Chaff Launch

Thursday, January 19, 2012

World Oil Transit Chokepoints - Add One More to the List

The U.S. Energy Information Agency has a dandy list of those narrow places on the earth where oil flowing in commerce on ships can be threatened by "pirates, terrorist attacks, and political unrest" at World Oil Transit Chokepoints. The list includes the Strait of Hormuz, the Strait of Malacca, the Suez Canal, Bab el-Mandab, the Bosporus, Panama Canal, and the Danish Straits.

Time to add another narrow area to the list, the "O Gap" sometimes located in Washington,DC and, unique to chokepoints, known to be more a part of a calculation than a real spot on the planet.

Shown below is a rare capturing of the "O Gap" as it begins to close off a route of oil to the U.S.:

Some might feel that the "O Gap" would be better known as the "Keystone Twist". Many people are unhappy with its existence, as set out in Expected Keystone XL permit rejection strongly criticized:
US Sen. Richard G. Lugar (R-Ind.), the primary sponsor of legislation that set a deadline for a decision, said the administration misled the American people on the pipeline. “In the face of Iranian threats against oil affordability, [it] once again is trying to blame Congress and the State of Nebraska instead of taking responsibility for American jobs and security,” he said during an appearance at a Greenwood, Ind., instruments and gauges manufacturer who potentially would be doing work for the project. “This political decision offers hard evidence that creating jobs is not a high priority for this administration,” said US Chamber of Commerce Pres. Thomas J. Donohue. “By placing politics over policy, the Obama administration is sacrificing tens of thousands of good-paying American jobs in the short term, and many more than that in the long term.”*** “Blocking the Keystone pipeline would be an enormous mistake by the Obama administration,” said National Center for Policy Analysis Senior Fellow H. Sterling Burnett. “We need the oil and we need the jobs it would bring. This is as ‘shovel ready’ as anything Obama has proposed, yet because his radical environmental constituency objects, he’s apparently halting the pipeline.”
Or, as set out in the video linked at Instapundit, “He chose Venezuela over Canada.”, which really ought to be watched.

China must like the result, Canada will look to China to sell its oil. I guess the oil tanker owners will be happy, too.

Remember the "O Gap" - the new chokepoint. UPDATE: Here, read Re-Election Obsessed Obama Goes Political On Keystone By ROBERT J. SAMUELSON

5 comments:

  1. Robert10:38 PM

    Mark, you've a great blog except when you take off like this. I'm agnostic about the Keystone pipeline, but if you think it's going to be a big help to the US, you need to research more.

    If built, the product will be refined in Texas and then shipped off to the world market; just as a large amount of the oil refined in Texas is today.

    It's not going to create many jobs (save short-term unskilled labor to build the pipeline) either. It may raise prices for fuel in the Midwest: http://www.startribune.com/opinion/otherviews/117832183.html

    And a scan of the Canadian press indicates that Enbridge, a competitor of TransCanada's, is having no luck with a similar pipeline from Alberta to a port in British Columbia. (Canadians don't want it either.) Hence the pressure to send the product to the Colossus to the South.

    So, while it may be a nice thing to have, it's not a massive missed opportunity.

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  2. Robert10:56 PM

    And if US energy security is the concern: what's happening to our refinery capacity? Valero Delaware City, Sun Girard Point, Sun Marcus Hook, and now Hess St. Croix -- recently closed or closing. Having oil is nice, if we can refine it for use...

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  3. Robert: For an "agnostic" about the pipeline, you seem to have some strong opinions against the Keystone. Thanks for taking the time to set forth your views. Based on my research and experience in the oil industry, I think you are wrong.

    First, a land pipeline (safest form of transportation - you can look it up) from a close ally and geographic neighbor is, in my view, a far better approach than relying on a series of ships transporting crude across oceans and through chokepoints from far off shores to this country. Unlike the petroleum sea lines of communication, Keystone does not require the forward presence of naval and other forces to preserve its route and to keep its pathway clear. This places less stress on our fleet and lessens the potential of blackmail by nations or groups who would close, say the the Strait of Hormuz.You might consider that Canadian oil is "ethical oil." This is a "big help" to the U.S.

    Second, define the "large amount" of refined product being shipped from Texas to the "world market." While doing that, discuss the jobs created in the process of this "through put" and the tax revenue generated from those jobs. Compare this volume with that flowing through the Colonial Pipeline and other domestic product pipelines and other forms of domestic refined product shipment.

    Third, define "many jobs." How many are too few to worry about? Since they are private sector jobs, what difference does it make how many or how few? Explain why "temporary jobs" building a pipeline are inferior to say temporary jobs building "high speed rail" or "bridge and highway repair or construction" or "construction in general" or, even "vehicle repair" (unless you have a full time mechanic on your staff). Explain why you feel pipeline construction jobs require "unskilled" labor?

    Fourth, explain how fuel prices could be lowered in the Midwest (and elsewhere) if ethanol was taking out of gasoline. Explain why cars prices might drop, too, along with food prices. Explain Mr. Verleger's view that a 700 million barrel strategic oil reserve has a single thing to do with this pipeline, or, for that matter, any of his other strawman arguments that favor low prices in the Midwest over lower prices in other parts of the country.

    Fifth, if you feel the refineries that are being shutdown in the Northeast are viable economic entities, I understand that they are for sale. Perhaps you could make millions in the refining business . . . good luck with that.

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  4. Anonymous7:26 AM

    Ha ha

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