The tar sand, heavy, sour crude oil, flowing from Canada to Gulf Coast refineries, will not decrease our dependency on unstable countries to feed our oil needs. The U.S. is a gasoline-driven country; the rest of the world runs, basically, on diesel fuel.
The world cannot keep keep up with the demand for diesel fuel. Presently, new refineries are being built around the world to bring more diesel to the marketplace. At the same time, older refineries are being retooled to accommodate this demand for diesel.
All along our Gulf Coast, this work is under way even though the Keystone XL pipeline has yet to be approved. What do these people know, that we don’t about the pending decision?
Valero — the largest exporter of refined products in the U.S. — has already secured a long-term contract with TransCanada to accept shipments on this pipeline — 100,000 barrels per day until 2030.
There are five other refineries along the Gulf Coast following Valero’s business plan: “We want the diesel fuel, because that is where the growth is.”
There are some minimal (by comparison) and short-term economic gains for the U.S. Those 20,000 jobs will be gone in 2013 when the pipeline is completed.
Rep. Westmoreland estimated $5 billion in new property taxes to state and local governments along the pipeline route.
Compare that to the billions, if not trillions, in diesel export profits over the next decades. Valero alone is currently shipping 165,000 barrels per day of diesel fuel.
This figure will increase drastically when the Keystone pipeline is up and running and Valero and the other 5 refineries increase their capabilities to refine this sour crude from Canada (and the U.S.) to diesel fuel.
Yes, a relatively small amount will be shipped back into the U.S. and it will be taxed by the U.S. at that time. Make no mistake: In the foreseeable future (two decades) this diesel fuel is destined for export throughout the world.
The pipeline terminates in a foreign trade zone. There is no import tax on the crude coming from Canada.
The refined diesel fuel will be shipped out of the same FTZ so the U.S. will not collect an export tax. This entire fiasco is going to amount to one huge tax subsidy for big oil. Very little in profit for the U.S. and all the pollution will be left behind for the U.S. to deal with.
Here is a great idea for deficit reduction: Nationalize that free trade zone.
Chuck Trioskey
Fayetteville, Ga.
