Tuesday, November 18, 2014

Keystone Pipeline explained, in less than 400 words.

Imagine that you own a 300 acre farm, bordered on the south by a railroad track, and on the north by a large fertilizer plant. Your little paradise lies smack in between these two necessities of rural life: nothing grows without fertilizer, and nothing moves grain more efficiently than the rails. Your farm inevitably benefits from the existence of both the factory and the railroad, as do dozens of other farms across the region.

Then one day, the fertilizer company approaches you about building a fertilizer pipeline across your farm and to the railroad. They want to create a fertilizer rail head to make it easier for them to send their products over the rails, reduce transportation costs, and expand the market for their product. Right now, they happen to be producing more fertilizer than the local market will bear, so they really need to get this stuff out of here, why there is practically a fertilizer glut! The railroad sends you a letter saying they'd like to have the fertilizer pipeline, because more freight means more business. It would be unpatriotic to stand in the way of the pipeline. 

The fertilizer factory promises to use your brother-in-law's construction company to build the pipe, but once it's done being built, they can't promise much. You'll still have to buy your fertilizer on the market, subject to all the same variables as every other farmer; there isn't going to be a fertilizer spigot extending from the pipeline to service your needs. And because the fertilizer that is made right next door to your place is now being shipped further and further away, you are competing with farmers from much further away than ever before for access to that supply. Indeed, instead of a glut of fertilizer at the local place, there might now be a local shortage, as the fertilizer plant has entered into guaranteed minimum freight contracts with the railroad, so the railroad, and not the local retail customer base, is the preferred outlet for the fertilizer. And because traffic has increased on the railroad, freight rates are up as empty cars become harder to find, making it more costly to move your harvest. 

Canada is the fertilizer plant. The Gulf of Mexico is the railroad. The midsection of the United States is your 300 acre farm. The Keystone XL pipeline, explained.

Photo courtesy of NPR









For a very good summation of the salient points of the Keystone XL pipeline issue, please visit this NPR News article.

1 comment:

Kirk River Mud said...

Agreed with all of the above, but the decision was made years ago, and the current administration will in no way impede it. And Dem strategists wonder why people are disillusioned with the party.....