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Yesterday the Obama administration denied TransCanada’s application for the Keystone XL pipeline. The project was to carry oil from Canada’s tar sands to the Gulf Coast. The proposed route would have been an economic boost but raised environmental concerns, especially in Nebraska’s Sandhills. The White House claims a deadline imposed by Republicans in Congress precluded adequate review, but the project may still go forward: TransCanada is likely to reapply with a revised proposed route. Please join us to discuss the Keystone XL pipeline, jobs and the environment
- Sarah Ladislaw senior fellow, Energy and National Security Program, Center for Strategic and International Studies
- David Mallino Laborers International Union of North America
- Bill McKibben founder,350.org scholar in residence,Middlebury College.
- Matthew Koch vice president, Oil Sands and Arctic Issues at the U.S. Chamber of Commerce’s Institute for 21st Century Energy
- Steven Mufson energy correspondent, the Washington Post
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Yesterday, the White House turned down TransCanada's application for the Keystone XL pipeline. Republicans had imposed a Feb. 21 deadline for the decision, a deadline, the administration claimed, did not allow for sufficient environmental review. Joining me to talk about the decision: Steven Mufson of The Washington Post, Matthew Koch of the U.S. Chamber of Commerce and Sarah Ladislaw of the Center for Strategic and International Studies.
MS. DIANE REHMJoining us by phone from Ripton, Vt., Bill McKibben, he's scholar in residence at Middlebury College. I know many of you have strong feelings about the decision. I'll look forward to hearing from you throughout the hour. And good morning to all of you.
MR. STEVEN MUFSONGood morning, Diane.
MR. MATTHEW KOCHGood morning.
MS. SARAH LADISLAWGood morning.
MR. BILL MCKIBBENGood morning.
REHMAnd to you, Steven Mufson, President Obama said he was not going to bow to political pressure. He also said this was not a judgment on the merits. How did he make his decision?
MUFSONWell, I think he made this decision by saying that there wasn't enough time to go through all the steps that the State Department was supposed to go through in evaluating the pipeline. Of course, proponents say they've been thinking about this for three years already, but still the State Department said it didn't have enough time and particularly for a new route through Nebraska, which TransCanada has yet to submit to get an exact plan for.
REHMExplain why the State Department was the one making the decision here.
MUFSONState is making this decision because the pipeline crosses an international border, and that's -- and that put it in states' hands. And State's done this before, but it's not its particular specialty. But it is its responsibility.
REHMSteven Mufson, he is energy correspondent for The Washington Post. Turning to you, Sarah Ladislaw, explain the purpose of the pipeline and the route that was actually proposed.
LADISLAWIt was a 1,700 mile-long pipeline that essentially connects the oil sands, which is a vast sort of oil resource in Alberta, Canada. They want to bring it down into the mid-continent where there is exact -- there is existing infrastructure, a pipeline infrastructure, but then also connect from Cushing, Okla. down into Texas. And so the pipeline actually has sort of a dual purpose. The first is to sort of de-bottleneck the mid-continent where we have a lot of refining capacity, but we have a lot of excess crude oil capacity that has, you know, persisted there for the last couple of years.
LADISLAWSo the lower part of that pipeline is actually designed to bring some of that excess oil capacity in the mid-continent down to the Gulf Coast and move it out through those markets and get it down to those refineries. But it's also to bring increasing volumes of Canadian oil sands into the United States and bring them down to the Gulf Coast where refineries are actually well-suited to be able to produce that crude into product.
REHMSarah Ladislaw of the Center for Strategic and International Studies. Matthew Koch, why did Republicans impose a Feb. 21 deadline on this?
KOCHWell, from the comments that they've made and from what the debate during -- when the legislation was passed as part of the payroll extension, after that went through right before Christmas, you know, they made it clear that they were unhappy with the progress being made by the administration on permitting this project. And as Steven mentioned, you know, there has been a -- over in a three-year period of review and some extensive environmental review.
KOCHAnd, you know, they just felt that there was -- it had been a long enough time, and they wanted to see the project permitted and give a more certainty to the industry.
REHMMatthew Koch of the U.S. Chamber of Commerce. And turning to you, Bill McKibben, I know you've been very involved with this issue. Why did the Obama administration feel that there had to be further studies on this when three years have gone by?
MCKIBBENWell, in the first place, three years really haven't gone by as everybody's, by now -- Steven, his colleagues at The Post and others have made clear, and there was at best a cursory beginning sort of review by the State Department. When people really started to focus on this this year, all kinds of other issues came up that they didn't even consider, and the most important, of course , came from the federal government's chief climatologist Jim Hansen in NASA.
MCKIBBENWhat he said was that if we heavily tapped those Canadian tar sands, of which this Keystone pipeline is one beginning way of heavily tapping them, it would be essentially game over for the climate. That's why this turned into a huge political uproar. It's why there were more public comments on this energy project than any in American history, and it's why it's so -- scared the big oil industry. Look, I'm no knee-jerk fan of partisan, of the president. I was arrested outside his house in August.
MCKIBBENBut he deserves real credit for what he did yesterday. He didn't just do the right thing. He did the brave thing in the face of bold political treats. A week ago, the head of the American Petroleum Institute said there would be, "huge political consequences" if he didn't back down. And, of course, you know, the man has the money to carry out those kind of threats. In the face of all that, Barack Obama stood up. And if the knock on him has been that he's too, you know -- rolls over too easily. He's too kind.
MCKIBBENHe's always trying to make friends. Not the case here. This is really the high watermark of his relationship with the environmental community. And it's one of the very few days -- having written the first book about global warming 23 years ago, it's one of the very few days in those 20 years when scientists were left smiling and big oil left scowling. I've been hearing from climate scientists for the last 24 hours, and they're -- you know, they kept saying the same thing.
MCKIBBENOur faith in this process is a little restored in the idea that government might someday come to grips with the biggest problem that we've ever faced.
REHMBill McKibben, he's scholar in residence at Middlebury College. Do join us, 800-433-8850. Send us your email to email@example.com. Join us on Facebook or Twitter. Sarah, back to you, give us a sense of the current pipeline organization throughout this country, the landscape.
LADISLAWWell, I think that it's -- you know, it's an interesting time to be asking that question 'cause not only is this an issue of whether or not we try and bring in more Canadian oil sands, a resource that is oftentimes thought of as something within the purview of the U.S. but is actually Canadian, which the Canadians would like to remind us from time to time. But we also have a great deal of new, unconventional oil and gas production in this country that, you know, is actually coming on quite quickly.
LADISLAWAnd so there will be a time over the next several years where the production of these new resources, that are actually quite commercial to produce, require and will require not only refiguring of some of the pipeline infrastructure in this country that has been slated to produce for -- and transport product and crude oil in a certain direction, mostly into the Midwest to be refined there and then sort of shipped out to other regions, but to sort of reconfigure how that infrastructure exists, whether or not, you know, the heavy oil refineries are still going to exist in the Gulf of Mexico, whereas the light, you know, lighter refineries will exist in other regions of the country.
LADISLAWSo there's actually going to be a fair amount of change and quite dynamic change that goes on within sort of the North American oil, both supply-distribution infrastructure and refinery infrastructure. And I think we're only starting to really understand how that's going to come -- how that's going to sort of play out over the next several years because this new sort of boom in U.S. unconventional resources is so new.
REHMAnd, Steven Mufson, how does this pipeline present risks that are different from those already present?
MUFSONWell, I think the main issue is that this pipeline is seen by its opponents as promoting the development of more production of the oil sands area in Canada's Alberta province. And these oil sands -- you know, extracting oil from them is really a little bit more like strip mining than it is like drilling for oil. They're -- you're melting down these sands and getting oil out of it. And it's very energy intensive.
MUFSONAnd that's the key part of this whole issue, is that getting oil out of that area is more energy intensive and contributes more greenhouses gases that could further climate change. And that's what makes this different.
REHMMatthew Koch, how do you see it?
KOCHWell, you know, certainly, it's a resource that is massive. And notice the second largest reserves and just north to the border, and as we look at it, you know, we hope that we can -- that the resource can be developed, and it's being developed in a much more environmentally-friendly manner. As technology has gotten better and as more investments gone in place up in Canada, about 20 percent of it is going to be recovered by mining.
KOCHAbout 80 percent is going to be recovered by a newer method that leaves a much smaller footprint called in situ that is a smaller footprint for the place where the mining is done and -- not the mining, but the drilling is done that's much similar to conventional drilling for oil. But, in fact, the other benefit we have is how we're going to be able to import this oil from a country that has our best interest in mind, that we've been friendly with for many years who is a good strong ally and also gives us an opportunity to have a stable source of energy going forward.
KOCHAnd in the future as we look to alternatives and other sorts of energy, it creates -- helps us create that bridge that we're looking for. You know, we're going to need 21 percent more energy in this country, as our Energy Information Agency has said, by 2025. And we're going to need to get those resources from somewhere. Even the State Department acknowledged that, while this pipeline -- it has some low risk.
KOCHIt's still less risky than importing oil from other parts in the country, over the world, I should say. And so, you know, we're looking at this as an opportunity to bring in energy. We're looking at this as an opportunity to create jobs. We have workers in this country that are looking for jobs. And this is certainly a tremendous opportunity for job benefits, so...
REHMMatthew Koch, he's vice president of Oil Sands and Arctic Issues at the U.S. Chamber of Commerce's Institute for 21st Century Energy. We'll take a short break. We'll talk further, take your calls and emails. Stay with us.
REHMAnd in this hour, we're talking about the president's denial of TransCanada's application for the Keystone pipeline. Here in the studio: Steven Mufson of The Washington Post, Matthew Koch of the U.S. Chamber of Commerce, Sarah Ladislaw of the Center for Strategic and International Studies and, joining us by phone, Bill McKibben, scholar in residence at Middlebury College.
REHMHere is our first email from Marilyn in Arvada, Colo., "Please describe the Ogallala Aquifer. The D.C. Press seems to portray it as some obscure, little spot in Nebraska. In reality, the aquifer is the largest in North America, covering nearly all of Nebraska, half of Kansas, all the Texas Panhandle, Eastern New Mexico, Colorado and Wyoming and southern South Dakota. Finding a second alternate route around this aquifer is not a minor issue." Bill McKibben.
MCKIBBENHey, people across the pipeline route rallied in opposition to this thing. The strongest opposition came from Nebraska, where the Republican governor and the Republican senator asked that the thing be rerouted and that the permit be denied in the fall. TransCanada has said it's going to try to reroute it around one area, the Sand Hills of Nebraska, but as your emailer points out, that leaves an awful lot of aquifer still to cross. And there's plenty of reason -- I mean, forget the climate impacts and things for a moment -- plenty of reason to be worry about this.
MCKIBBENThe precursor pipeline, Keystone 1, managed to leak a dozen times in its first year. We had two big spills last year, one in the Yellowstone River and one in Kalamazoo River. And these aren't cleaned up yet. This is, you know -- the point is that, for a huge variety of reasons, the time has come to stop trying to further our addiction to fossil fuel and find, you know, some new pusher for it. The time has come to end that addiction and really begin to take serious steps to go in a new path. We're not doing that so far.
MCKIBBENYou know, the head of the Chamber of Commerce, Thomas Donahue, gave a speech last week in which he listed the huge volumes of natural gas and coal and oil that we should burn in this continent. I called the folks at NASA that -- Dan asked them to add it up, and they said if you added it all up, all the things that he wants to burn just in America, it would raise the carbon concentration in the atmosphere from about 400 parts per million now to about 650. This is just exemplary of the radicalism of big oil.
MCKIBBENAnd it's those of us who are, you know, in Nebraska and all around the rest of the country who are kind of the leftists, the odd conservatives in this fight, trying to hold onto a planet and a continent that looks something like the one we were born on to.
REHMAll right. And one element that proponents of the Keystone pipeline have pointed to is the number of jobs. I've heard anywhere from 2,500 to 50,000, and most temporary jobs. What are the facts, Steve Mufson?
MUFSONWell, the -- what TransCanada, the company that wants to build the pipeline, says is that this would create 20,000 job years -- 13,000 for direct construction jobs and the rest for supply chain jobs. But what they mean by job years is that if the project takes two years, then that's two job years. So, in fact, we're really talking about 6,500 construction jobs, which, of course, is -- are still -- is still a real number of jobs, but not just as many as some of the proponents make it out to be.
MUFSONIn addition, TransCanada has already spent much of the money, if not most of the money, that it plans to spend for parts, and so the additional jobs in the future that would go to the supply chain is probably not so great.
REHMSarah, what about those jobs?
LADISLAWYeah, I tend to be on the side of thinking that a lot of these jobs numbers are in the category of voodoo science. And when you start trying to dig down into what a job year is versus a job and what could actually constitute an American job versus something that would just be economic growth for some company that, you know, may be here or may be there, it gets very complicated very fast.
LADISLAWAnd so as sort of a, I guess, an energy purist, I think that there's lots of reasons to look at projects like this and the virtue of the projects like this, but then also, as Bill had, you know, rightly mentioned, some of the risks of projects like this 'cause it has both. And I understand that the name of the game right not is quite political, and it has to do with jobs. But I think if you wanted to build this pipeline based on the jobs alone, it's probably a bit of a hard sell.
LADISLAWAnd, you know, I feel like once the American public sees numbers throwing around, that, you know, variety that you talked about and with all those qualifiers, it begins to mean very little, very fast.
REHMAnd joining us now from his office here in D.C., David Mallino. He is with Laborers International Union of North America. Good morning to you, David.
MR. DAVID MALLINOGood morning.
REHMI know your members are big supporters of the pipeline. Tell us why.
MALLINOWell, first of all, thank you for having me on today.
MALLINOI absolutely appreciate it. We are big supporters of the pipeline, and we're very disappointed in the White House's decision on this. And I know that the jobs issue has been one of the most contested issues as a part of this debate. But the fact of the matter is is the construction sector has been hit particularly hard by this recession.
MALLINOAnd we -- unemployment levels in the construction sector, in particular, still far outpace the national unemployment averages or unemployment numbers. And creating jobs for construction workers is of paramount importance to the laborers' union.
REHMI can certainly understand that. However, considering the wide range of numbers we've heard, not only here this morning but throughout this debate, aren't you somewhat concerned about the reality of those jobs out there?
MALLINOWell, first of all, for a construction worker who's otherwise sitting idle, any job is a good a job, and these will be particularly good jobs. And any chance to increase the opportunity for work increases the amount of wages and benefits that our -- that workers have access to. And, look, the nature of the construction industry -- and, unfortunately, Diane, you referred to it as one of the sort of pejorative terms that these jobs are being characterized as temporary. The nature of construction generally means that projects begin and they end.
MALLINOOur workers are, by their daily existence or their careers, are used to moving from project to project, and projects of this size and scope do come along every day.
REHMI understand. Now, one other question. You're also a citizen of this country. I wonder to what extent you and your members are concerned about climate change. Does the project give you any pause?
MALLINOWell, this project doesn't give us any pause. But to that issue, the Laborers International Union of North America has been at the forefront of the climate change debate amongst unions in this country. We're supporters of comprehensive climate change legislation. We worked very hard to see that come to fruition. We don't believe that this pipeline or stopping this pipeline is going to have an effect on the development of the oil sands.
MALLINOAnd if the oil sands are going to be developed, we believe that they should be developed in a way that produce the most amount of work opportunities on both sides of the border. By the way, we have members on both sides of the border, both in Canada and here in the United States.
REHMOK. I think Steven Mufson has a question for you.
MUFSONOh, I was just going to say that, even within the labor movement, while the construction workers' unions like his are in favor of the project, some other unions are opposed to it, like the transit workers. And the AFL-CIO hasn't actually taken a position on the pipeline.
REHMAll right. David, did you want to comment?
MALLINOYou know, we're disappointed that unions that don't have a particular stake in this issue have decided to weigh in. They've done that for their own reasons. You know, we try to do our best to promote projects and opportunities for work for our brothers and sisters. We wish that they had not done this. The AFL-CIO has not taken a position on the project because of some of the other unions who don't have a particular stake in this matter weighing in. But, again, as Steven mentioned, the building and construction trade unions are strongly in support of this...
MALLINO...and we appreciate their support.
REHMThank you so much, David Mallino of the Laborers International Union of North America. Thanks for joining us.
MALLINOThank you for the opportunity. I appreciate it.
REHMAll right. And turning to you, Sarah Ladislaw, what impact can you project, if any, this pipeline would have, might have on oil prices?
LADISLAWWell, that's a good question. I mean, with projects like this, again, it's not talking about production tomorrow. It's talking about production that would come online, you know, several years from now, except for the fact that, as I said before, the pipeline is actually two pipelines. And one of the pipelines was slated to sort of deal with some very intricate issues between the WTI pricing, which is the Mid-Continent U.S. pricing for crude, and things like Brent pricing, which is pricing for oil sold, you know, in sort of Asian markets.
LADISLAWAnd so there are some near-term little intricacies that could read into oil markets. I think what the near-term effect on sort of global oil prices is relatively negligible. I think that there's a lot going on in the oil market right now: concern over Iran, concern over strikes in Nigeria, the impact of the European, you know, debt crisis on demand, things like that, that have a more sort of prevalent effect.
LADISLAWThe thing to keep in mind is that all energy projects are, by their very nature, long term. And so it's really not a question of what the impact is today. It's a question of what the impact will be, you know, three, four, five years down the road, which makes it...
REHMHowever, we've had two differing views on exactly the effect on the tar sands. Steven Mufson, you said it was akin to strip mining. And, Matthew Koch, you said that would be minimal. How do people really interpret those two views, Steven?
MUFSONYou mean about the impact on the environment?
MUFSONWell, I think that however you describe it -- I mean, I think there's agreement that it is worse for the environment, that it produces anywhere from 5 to 15 percent more greenhouse gases in the average barrel of oil consumed in the United States. I think people like Bill would argue that even if this protest over the pipeline only delays production of oil sands, that that would give time to try to come up with more efficient ways to produce it.
MUFSONAs far as whether or not that would delay things, I know there are a lot of people who say that if we don't build this pipeline, that Canada will simply export this stuff out through the West to China. But that's not so easy either because Canada's Native Americans have a lot more clout than Americans. Building that pipeline requires permits in Canada.
MUFSONI think TransCanada still thinks that it's best off -- and clearly in its statement yesterday -- best off continuing to pursue this pipeline here in the United States. Even with all the problems and delays it's had here, this is still the closest and best market for that oil, in their view, I think.
REHMSteven Mufson of The Washington Post, and you're listening to "The Diane Rehm Show." Matthew Koch, do you want to comment?
KOCHJust to go back to that, I think it's certainly important to understand that, yes, you know, the Canadians are looking to this to -- as a -- for the market, for their product. And we're the closest country to them, and we have a demand here that needs to be met. And they see that as a -- as certainly as an opportunity. But as I mentioned earlier, you know, this is a resource that we -- been around for a while, but it's only in recent years that it's become most -- both economically and technologically feasible.
KOCHAnd as technology gets better, we're going to continue to find ways to extract this in a more environmentally-friendly manner. And, you know, we do need this resource. We do need to have it developed, and it is a benefit to American workers and to our economy going forward. As far as fuel prices are concerned, you know, I'll agree. For the most part, it's hard to say how much impact it's going to have in the short term.
KOCHBut more -- any economist will tell you, you know, more supply is not a bad thing, that there's -- when there's more supply, it helps even out some of the price spikes that might happen when there is instability in the world, as we've been seeing recently over in the Middle East. And those sorts of things create problems in the marketplace. They also -- but more resource nearby helps us, as far as having a stable resource to import from.
REHMBill McKibben, do you believe that Keystone will provide an alternate route, and would an alternate route diminish some of the problems we're hearing about?
MCKIBBENI think that probably TransCanada will try to come back and re-apply, but I don't think it's going to happen easily or quickly. They'll have to go back to the beginning of this review process, and this time the review will be more transparent and more closely watched. And you know what? The same thing is happening everywhere. The Canadian government just announced a year-long pause in its environmental review of the Gateway pipeline, exactly the thing that the Obama administration proposed would happen here, and that the GOP and the Chamber of Commerce said was unacceptable.
REHMOn what grounds?
MCKIBBENBecause they've gotten a record number of public comments up there. The majority of Canadians oppose the Gateway pipeline going west to the Pacific. More and more people on both sides of the border are waking up to the idea that quick fixes and short-term answers and finding another little bit of oil here and there is not the answer, but we're asking the leaders to do so.
REHMWhat do you see is the answer, Bill?
MCKIBBENWell, I think the answer, probably, is to put a serious price on carbon so that we can begin the process of really making a transition away from fossil fuel. Look, the oil industry, the fossil fuel industry, is the only industry on Earth that gets to dump its waste for free. They get to use the atmosphere as an open sewer for free. And if they didn't, if we charged them, as we do every other business, with, you know, putting out their waste, if we charged them the damage that they're doing in carbon, then no one would be going near the tar sands.
MCKIBBENAnd we would be having a huge boom in sun and wind and all the things that people in their heart of hearts know that we need to go to, and that we're just putting off going to because the oil companies are making so damn much money right now. Exxon made more money last quarter than any company in the history of money. And they use some of that money to corrupt our political process. The 234 members of the House who voted in favor of expediting the approval of this pipeline, those 234 members have taken $42 million from the fossil fuel industry.
REHMAll right. Bill McKibben of Middlebury College. He's also founder of 350.org.
REHMAnd welcome back. It's time to open the phones as we talk about the president's decision to reject, at least for now, the Keystone pipeline application and what's next. Let's go to Mark in Dallas, Texas. Good morning to you, sir.
MARKGood morning, Diane. I haven't had the opportunity to tell you happy New Year, so let me get that...
REHMHappy New Year. Thank you.
MARKSee, I wish I could share Mr. McKibben's positive outlook on this decision, and my knee-jerk reaction was that this was a nod by the Obama administration to environmentalists who represents a, I guess, a small portion of his disgruntled base. But that post-election 2012, if he were to be re-elected, that he would simply re-evaluate this decision and the pipeline would proceed as according to the moneyed interest.
MALLINOAnd I wonder if he, in particular Mr. McKibben, could comment on what could possibly prevent that or any indications to the contrary that my assessment might be wrong.
MCKIBBENSure. Look, there have been a couple of things in the last little while that show the Obama administration is, I think, really starting to take some serious steps. The mercury rule that they put out a few weeks ago was strong and good. And there'll be new rules on greenhouse gas regulations, greenhouse gas emissions from power plants, and we'll get some sense of what those will be like. And they did a good job with this regulation to increase mileage for automobiles pretty dramatically by the 2020s. Their record is far from perfect.
MCKIBBENAnd as I said before, you know, I mean, I spent three days in jail for sitting in outside the president's house. But I, you know, so I think I get to be a fairly realistic observer. I don't think there's -- I think there's no question that there'll be endless pressure on him to approve this pipeline and that pipeline and 100 other pipelines. I'm also pretty sure, as a realistic observer, that, you know, that Mitt Romney would approve -- you know, if the Koch brothers told him that he was supposed to, you know, frack Old Faithful so that it spewed propane instead of water, he'd ask him how high he wanted it to…
REHMAll right. And I think what I want to do here is turn to Sarah because you've written that the most disconcerting thing about the controversy over this project is what it says about our national dialogue on energy policy. Tell me about that.
LADISLAWWell, you know, I think it -- and we all do have to understand it's an election year, and energy has been, for the last several years, a really hot topic. And it's because it touches on so many important things like jobs, like economic security, like energy security and, like, the question over climate change. But the reality is the Keystone pipeline is that it's a pipeline, and there are lots of pipelines in this country. There's also lots of different ways of getting oil sands to market.
LADISLAWThere's lots of different ways of approaching the question of climate change. But we seem to be fixated because this is such a convenient political football. It's one of the few times that the administration has authority over citing a permit at the presidential level that -- of course, that authority has been sort of handed down to the State Department, but it allows for this to be a very unique vehicle for the kind of, you know, political controversy that makes for a lot of good headlines in an election year.
LADISLAWAnd, unfortunately, this administration had come in with very large aspirational goals in terms of what it wanted to do on climate change. We were having a very serious conversation about that for a few years. And now, a lot of that seems to have gone away, and we seem to be focusing on this pipeline as sort of the frontline or the symbol of what direction we're going to take as a country. And it doesn't actually answer those questions.
MUFSONWell, I agree. And I think that, you know, we've been talking a lot about the pipeline, which is a supply question, but really, the -- our real problem is the demand side of it. And Bill, of course, mentioned the possibility of taxing carbon to do that to lower that amount, but, really, that's the thing. You know, we consume an astonishing amount of oil in this country. One out of every nine -- eight or nine barrels of oil produced in the world goes into an American automobile.
MUFSONSo even though people say that Obama doesn't have an energy policy, that's a popular thing to say. In fact, his decision to raise fuel efficiency stance for cars is arguably the most important piece of energy policy you can do. But I just also wanted to say that in reference to the idea of pricing carbon, that won't exactly solve, you know, none of this makes the problem go away. It reduces the number of choices. We're going to have tradeoffs no matter what as long as we're consuming oil.
MUFSONShell says that it uses an internal price for carbon as it is to develop projects and that the oil sands would pass that test with a $40 price for a ton of carbon. So even if we do take measures to dampen demand, we're still going to face these tradeoffs. This is why this is such a -- an interesting issue because it's really come to a head over this in a very graphic way. But I'm afraid that we're all -- we're going to be facing these kind of tradeoffs as long as we're consuming oil in large quantities.
KOCHYeah. I just wanted to chime in. I think there's -- you know, we would be in an agreement that we are still struggling over what direction our country is heading in on our energy policy, and I think you could say, regardless of which administration you worked for over the last 20 or 30 years or, you know, who has been president, it's been difficult to try to understand that.
KOCHAnd in the meantime, the consumers and the industry and, you know, even folks in the environmental community, there's been a lot of confusion on -- and an uncertainty as to what are our options, what are our opportunities, where are we going and what does that bridge to the future. Mr. McKibben even raises that, you know, this is something that's favored by the oil industry. But I would say that, in the meantime, consumers, you know, perhaps are trying to figure out what their choices are going to be and what they can use going forward.
KOCHIf it's not gasoline or diesel or some other sort of fossil energy, what's our other options and what are other choices? And in the meantime, those things aren't happening overnight. Those alternatives aren't being developed that quickly. And we need to have something in place to ensure that Americans have jobs, Americans can get to work, our goods and services can get to the market and that we can continue to have our economy thrive.
REHMTo Galesburg, Mich., good morning, Chris.
CHRISGood morning. And thank you for taking my call.
CHRISThe jobs that we're talking about for building this pipeline are not typical construction jobs. They're not hammers and saws and two-by-fours. They're welders and pipefitters. And right now in this country, welders and pipefitters are at a rather low unemployment rate. And here in Michigan, businesses are advertising for these jobs all the time, can't get enough people to fill them. And the federal government even subsidizes their education because of projected shortages in the near future for these occupations.
CHRISAnd further, my -- that's my statement. My question is, aren't our oil refineries already at maximum capacity? And I've heard that the oil that comes out of them is just going to be put on ships.
MUFSONWell, our refineries are operating at pretty close to capacity. I think this would be a benefit for the refineries in the Texas Gulf Coast because that gives them a choice of supplies. Right now, they're importing some oil from Venezuela that they might be able to back out with this oil from the oil sands. And these refineries are particularly good at refining low-quality crude, so it's an advantage for them to have access to that Canadian oil. But it's not going to change the output, I think, of our refined product really.
REHMWhat about the construction jobs Chris mentions?
MUFSONFor the pipeline or for -- well, those jobs, you know, would be created, but, you know, they'd last a couple of years and...
REHMBut what he's saying is that the welders, the pipefitters had the lowest unemployment rate among construction workers, Sarah.
LADISLAWI, you know, it's very hard, and it -- not typically my day job to comment for, you know, on the face of labor unions. But at the same time, you know, I mean, a job is a job is a job. And so this is what makes the jobs discussion so complicated to deal with is that, well, even if they have a low unemployment rate, well, for an unemployed, you know, welder or someone who work and get one of these jobs, it's a hard thing to deny. And so it makes it very politically powerful thing to talk about but also very complicated to talk about, too.
REHMAll right. To Mishawaka, Ind. Good morning, Dave.
DAVEHello. My questions -- my comments are mostly directed to Mr. McKibben. From what I've read from the Natural Resources Defense Council, this project in Alberta, Canada is just environmentally just horrific. What they are saying -- and I want, you know, seek for his confirmation to this -- they're saying that they are actually destroying a forest the size of Florida to get at this stuff.
DAVEAnd, you know, to do that, you're taking a major CO2-absorbing mechanism out of the ecosystem, which is going to greatly exasperate climate change. In addition, if -- as this forest decomposes, you're going to release huge amounts of carbon into the atmosphere, which is going to greatly exasperate climate change, and you're going to kill, you know, millions of animals 'cause they rely on this for their habitat.
DAVEAnd if that isn't bad enough, from what I heard, these toxic wastes that's produced from getting the stuff out of the ground, they make these huge sludge ponds that's filled with this toxic waste, and it's contaminating the water supply of native communities downstream, which is resulting in a 30 percent increase in their cancer rate.
REHMIs that your understanding, Bill McKibben?
MCKIBBENAnyone who's got Google Earth installed in their computer can go look and see what it looks like up there. They've only gotten 3 percent of the oil so far, but they've already moved more earth than they moved to build the Suez Canal and the Great Wall of China and the 10 biggest dams on Earth combined. They've got the largest toxic impoundments behind dams any place on Earth.
MCKIBBENNow, this -- as Mr. Koch said, they're beginning to do more of what's called this in-situ mining, and that means they have to take natural gas from some place else and pump it underground to heat the oil to make it flow enough. The basic problem is this stuff is crappy oil. It's all bound up in this sand and very difficult to get at. And the caller is absolutely right. This is the reason that indigenous people in these areas have been sounding the alarm for so long.
MCKIBBENI was up in Yellowknife, north of there -- and, of course, the water flows north there, so these guys are downstream -- a couple of months ago with Bill Erasmus, the chief of the Dene, biggest tribal band in that area. And it was just -- you know, it was really powerful to hear him and his people talk about the impacts and to talk about the reasons that they've been so outspoken in trying to block this project.
REHMAll right. I want to give Matthew Koch a chance to respond.
KOCHAs Mr. McKibben indicated, you know, this has certainly had some projects that have been underway for a few years and have had some -- you know, mining has been the most common way to extract the resources closest to the top of the earth. But at the same time, they are using these newer methods. The technology is getting better. They are finding efficiencies. And this is -- you know, really, as I mentioned earlier, resources have only been developed in a relatively near-term period of time.
KOCHAnd as we always hope that Americans and other people can develop technologies that'll help us reach our goals and that includes getting better on climate change and getting more efficient and finding ways to extract oil in a more environmentally friendly way, we're going to use that.
REHMAnd you're listening to "The Diane Rehm Show." Sarah, you want to comment?
LADISLAWYeah. You know, I want to -- I just thought of a helpful anecdote. We -- this has been very interesting to debate, sort of the oil sands issue from a U.S. perspective. And as Bill and others have pointed out, this is an ongoing debate that's going on in Canada as well. But there's a difference.
LADISLAWI have an anecdote from a conference I was on not too long ago where you had representatives from Pembina, which is essentially one of the largest environmental groups in Canada that deals with the oil sands issue, and someone from the environment ministry in Canada and then, you know, some oil and gas companies.
LADISLAWAnd it was very interesting because they talked a lot about this concept of social license, which was recognizing the fact that, just as Bill said, there are, you know, communities that are deeply impacted and have been, for years, deeply impacted by the -- by what is a very intrusive industrialization process in some ways.
LADISLAWAnd then there are other parts of the community that have really experienced a great deal of growth and recognized that especially for places like Alberta that this is a livelihood and this is a reality that they're probably going to be producing this resource, and it's something that they think is a good thing. And the way that the discourse went is that they had this conversation about the kinds of standards that they're putting in place to improve the production, to reduce the water use, to reduce the emissions, to reduce the environmental impact.
LADISLAWAnd it was a very polite sort of conversation of finding a pragmatic way forward recognizing that there was a variety of use on the issue within society. And I think that that -- it would sort of help remind us, you know, that this is a U.S. conversation we're having about something that's going on in Canada that, of course, has a global commons aspect to it because it does deal with climate change and things like that.
LADISLAWHowever, the Canadians have found a way and are constantly working at finding a way to make peace and a way forward on this kind of a production. And it just appears that we don't necessarily have that kind of a conversation going on here.
MUFSONWell, I think Sarah makes some good points, but I'd just like to stress a little bit more that this isn't just the local decision when you're talking about environment issues. It's not just a question of whether people would be better off in that area. It's a question of, as you say, these global commons issues and environments that we all want to share, but that we might not have as direct a stake in as someone actually lives there.
MUFSONBut we still have a stake in it, and that's what makes all these environmental issues tough ones because, you know, if you're going to decide to protect some part of the environment, that means you're going to prevent it from being developed by a certain group of people for the sake of all of us. And I think that this is typical of all these environmental issues when we're trying to protect natural resources.
LADISLAWI completely agree. And I actually think that that's a good link back to what's going on in Nebraska. In the case of Nebraska, I mean, that question of what kind of risk are you willing to take near something like the Ogallala Aquifer or something, you know, or the Sandhills or environmentally sensitive places.
LADISLAWYou know, in the last several years, we've seen a number of really startling environmental accidents related to all kinds of energy sources that really do raise the question of what kind of risks are we willing to take for the, you know, the energy that we use, provided that all energy does have some sort of risk to it and all energy has a cost and a tradeoff as, you know, I said earlier.
REHMOr are we willing, perhaps, to put monies into alternative sources of energy? I want to thank all of you, Bill McKibben, Steven Mufson, Matthew Koch, Sarah Ladislaw, for joining us today. A very interesting conversation. And thanks for listening all. I'm Diane Rehm.
ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Denise Couture, Monique Nazareth, Nikki Jecks, Susan Nabors and Lisa Dunn, and the engineer is Tobey Schreiner. A.C. Valdez answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information. Our email address is firstname.lastname@example.org, and we're on Facebook and Twitter. This program comes to you from American University in Washington. This is NPR.
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