Based on the level of vitriolic hyperbola generated by the Keystone XL pipeline, any hope of rational discussion seems to have been subsumed by lobbyists peddling influence, media sound bites and campaign rhetoric.
There is a better way to reach a decision on Keystone. One that applies bedrock conservative financial principles in a manner all interest groups — Democrats and Republicans, conservatives and liberals, teapartiers and occupiers — can agree on.
Require TransCanada to publish its business plan for the project.
The benefits to decision makers are tremendous.
For example: In promoting Keystone XL, John Boehner originally claimed 20,000 new jobs would be created. Later, his number rose to 50,000. Eric Cantor uses the phrase “tens of thousands.” John Huntsman claimed 100,000. The implication in all the statements is that these will be permanent, middleclass jobs and the jobholders will be Americans.
In a business plan, employees are liabilities and reduce profits, so TransCanada would most likely stick with its published claim that no more than 20,000 man-years of work would be required to complete the entire project. That’s man-years of work, not permanent jobs, and includes work performed by existing TransCanada employees. The business plan would also acknowledge that most new jobs would be short-term construction work, much of it unskilled labor at low wages. And there would be fewer than 6500 of those.
Another example: Existing pipelines and refineries in the Midwest are underutilized and have capacity to handle all the oil Canada can produce at least through 2030. Keystone XL would divert oil from these pipelines, increasing the cost of shipping oil through them. The Canadian government has openly expressed concern that Canada exports 97 percent of its energy to the U.S., and has urged Canadian oil companies to “diversify.” Indeed, Keystone XL became a priority for TransCanada only after its proposal to build a pipeline across the Canadian Rockies to the coast of British Columbia was tabled due to environmental concerns.
In the world of lobbyists, ad campaigns and political bloviation, these facts have been buried beneath the rhetoric of U.S. energy independence.
None of these facts could be ignored in a legitimate business plan, where we would expect TC to show how it could promise $3.9 billion in additional income by allowing artificial shortages to drive the price of gasoline higher in the Midwest. The plan would also address “diversification,” most likely by utilizing refineries in free trade zones, meaning the Canadian petroleum could be refined in Texas and then loaded directly onto tankers headed for foreign ports. As an added benefit, because the oil would technically not be processed or sold in the U.S., there would be no U.S. taxes to pay.
Similarly, a business plan would specify the real value of use of eminent domain to acquire right-of-way. It would include a detailed risk assessment and plan for limiting liability. The extent to which TC expects the U.S. government to hold the corporation harmless and assume liability would be underscored. Because a business plan requires that circumstances be reduced to dollars and cents, there would be no need to speculate on how TC has calculated environmental risks, planned to limit the danger of an environmental catastrophe, or planned for mitigation of a worst-case scenario.
Most important, there is no downside to requiring TransCanada to produce its business plan. The data already exists; it was used to justify the project to the TransCanada Corporate Board and much of it has been presented to Canadian regulators. Because TransCanada is, in essence, asking for a monopoly on transport of Canadian oil to the Gulf of Mexico, there are no competitors to worry about. Because pipelines are not new technology, little proprietary information is involved. Patented processes are already a matter of public record. If there are legitimate trade secrets in the plan, they can be confidentially examined by the Congressional Budget Office and redacted from public releases of information.
If the plan is sound — if the facts support the request — Congress and the President can approve it without fear of political fallout.
Given that $42 million has already been spent to win Congressional support for Keystone XL, it is unlikely our legislators will voluntarily change their approach to reviewing corporate requests for favors. That leaves it to us to contact our legislators and demand a saner approach.
Just show us the business plan and make decisions based on facts.
Richard A. Wueste is CEO of Colorado Consulting Associates, based in rural Colorado.
EDITOR’S NOTE: This is an online-only column and has not been edited.
