We wrote here and here about Robert Greenwald, a failed filmmaker who is now paid to produce far-left “documentaries.” His current series is called “Koch Brothers Exposed.” It is a series of video attacks on Charles and David Koch and their company, Koch Enterprises.
It is possible that someone, somewhere, has produced worse “documentaries” than these, but it isn’t likely. The current effort tries to tie Koch Enterprises to a pipeline project called Keystone XL. If you believe Greenwald, the Keystone project is all about enriching the Koch brothers:
The attentive viewer will note that the video contains hardly any facts. Let’s start with the basics. There is an existing Keystone pipeline that begins in Alberta and runs to Cushing, Oklahoma, as well as points east. The proposed Keystone XL pipeline, which is scheduled to begin construction this year, represents an expansion of that system, as this map shows:
The Keystone XL pipeline, like the existing Keystone pipeline, will be owned by a subsidiary of TransCanada PipeLines Limited, a Canadian company in which neither Koch Industries nor any other American company has any interest.
Koch Industries’ two largest refineries are in Rosemount, Minnesota (Pine Bend) and Corpus Christi, Texas. Koch does not use the existing Keystone pipeline to ship crude oil to either of these refineries, or any other Koch refinery. Instead, Koch buys crude oil for the Corpus Christi refinery from onshore Gulf sources or from abroad, and it ships Alberta crude oil to its Pine Bend refinery on the Enbridge pipeline, taking custody at Clearbrook, Minnesota:
Now go back to the first map, and look at the proposed Keystone XL pipeline. You will see that it does not go any nearer Rosemount, Minnesota, than the existing line–actually, it will be farther away–nor does it go to Corpus Christi. Koch has stated that regardless of whether the Keystone XL project is constructed, its refineries will continue obtaining crude oil from their existing sources. The proposed Keystone XL pipeline does not offer any economic benefit to Koch Industries. Because Koch Industries has no financial interest of any sort in the Keystone XL project, it has never taken any position on whether that project should be approved.
In fact, completion of the Keystone XL project likely would be detrimental to Koch Industries. Currently, the large quantity of crude oil produced from Alberta sands flows predominantly to the Midwest, where there is a surplus of supply. This allows Koch to buy crude at Clearbrook at favorable prices. If the new pipeline project is built, Canada will have more outlets for its crude oil and the Midwest will have to compete with refineries in Texas for the product. Thus, the Keystone XL project likely would result in Koch paying higher prices for crude oil for its Pine Bend refinery.
One of the few supposed “facts” in the Greenwald video is this statement:
The proposed Keystone XL pipeline can be used by Canadian shippers to add up to $4 billion to U.S. fuel costs.
This statement is absurd on its face. How can shipping more crude oil to the U.S. raise fuel costs here? Greenwald’s claim comes from Democratic Senator Ron Wyden. Wyden, in turn, based his assertion on testimony given several years ago to the Canadian National Energy Board by a consultant named Tom Wise:
Mr. Wyden referred to testimony from a TransCanada consultant, Tom Wise, at an NEB hearing several years ago in which he said oil companies were being told to expect lower per-barrel profits on the XL pipeline, but that they could increase their returns in the Midwest and Ontario because the lower volume of crude going into those markets would increase prices.
Mr. Wise had suggested the oversupply of crude in the Midwest had resulted in a significant discount being paid to Canadian producers, and the XL pipeline could eliminate that discount and increase revenue by as much as $4-billion a year.
I have not been able to locate a transcript of Mr. Wise’s testimony, but it appears obvious even from this account that he did not say that the cost of fuel in the U.S. as a whole would rise as a result of the increase in supply–the economic equivalent of water running uphill. What he did say was that Canadian shippers would get more revenue from the Midwest because the glut referred to above will be eased. In other words, Koch Industries’ Minnesota refinery will in all likelihood pay higher prices for its Canadian crude oil if the pipeline is built. Which presumably explains why Koch has never supported or participated in any way in the Keystone XL project.
Apart from scary music and general references to “billionaires,” there are only two sentences in Greenwald’s video that try to associate the Keystone XL project with Koch Industries. The first is: “Koch Industries is among Canada’s largest crude oil purchasers, shippers and exporters.” This is an odd sentence, since being a purchaser is more or less the opposite of being an exporter or shipper. In fact, Koch is only a minor producer of oil, and it does not produce any oil from Alberta sands. Its Minnesota refinery is a major customer for Alberta oil, which is shipped on the Enbridge pipeline, and will continue to be shipped on the Enbridge pipeline regardless of whether Keystone XL is built, since Keystone XL won’t go anywhere near Koch’s refineries.
The last sentence about Koch in the video that sounds vaguely factual is this: “Koch Industries handles 25% of tar sands imported into the U.S. and runs a crude oil terminal from where the pipeline starts.” Once again, note the ambiguity of the word “handles.” Koch may indeed buy 25% of the oil from tar sands that is imported into the United States. So what? That has nothing to do with the Keystone XL project; the only likely effect of Keystone XL, if you believe Tom Wise, is that Koch will have to pay more for the same oil it is already importing via the Enbridge pipeline.
The statement that Koch “runs a crude oil terminal from where the pipeline starts” is deliberately misleading. The various pipelines that now carry, or may in the future carry, Alberta crude oil all start more or less in the same place–Hardisty, Alberta. Koch has a terminal there which on occasion buys Canadian crude oil and blends it for Koch’s Pine Bend refinery. That blended oil is then shipped on the Enbridge pipeline, not the Keystone pipeline. This has no relevance to the Keystone XL project, which won’t go anywhere near Minnesota.
The left wing’s determination to attribute everything they don’t like to the Koch brothers can fairly be described as insane. Liberalism has always been a philosophy aimed at the ignorant, but today, in the hands of paid propagandists like Robert Greenwald, it has become completely unmoored from reality.
Who will actually benefit from construction of the Keystone XL pipeline? American consumers, because it will provide an additional source of secure petroleum from Canada. This study, done in 2010, concluded that the project will reduce the cost of energy:
[T]he Keystone XL Project facilitates a long-term increase in marginal supply, which will have a modest price effect permeating the entire economy.
American construction workers and others in related occupations will also benefit. The same study also found that the immediate impact of the pipeline’s development and construction would be “$20.931 billion in total spending, $9.605 billion in output, and 118,935 person-years of employment.” These paragraphs summed up the conclusion of the study:
Under “normal” oil price assumptions equivalent to the average for all of 2007, The Perryman Group found the gains in US business activity stemming from a permanent increase in stable oil supplies to include $100.144 billion in total spending, $29.048 billion in output, and 250,348 permanent jobs.
In the high-price case in which costs per barrel reach the peak levels observed in the summer of 2008, The Perryman Group measured the annual impact of an increase in stable oil supplies associated with the Keystone XL Pipeline Project to include $221.305 billion in spending, $64.193 billion in output, and 553,235 jobs.
In addition to the American people, the Canadian oil companies that will take advantage of the new pipeline to ship their crude oil to Texas and other destinations will benefit. As part of the development process, TransCanada obtained shipping commitments from oil producers who have committed to ship more than 900,000 barrels of oil a day on the new pipeline. It would be nice if some American companies could profit from the new pipeline along with the Canadian oil producers, but Koch Industries wasn’t on the list, since it has no foreseeable use for the Keystone XL pipeline.
It is perhaps no surprise that paid propagandists like Robert Greenwald produce pieces that are based in fantasy and are deliberately deceptive. What is shocking–or should be, anyway–is that these smears are coordinated with the Democratic Party and other elements of the Left. Thus, within 24 hours of Greenwald’s release of his Keystone video, Democratic Congressmen Henry Waxman and Bobby Rush absurdly demanded that the House Energy and Commerce Committee subpoena documents from Koch Industries relating to whether it has any interest in Canadian tar sands. Does anyone seriously believe that this is a coincidence? What we have here is a disgraceful attempt by the Democratic Party to coordinate smears against those who do not toe the left-wing line, for its own political advantage. All of the liberals involved in this campaign should be ashamed of themselves.