As oil prices around the world have continued to decline from the $100-plus level, and as of today (October 27) they have even dropped below $80 a barrel, the debate over Canadian tar sands development and the Keystone XL pipeline has begun to change.
At the $100-plus level, the argument for the Keystone XL pipeline ran something like this: ‘Tar sands oil is market worthy and the pipeline is needed to get it to consumers.’ Now, however, in a new oil price environment that looks like it will persist for some time to come, the new argument by pipeline advocates is this: ‘We need the pipeline so tar sands oil will be cheap enough to be market worthy.’
So here you have it. Tar sand oil development, always crazy from an environmental greenhouse gas-generating perspective, and almost as crazy from a purely energy perspective given that the world is awash in other sources of petroleum and is also experiencing an alternative energy revolution that increasingly competes with fossil fuels like petroleum, is now even more crazy as a place where tar sand oils development makes economic sense — unless tar sands producing companies are bailed out by a pipeline. Maybe. For awhile. Unless the world price for crude continues to fall too much.