Keystone Opponents Using Flimsy Report to Claim Koch Bros Will Profit from Pipeline

Keystone Opponents Using Flimsy Report to Claim Koch Bros Will Profit from Pipeline

Liberal opponents of the Keystone XL pipeline are using a flimsy and contradictory report to blast the Koch brothers as greedy and sinister forces behind the pipeline.

“The Left’s hatred for conservatives has become so obsessive that it is hard to engage a liberal in rational discussion of any public policy issue,” writes John Hinderaker in Powerline. 

Case in point: A researcher for the International Forum on Globalization (IFG) produced a report that claimed the Kochs and their subsidiaries could make up to $100 billion if the Keystone XL pipeline is constructed.

“The Kochs have repeatedly claimed that they have no interest in the Keystone XL Pipeline, this report shows that is false,” a researcher with IFG wrote. “We noticed Koch funded Tea Party members and think tanks pushing for the pipeline. We dug deeper and found $100 billion in potential profit, $50 million sent to organizations supporting the pipeline, and perhaps 2 million acres of land. That sounds like an interest to me.” 

The researcher continued, “We all know they will use that money to fund and expand their influence network, subvert democracy, crush unions like in Wisconsin, and get more extremists elected to congress.”

Powerline detailed how the report spawned headlines in many left-leaning outlets: in Grist, a “pseudo-environmental left-wing outfit,” a headline read: “Koch brothers could make $100 billion on Keystone XL pipeline deal.” Other outlets followed suit:

The Huffington Post headlines: “Keystone XL Pipeline Could Yield $100 Billion For Koch Brothers.” PolicyMic: “Actually, You Probably WILL Guess Who Stands to Make $100 Billion Off the Keystone XL Pipeline.” TruthDig: “Koch Brothers Stand to Make $100 Billion From Keystone Pipeline.”

Yet, as Powerline points out, many of the claims in the report may be demonstrably false, especially the claim that the Koch Brothers stand to make $100 billion from the Keystone XL Pipeline and “own” 2 million acres of land in Canada. To put that claim in comparison, Exxon Mobil, which is “a vastly larger enterprise than Koch Industries, made a $45 billion profit last year, one of the biggest ever recorded by any company.”

Powerline also points out that Koch Industries has not even taken a specific position on the pipeline because it may actually be detrimental to its interests. Koch will likely have to pay “higher prices for crude oil for its Pine Bend refinery” if the Keystone XL pipeline is built, because “Canada will have more outlets for its crude oil and the Midwest will have to compete with refineries in Texas for the product.”

In fact, the very IFG report that the left-leaning media relied on made the same claim, finding that the Keystone XL pipeline would cost Koch $120 billion in profits that they would have to make up:

Using our modest estimate that KXL will prevent on average a $20 discount to the price of a barrel of tar sands crude, FHR’s [Flint Hills Resources, a Koch subsidiary] Pine Bend refinery will miss out on $120 billion in profit ($20 x 6 billion barrels = $120 billion).

In addition, the IFG report never even stated that Koch owns two million acres of land in Alberta, Canada. The report merely said that Koch leases the land and, because “data on lease acreages are not publicly available,” the report “purports to rely on a former Koch employee who may have made the whole thing up.”

Even if, as the IFG report alleges, Koch is leasing 1/18 of the land in Alberta, Canada, they will have access to 1/18 of the 830,000 barrels of oil per day that will be the Keystone XL pipeline’s daily capacity. With these calculations, as Powerline notes, Koch would get 16.8 million barrels per year. Since the IFG report said Koch would need to “sell eight billion barrels to break even on the $120 billion” it will lose over 50 years if they do not, it would take 476 years for Koch to break even on the pipeline using the IFG report’s numbers.

Furthermore, Koch would have to clear $15 a barrel on those eight billion barrels to break even. Only when Koch ships 14.7 billion barrels of “Alberta oil on the KXL pipeline” will it realize the $100 billion profit figure in all of the headlines. And as Powerline notes, that is assuming the “IFG’s facts are correct,” even though Koch may not even produce oil in Alberta, which is to say it would take an extraordinary number of things to happen for Koch to come to close to realizing the $100 billion in profits. 

“So what is going on here?” Hinderaker asks.

Rich liberals hire kids-recent college graduates, or maybe college or high school students-to produce idiotic “research reports” that can be dismantled by anyone familiar with arithmetic, let alone the oil and gas industry, of which these kids obviously know nothing at all. The claims these reports make are completely divorced from reality, but liberals don’t seem to care.