Joe Nocera Still Doesn’t Get It On Keystone XL

Our guest blogger is Ed Dolan, an economist and author of TANSTAAFL (There Ain’t No Such Thing as a Free Lunch), a book that outlines the libertarian case for a cleaner environment.

Joe Nocera replies to his Keystone XL critics in “The Politics of Keystone, Take 2” in Saturday’s New York Times. He still doesn’t get it. Like many people, Nocera doesn’t seem to understand the relationship between energy use and energy prices. He writes:

The seemingly inexorable rise in greenhouse gas emissions is the result of deeply ingrained human habits, which will not change if the pipeline is ultimately blocked.

The truth of the matter is that human habits are not really all that deeply ingrained. In countries where energy prices are higher, people systematically use less of it. How much less is shown dramatically in the chart attached to my response to Nocera’s first defense of KXL. Wealthy countries like Japan and Germany that have much higher fuel prices than the United States use only a half to a third as much per capita:

Nocera plunges even more deeply into economic confusion when he writes, “The benefits of the oil we stand to get from Canada, via Keystone, far outweigh the environmental risks,” and then goes on to list, as one of the benefits, the fact that Canadian oil is currently selling at a discount from Saudi crude.

Yes, Canadian oil is currently selling at a discount, but that is not a valid argument for building KXL. An especially low price on oil from a relatively dirty source is not a “benefit” — it is bad energy policy and bad environmental policy. What is more, even fans of underpriced energy need to recognize that building more pipelines would allow oil from Canadian sands to mix more thoroughly into the world oil market, so its price would go up.

Nocera’s “Take 2” does make some valid points. One is that the oil export issue is a red herring. If KXL is good, then it is good whether the products refined from it are consumed in the United States or exported. The same goes if KXL is bad. The fact that some of it would be re-exported doesn’t make it any worse.

Nocera also catches out Robert Redford for saying that oil from Canadian sands is “the dirtiest oil on the planet.” The truth is more nuanced. Andrew Leach and other observers point out that not all oil sands are alike. Oil from some deposits, recovered using some techniques, is much dirtier than others. The worst of it is pretty bad; the best is cleaner than some U.S. domestic oil, for example, thermally extracted heavy oil from California.

Whether Canadian oil is or is not the dirtiest on the planet is not the real point. The real point has always been that we need a comprehensive energy policy that encompasses economic, security and environmental dimensions. At a minimum, such a policy would raise energy prices across the board by enough to cover all environmental costs. At best, it would use price signals based on carbon content that would provide incentives to use energy from the cleanest sources first, and at the same time, develop even cleaner technologies for the future.

That is the part Nocera just doesn’t seem to get.

Comments are closed.