovered up that surplus every year, using it to pay for anything and everything. The trust fund year after year was given figurative IOUs.

The weight of demographic change finally reversed the flow in 2010 when the Social Security Administration began to run a deficit (aggravated for two years by the payroll tax cut almost in half to boost the economy), and now the the government has had to begin ponying up what it owes — some $37 billion to cover last year’s shortfall in Social Security receipts versus benefits.

a void on the horizon

Actuarial projections foresee the trust fund running on empty come 2033. That may seem a long way off, but if gradual steps are not taken now, time’s passage will build an ever steeper cliff to plummet from as that year draws nearer. Better modest changes now than drastic changes later. Obama is emulating Reagan and the 98th Congress, who made changes to fend off the bankruptcy of the trust fund that threatened then.

But Democrats, who fashion themselves as more reasonable and nuanced than their doctrinaire Republican counterparts, have shown themselves to be just as rigid. Instead of recognizing that something must be done, they are demanding that no changes be made. Hands off the seniors’ safety net.

nice try, but…

That said, Obama’s solution is a bad idea. Except for two recent years following the economic crisis, Social Security payouts are ratcheted upward every year by a cost-of-living adjustment in line with the Consumer Price Index (CPI). Obama wants to adopt a different calculus — referred to as the Chained CPI. Its premise is that if prices rise for an item , the cost-of-living adjustment should not rise in matching lockstep. People instead should be expected to buy a lower cost substitute — beans rather than beef, so to say. But as they age, seniors unavoidably spend ever more on healthcare, for which there are no cheaper substitutes. Worse, those healthcare costs rise faster than almost all other costs.

The purpose of switching to a different CPI is to lower the yearly percentage increase in monthly payments. And each year’s lower percentage is applied to each previous year’s benefit, such that the reductions compound. There are a couple of bonus “bumps” added back at ages 76 and 95 for those that make it that far, but those who retire at age 65 would see 3.7%, 6.5% and 9.2% less flowing into their bank accounts 10, 20 and 30 years down the line, according to the Social Security Administration. That can come to several thousand dollars of lost income.

Obama’s scheme harms seniors to a progressively greater degree the older and more vulnerable they get, and in years when Social Security may become the only income they have. Americans are finding it far more difficult to save for their late years, and already more than half of married couples and three quarters of single persons rely on Social Security for more than half their income. More troubling still, one quarter of marrieds and just over half of singles rely on Social Security for 90% or more of their income.

alternatives

Social Security has always been a transfer payment from the young to the old. But it is palatable as long as the young can reliably expect their late years to be covered in turn. However, demographics are working inexorably against that social contract. In 1950 America, there were 16 workers to support each senior, whose lifespan averaged only 68 years. But now, the increase in longevity to 78 years has led to a mere 3 workers supporting each retiree, and the swelling of the senior population group by the baby boom will reduce that number to 2 per retiree.

Add to that the suspect rise in persons qualifying for Social Security at any age owing to disability, a number that has risen much faster than the population and a subject we covered in this article.

What is sobering to realize is that Obama’s proposal to crimp the cost of living adjustment would fill only 20% of Social Security’s shortfall. Far more drastic measures are needed to fill the rest, a fact that the public and Congress refuse to face. So what should be done?

soak the rich!

The Social Security payroll tax of 12.4% (half paid by one’s employer, all paid by the self-employed) is currently applied to the first $113,700 of an individual’s earnings. Income beyond that point is taxed no further. Democrats say, why not remove the cap altogether? That boost in receipts would cover 88% of the shortfall, says the Social Security Administration.

If the cap were removed, the wealthy (along with their employers) would be asked to pay a whopping 12.4% of everything they earn. They alone would be asked to prop up the system to the benefit of everyone else. Where’s the fairness in that?

We would see a spate of maneuvers by high income earners to have themselves paid in new and imaginative ways that do not count as payroll so as to evade the payroll tax. Why, it might even set off class warfare within the ranks of the wealthy, pitting those suffering the tax against those who make their money by pathways other than payroll and pay no payroll taxes at all. Mitt Romney provided a striking example of the latter.

< delayed eligibility

One root of the problem is that people are living longer while still wanting to retire at the same age as before. That eligibility age is slowly being increased — it now stands at 66 in place of the 65 which has long obtained. But those not wanting to see benefits reduced by the chained CPI say why not extend the eligible age — to 70, for example? People are healthier in those early years. If benefits are to be trimmed, better then than when they are older and in declining health.

Moreover, income levels for all but the top percentiles have been flat across the most recent decades and have even dropped over the last ten years, with various seers telling us this is the “new normal” to which we had better adapt. The media is filled with suggestions that people need to work longer so that Social Security can start later.

But apart from how unpopularity of postponing the start of Social Security deposits hitting our bank accounts, this scheme also has its unfairness component. Bodies suffer wear and tear for those in physical jobs; a man or woman cannot be expected to still lift that bale all the way to age 70. What to do about that?

The disability provisions of Social Security don’t quite work for this group of workers. Inability by a certain age to perform physical labor is not necessarily disability. There’s a novel workaround that would allow for age 70 eligibility to be equitable for all. Workers in jobs classified as physically strenuous could pay a sharply reduced rate of Social Security payroll tax while working at such jobs. (Employers would continue to pay their 6.2% half.) Like everyone else, those workers would not be eligible for benefits until age 70, but all along, while working physically debilitating jobs, they will have been keeping more of their paychecks than the desk job neighbor down the street. It would be for them to stow away that money for when they have to quit working and wait until age 70 when Social Security kicks in.

end early eligibility?

If the government wants to beef up Social Security, instead of Obama’s plan to increasingly squeeze seniors the older they get, why doesn’t he instead propose doing away with the option to start receiving benefits at age 62? The Social Security Administration would say that they save money because the benefit payout is less all along for early adopters. Take the example of a person just turned 62 who is eligible for benefits of, say, $1,500 a month. For each year that person elects to wait, the monthly amount rises. That same person electing instead to start collecting at age 66 would receive about $2,000 a month. But across sixteen years the Administration will pay out more money cumulatively to the person who started early. Not until 2029 and age 78 does crossover occur, where the person who started at age 66 begins to receive more. The average life expectancy is now 78. Wouldn’t Social Security save money by ending early eligibility?

pay according to need?

How about means testing? Why should Social Security money be wasted on people who don’t need it, is the argument. First, we already are means tested to a degree, and at very low income levels. The Social Security tax we paid into the system is taxed all over again when it is returned to us, the amount varying by how much other income we earn. When people propose means testing, it is not clear whether they know this, given that software or services (using software) now compute virtually everyone’s taxes. Few venture into Form 1040 instructions to discover this.

And would means testing be based only on income? Discussions of mean testing often toss in words like “assets” and “savings”. Are its advocates suggesting that we all must report the market value of our house, CDs, bank balances, while and our mutual funds and brokerages mark to market our securities and report to the government? Everything laid bare?

Besides, means testing can be a trap. Social Security payments in the current year would be based on income of some prior year. What if that prior income was enough to shut off Social Security payments in the current year, and that other income plummets, leaving seniors with no income. One need look no further than the sudden disappearance of interest income caused by the Federal Reserve cutting interest rates to zero across the last couple of years.

so what’s the answer

Probably a little of everything mentioned above. Or rather, a lot of everything, because beginning in 2033 when the government has fully repaid what it has borrowed over the years and owes the “trust fund” nothing further, Social Security will not be able to meet 25% of its obligations. That’s a big hole to fill.

But every solution will be met with extreme hostility. We saw the reaction when in 2005 George W. Bush hoped to create what he called “the ownership society” in which Social Security would be privatized. We would instead deposit into private investment accounts to manage ourselves. As people caught on, Bush sampled that hostility. The 2008 economic crash showed how hazardous that program would be and it is no longer advanced as a prudent solution.

So apologies for probably wasting your time, because none of these solutions will be adopted. Congress will not dare to lead, fearing the voters’ wrath. Voters will demand that nothing change, refusing to face the uncompromising math. And the result can only be that we’ll build that cliff ever higher until Social Security arrives at the edge.

The government will simply be forced to pay the difference — no longer “entitled” to us as repayment of our payroll taxes borrowed over the years, but just as an expanding social welfare program. And that will have to be paid for by general tax increases — or with deficits, because tax increases, too, will be met with furor.

Crunch Time for Obama on Keystone Pipeline Decision

President Obama might be wishing he had ruled on the Keystone XL pipeline back in the fall of 2011 rather than postponing his decision until now. It has since ballooned into a major test of his presidency, with protests and arrests at the White House gates and a nation sharply divided between those heralding energy independence delivered by a deus ex Canada versus others sounding the tocsins to warn us of climate cataclysm from dirty oil.

Obama’s pointedly delaying his decision until after the election intimated that he favored the pipeline and was avoiding angering his environmentalist base with that decision. Those concerned about climate change were naively jubilant, reading the postponement as an indication that he would let the matter die. We thought the opposite, predicting on this page at the time that he intended to approve the pipeline, and there’s little reason to change that bet.

Now, a year and a half later, the State Department, involved because the pipeline crosses the national border, has given its approval. In March it issued its study that said the pipeline would not significantly damage the environment, much as it concluded in its original review even though the pipeline’s intended route then ran right over the largest water aquifer in the United States. Now that the pipeline’s path has been detoured around the aquifer, which provides 83% of Nebraska’s agricultural water and 78% of the that state’s public water supply, Governor Heineman has signed off. And in April the public comment period ended. So the matter sits on the President’s desk.

Obama has many times alluded to the necessity to confront climate change, from right after his election in 2008 to his second inaugural address in January in which he said, “We will respond to the threat of climate change, knowing that failure to do so would betray our children and future generations”. But fund-raising in Silicon Valley, he gave a hint of the difficulty he is having with this decision, saying to the gathering that environmental issues “are tough” and “You may be concerned about the temperature of the planet” and view the unconcern by others in a difficult economy as “shortsighted, [but] that’s what happens when you’re struggling to get by”.

refresher

The pipeline is a $7 billion project of TransCanada Corporation of Calgary that would transport some 700,000 barrels of oil daily across 1,711 miles from the tar sands of Alberta Province, through Montana and four Great Plains states, and down through Texas to refineries in Houston and Port Arthur on the the Gulf Coast. The Wall Street Journal claims that halting the project would cost the U.S. 20,000 jobs, echoing TransCanada’s claim, but the State Department says 6,000, a more persuasive number because the jobs are temporary and that is the number State estimates to be working at any one time.

The tar sands hold 175 billion barrels of recoverable oil. Only Saudi Arabia has more. The pipeline offers the U.S. the opportunity to replace an estimated 18% of the 8 million barrels we import daily — much of it from unstable and often hostile countries — with a reliable supply from the trusted country to our north.

borne back ceaselessly

It is the nature of the oil that ignited the controversy and has climate change activists anguished over backsliding. Both its extraction and its burning release higher emissions than other forms (see companion story in adjacent column). For those campaigning against the pipeline, the expediencies of the moment are hardly grounds for allowing a pipeline that will cause a quantum jump in carbon release, reversing hard won gains against climate change and “perpetuating our addiction to dirty fossil fuels, [by] moving to ever dirtier ones” in the words of NASA’s climate expert, James Hansen. He told Rolling Stone, “If we were to fully exploit this new oil source, and continue to burn our conventional oil, gas and coal supplies…twenty to 50% of the planet’s species would be driven to extinction. Civilization would be at risk”. In February he joined environmentalist Bill McKibben in a protest in front of the White House that led to the arrest of about 50 environmentalists, among them also Michael Brune, head of the Sierra Club. John Abraham, a mechanical engineer at the University of Saint Thomas in Minnesota, told Scientific American that, if we burn it all, Alberta’s tar sand oil will on its own raise global temperatures nearly by 0.4 of a degree centigrade.

inevitability

But America runs on oil and will continue to do so for a long time to come. Only 13% of our power comes from renewables — wind, solar and hydro — and most of that, still, from hydro. Environmentalists watching grudging progress against the rapidly changing climate (with the threshold of 400 parts per million of carbon dioxide in the atmosphere just recorded) fear that new and vast supplies of oil coming on the market will cause a drop in the price of oil in coming years that will make it impossible for renewable energy to compete and gain a foothold.

Pipeline advocates say that to think blocking the pipeline will spur green energy is a delusion. Their view is that if Obama nixes the pipeline, we will continue to import those millions of daily barrels from Mexico and Venezuela, and they also produce heavy oil that requires so much refining that it produces greenhouse gas emissions comparable to the tar sands. So what is there to gain by rebuffing Canada, our most important trading partner, especially remembering that Venezuela has twice threatened to cut off our supply. Their position is that a large supply of crude oil available by pipeline from a friendly neighbor is undeniably valuable for the energy security of the United States.

Added to that, President Obama must consider that halting the pipeline could cause a deep and lasting rift between Canada and the U.S., resulting in possible retaliation, such as Ottawa importing its military aircraft from elsewhere.

Worldwide demand for oil will reach 110 million barrels a day by 2035, the International Energy Agency projects, about 20% more than in 2009. So the argument is that Canada will exploit its reserves anyway. Having invested (U.S.) $100 billion in the tar sands over last 10 years, its industry is looking for security of demand, wherever that may be found. The industry already accounts for 75,000 jobs nationwide and Canada’s energy plan is to raise the current output of 3.2 million barrels a day to 6.2 million by 2030 with most of the increase coming from the sands.

undeterred

The State Department expects the oil to head south whether or not the pipeline is permitted. Alternate methods — truck, rail or barge — could deliver the oil to Texas with no border physically breached and therefore no permissions needed. State’s report calculated that 15 trains daily, each with 100 tank cars, could do the job. That paints a vivid picture of what our addiction to oil looks like. Each conveyance method has its own environmental impact, the State Department report points out — noise, traffic, air pollution and probability of spills — suggesting that if tar sands oil is inevitable, a pipeline has its advantages.

westward ho!

And then there is Canada’s Plan B. If the U.S. were to scrub the pipeline, Canada threatens to export its oil to China. Delegations sent to Beijing were no bluff, says Canada’s oil ministry. That plan would call for the far more arduous option of running a pipeline west to the coast of British Columbia. That entails crossing the Sierras, which would cost an estimated $5.5 billion, less than the pipeline, but and would take ten years. Once completed, some 220 tankers a year, reports The New York Times, would then ferry the oil out the twisting waterways from the inland town of Kitmat to the sea. That has British Columbians alarmed at the hazard of spills while seeing no benefits in return, and the plan is so far blocked by leaders of First Nation, aboriginal peoples in British Columbia who say they would block the pipeline from crossing their territories out of worry about spills and the threat to salmon runs.

Canada itself is not without disagreement. Two studies, one from the Royal Society of Canada and another commissioned by the federal government, claimed regulators had “not kept pace with rapid growth”, that Alberta’s environmental assessments had “serious deficiencies” well shy of “international best practice”. But conservative Prime Minister Stephen Harper, who withdrew Canada from the Kyoto Protocol, is a prime mover behind the tar sands expansion. That his power base is in Alberta raises concerns. An op-ed in the Times by a Canadian professor frets that Canada is becoming a petro state in which “capital and talent flow to the tar sands, while investments in manufacturing productivity and high technology elsewhere languish”.

And Canada’s oil companies “know there’s no hiding it’s a dirty business and the country’s fastest-growing source of greenhouse-gas emissions”, says a Bloomberg-Business Week article. They worry that its higher pollution content will cause their oil to be barred from foreign markets.

pipeline headlines

Dirty oil may have triggered the controversy, but the imbroglio has brought public attention to oil pipelines in general. Americans heretofore seem to have been unaware of their ubiquity. For example, an earlier TransCanada oil pipeline into the U.S. — narrower than Keystone XL but not small — elicited hardly a whisper of protest when constructed.

The U.S. has 2.5 million miles of pipeline. The map at left
shows a hairball in the Chicago region that doesn’t begin to compare with the tangle at the base of Texas where so much of the nation’s oil is refined.

Hardly noticed at the time, the media now often cites a 2010 spill into the Kalamazoo River in Marshall, Michigan. It was overshadowed by the BP oil spill in the Gulf. The spill of 819,000 gallons of diluted bitumen was caused by another Canadian pipeline, pumping the same Alberta extract that would flow through Keystone XL. It shut down the river for miles. The Canadian company, Enbridge, that owned the pipeline had to buy up 150 homes in an area that residents said was no longer livable.

In March a Chevron pipeline in Utah leaked more than 25,000 gallons, the third line break there in three years.

And this April in Mayflower, Arkansas, a 2-inch wide crack 22-feet long opened in an Exxon Mobil pipeline carrying close to four million gallons of heavy crude a day from oil sands in eastern Canada. Half a million gallons of oil mixed with water flowed even into the streets of the town, causing evacuation of 22 homes.

Between 2008 and 2012, U.S. pipelines spilled more than 3.1 million gallons of hazardous liquids on average each year, according to the nation’s pipeline regulator, part of the Transportation Department. Many of the pipelines are old — 65-years-old in the case of the pipeline running through Mayflower — and there is the question of whether the federal government has the capacity to monitor the safety of the vast American pipeline labyrinth.

returning to Obama’s desk

Speculation is that the President will still not face this rather defining action until late summer or early fall. Either way he will be lavished with praise by one faction and despised by the other. He is probably wishing there were some way to leave the decision to the next president.

The guess here is that Obama has ordered up a plan to balance the scales so that he can approve the pipeline, but needs more time, because that peace offering to the climate and environment crowd will have to be very concrete. Taking advantage of the Supreme Court’s ruling that carbon dioxide is a pollutant that can be regulated under the Clean Air Act, the Environmental Protection Agency has already been developing just such a regulatory package for the power industry. A recent Times article has the White House and State Department insisting that the “pipeline ruling will be made strictly on whether [it] is in the economic, environmental and security interests of the United States” and “is not a fundamental piece of the nation’s climate policy nor is it a political bargaining chip to trade for other measures”.

Nevertheless, on some bright midweek day in the fall, we may watch the President announce in the Rose Garden his ground-breaking step to force coal-burning plants finally to do what they have been avoiding for decades — and a day or two following we may then hear about an announcement made late on that same week’s Friday, too late for the news cycle, that, oh, by the way, the pipeline has been approved.

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