Biden: We need more oil from Canada, but not through a pipeline

Biden: We need more oil from Canada, but not through a pipeline
(AP Photo/Nati Harnik, file)

People seem to be realizing that Joe Biden’s plan to drain the Strategic Petroleum Reserve down to less than half of its maximum capacity isn’t going to do anything to cut gas prices by more than a dime or so. Biden and his advisers have apparently reached the same conclusion themselves. As this realization dawns, the White House appears to have finally figured out that if you want gas prices to drop you either have to reduce demand or increase the supply. (Funny how that works, eh?) Telling people to stop driving is a nonstarter, so they’re going to have to find some more gas. And to make more gas you need more oil.

But where will he find it? Asking Russia for oil at this juncture would be awkward, to say the least. And OPEC hasn’t shown any interest in pumping up their output. So Biden is now looking to get more oil from our partners in Canada. That’s not a terrible idea because they are a reliable ally that pumps a huge amount of oil. But Joe Biden is still drawing one very big red line in the tar sands. He doesn’t want to finish construction on a new pipeline to get more oil to United States refineries. Why? Because that might make some of his base of voters even more angry. (Wall Street Journal, subscription required)

Biden administration officials are seeking ways to boost oil imports from Canada, people familiar with the situation say, but with one big caveat—they don’t want to resurrect the Keystone XL pipeline that President Biden effectively killed on his first day in office.

The people said deliberations are in early stages and that no clear-cut solutions have emerged.

Canada could export some more oil via rail, according to analysts and others familiar with the situation, and it could also pump more oil by increasing pressure on existing lines or by installing larger pipelines along permitted routes.

There’s nothing problematic about asking our friends in the Great White North to send us more oil. They’re always happy to do business. But the logistics of moving even more oil than we’re currently importing are complicated. Industry analysts tell us that the existing pipelines between the U.S. and Canada are already running at close to their maximum capacity and have been for months. If we had just kept on working on the construction of the Keystone XL pipeline, it could have been nearly finished by now, but Biden killed that project off on his first day in office with an executive order.

There are other options for transporting the oil, such as with rail cars. But as the linked analysis reminds us, shipping oil by rail is significantly more expensive than pumping it through a pipeline. So you might wind up boosting the output of the refineries, but the resultant gasoline would be more expensive, wiping out any gains you might see from the increased supply. Also, rail cars crash sometimes, and the last headline Biden needs his base to be reading at the moment is something about an oil spill on a stretch of train tracks that he requested. Also, Canada can only ship roughly 200,000 barrels of crude oil per day by rail, while the Keystone XL would have been pumping nearly a million.

Canada has ample reserves under its soil to meet U.S. demand, said Kevin Birn, an analyst with S&P Global Commodity Insights. It just doesn’t have enough pipeline capacity to pump it here, he said.

“There’s not a limitation in terms of resource potential,” Mr. Birn said. “There’s a limitation of capacity.”

If nothing else, all of the activists who have been pushing to “keep it in the ground” and driving Joe Biden’s decisions may be getting a very expensive object lesson in reality right now. They’re getting a look at what a world without enough oil and gas looks like when the country remains unable to meet even 20% of its needs through renewable energy. And it’s not a pretty picture.

Summer is approaching and that’s typically when a lot of people take to the road for vacations and business trips. That’s only going to drive the demand for gasoline higher and probably the price of gas with it. Sometimes government policies have very real-world effects and people tend to notice them quickly when they’re getting hit squarely in the bank account. If only someone could have warned Joe Biden about this in advance. Oh, wait… that’s right. We all warned him.

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