One more time: Keystone XL is about profit

"Shang-hai traffic ... so hard to get through youuu."

This morning, Stephen Lacey at Climate Progress writes about a new report that says there are now 1 billion cars and light trucks on the road worldwide. “Billion” with a “b.”

In just six months, the world added about 35 million cars. But only about 1 percent of those were registered in the U.S.

It will probably come as no surprise that more than half of those cars — 16.8 million — were purchased in China. With 78 million cars, China is now second only to the United States in the number of vehicles on the road.

If China keeps adding new vehicles at this rate, Lacey points out, it could pass the U.S. within a few years.

So what does this have to do with Keystone XL? China’s rapidly increasing oil demand is often cited as a reason the U.S. State Department should approve the pipeline. If we don’t buy the oil, the argument goes, Canada will just sell it to booming markets in Asia.

The problem with that argument, as I’ve written before, is that Keystone XL doesn’t necessarily prevent Canadian companies from shipping oil to China. If anything, it makes it easier.

National Geographic on Friday wrote about an analysis by Canadian economist Philip Verleger, who argues that not only does Keystone XL make oil shipments to China more likely, it makes them a virtual certainty:

The bottom line for Verleger is that refineries on the Gulf Coast have long-term commitments to buy oil from current suppliers—including Saudi Arabia, Venezuela, and Mexico. Those nations don’t want to cede market share to Canada. All three have ownership in Texas refineries, and they can also match any discount that comes with the Canadian crude. “There will be too much oil, it’s got to go somewhere, and it’s going to China,” Verleger says.

The reality is that Keystone XL, as TransCanada has acknowledged, is all about opening up new markets for Canadian oil. As China continues to add staggering numbers of cars, and as the U.S. attempts to curb its oil consumptions, it’s not so radical to suggest that much of the new oil entering the market will flow eastward.

Photo by Bert van Dijk via Creative Commons

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