THE KEYSTONE XL PIPELINE HAS DEALT WITH A NUMBER OF
OBSTACLES, PROTESTERS, REGULATIONS, PEOPLE WHO DO
NOT WANT THE CONSTRUCTION OF THE PIPELINE TO CONTINUE.
AS YOU CAN REMEMBER AT THE END OF THE OBAMA ADMINISTRATION,
THE TRANS CANADA WHICH IS THE COMPANY, THE CORPORATION BEHIND
THE KEYSTONE NEXTEL PIPELINE DID EVERYTHING THEY COULD TO
GET OBAMA TO APPROVE THE PERMITS TO FURTHER CONSTRUCTION.
OBAMA SAID NO, TRUMP COMES IN AND SAYS YES, YOU CAN
CONTINUE WITH CONSTRUCTION AND NOW IT TURNS OUT, DUE TO
SIMPLE ECONOMICS, YOU MIGHT NOT EVEN HAPPEN.
THEY MIGHT EVEN BUILD THE REST OF THE PIPELINE.
LIMIT ME THE DETAILS ON THIS.
THE EXECUTIVE VICE PRESIDENT FOR TRANS CANADA HAD A CALL
WITH INVESTORS AND HE IS LIKE YO, I DON'T KNOW WHAT TO DO.
IT TURNS OUT THAT THE PRICE OF OIL IS PRETTY LOW,
PRODUCING OIL IS PRETTY HIGH.
MAYBE IT DOESN'T MAKE SENSE TOGETHER WITH THIS PROJECT
AFTER ALL.
LOW OIL PRICES AND THE HIGH COST OF EXTRACTING CANADIAN CRUDE
FROM OIL SANDS ARE CASTING NEW DOUBTS ON KEYSTONE XL AS
EXECUTIVES WITH THE CANADIAN COMPANY THAT WANTS TO BUILD
A FACE THE FINAL REGULAR REGULATORY HURDLE NEXT WEEK
IN NEBRASKA.
KEEP IN MIND THAT NEBRASKA'S ONLY STATE THAT HAS AN
APPROVED IT JUST YET, AND THAT IS BECAUSE THE FARMERS IN
THE STATE THAT ARE CONCERNED ABOUT THEIR CROPS.
THE PIPELINE WOULD ESSENTIALLY GO TO THEIR PROPERTY AND IT
COULD BE DAMAGING FOR THEIR BUSINESS, FOR THEIR
AGRICULTURE AND SO TRANS CANADA, AND A TRANSCANADA EXECUTIVE
RAISED EYEBROWS IN THE INDUSTRY LAST WEEK
WHEN HE SUGGESTED THAT THE PIPELINE DEVELOPER DOESN'T
KNOW WHETHER IT WILL MOVE FORWARD WITH THE PROJECT.
PAUL MILLER, AND EXECUTIVE VICE PRESIDENT WHO IS EVERYTHING
THE PROJECT, TOLD AN INVESTOR CALL THE COMPANY OFFICIALS
WILL DECIDE UNTIL LATE NOVEMBER OR EARLY DECEMBER WHETHER
TO START CONSTRUCTION.
JUST TO GIVE YOU AN IDEA OF HOW MUCH THINGS HAVE CHANGED SINCE
THEY BEGAN CONSTRUCTION, CRUDE OIL WAS TRADING AT AROUND $49.50
A BARREL ON WEDNESDAY THIS WEEK, AND THAT IS DOWN FROM THE
HIGHS OF MORE THAN $100 IN 2014.
AGAIN, PRICES HAS DIPPED CONSIDERABLY IN THEIR LIKE
WE DON'T KNOW THAT UP ANYMORE.
MARCUS?
HOW DO YOU LIKE THEM PREMARKET QUEST OF THIS IS REPORT FOR
A NUMBER OF REASONS.
PERSONAS IMMEDIATE ISSUE.
THE CRUDE OIL THAT COMES FROM CANADA IS THE MOST
EXPENSIVE KIND OF OIL TO EXTRACT.
THEY BEGAN THESE PROJECTS WHEN OIL PRICES WERE REALLY HIGH
AND WHEN OIL PRICES ARE REALLY HIGH THEN IT IS WORTH GOING
THROUGH THAT EXPENSE TO EXTRACT IT.
IS ALSO SOME OF THE DIRTIEST FOSSIL FUEL THERE IS ON THE
PLANET.
THERE IS MORE CARBON THAT GOES IN THE AIR BECAUSE OF THIS TYPE
OF OIL THAT IS IN CANADA.
IT IS NOT THE ONLY PLACE IT IS IN
BUT CANADA HAS A HUGE RESERVOIR OF IT.
SO IF OIL PRICES ARE HIGH THEN YOU'RE GOING TO HAVE A HUGE
ECONOMIC INCENTIVE.
WHICH IS MAKE UP NUMBERS TO KEEP IT SIMPLE THOUGHT IT COST YOU
50 BUCKS TO GET THE OIL OUT OF THE GROUND, BUT THE OIL IS
TRADING AT 100 BUCKS, EVEN WITH THE TRANSPORTATION AND
DISTRIBUTION AND ALL THAT STUFF, YOU'RE STILL GOING TO HAVE
A HEALTHY PROFIT MARGIN.
BUT IS NOW ALL THE SUDDEN THE PRICES ARE $50, THAT IS THE
PRICE TO EXTRACTED.
IT DOESN'T MAKE SENSE TO MAKE ANYMORE.
TO GO FORWARD WITH THE PROJECT.
ONE OF THE REASONS OIL PRICES ARE GOING DOWN IS BECAUSE
THERE ARE A LOT OF OTHER SOURCES OF ENERGY NOW WHICH DIDN'T
EXIST AND WE HAD INCREDIBLY HIGH OIL PRICES EARLIER ON.
SOME OF WHICH EXISTED BUT WERE AT A MUCH LOWER LEVEL.
SOME ARE GROWING EXPONENTIALLY NOW.
KEEPING IT REAL, IT IS NOT JUST RENEWABLE ENERGY.
FRACKING IS KILLING OIL.
FRACKING IS A REALLY INTERESTING TOPIC AND IT HAS BIG UPSIDES,
BUT POTENTIALLY MUCH BIGGER DOWNSIDES BUT ONE OF THE UPSIDES
IS THAT AT LEAST IT BRINGS DOWN THE PRICE BECAUSE THERE IS MORE
SUPPLY FOR REAL ECONOMIST, YOU UNDERSTAND WHAT SUPPLY AND
DEMAND IS UNLIKE RICK PERRY WHO THINKS SUPPLY AND DEMAND
WORKS, IF YOU MORE SUPPLY YOU HAVE MORE DEMAND.
THAT SOMEHOW WORKS AT ALL.
THIS IS ALSO GREAT NEWS FOR THE FUTURE ON A BIGGER SCALE BECAUSE
FRACKING HAS A LOT OF DOWNSIDES BUT RENEWABLE ENERGY DOES NOT
HAVE VERY MANY DOWNSIDES AND IT IS ALSO GROWING EXPONENTIALLY.
WHEN IT DOES, IT BECOMES CHEAPER TO MAKE BECAUSE YOU HAVE
ADVANTAGES IN TECHNOLOGY THAT YOU CAN TAKE ADVANTAGE OF THAT
YOU HAVE ECONOMIES OF SCALE YOU COULD TAKE ADVANTAGE OF AND SO
THE BIGGER RENEWABLE ENERGY GETS, THE LOWER ITS COST IS AND
THAT IT COMPETES WITH OIL AND THERE IS A CERTAIN POINT AT
WHICH EXTRACTING CRUDE OIL NO LOVING OR MAKES ECONOMIC SENSE.
THIS IS HOW A FREE MARKET IS SUPPOSED TO WORK.
WHERE YOU HAVE COMPETITION FROM COMPETING INDUSTRIES, COMPETING
SOURCE OF ENERGY AND YOU DON'T HAVE THE OIL INDUSTRY OR THE
COAL INDUSTRY OR ANY INDUSTRY HAVING A MONOPOLY ON THE
WAY ENERGY IS PRODUCED IN THE UNITED STATES BECAUSE THAT
IS ESSENTIALLY WHAT IS BEEN HAPPENING FOR VERY LONG OF TIME.
YOU HAVE LOBBYISTS WORKING FOR BIG OIL, WORKING WITH
POLITICIANS, FUNDING POLITICIANS IN ORDER TO PREVENT ANY TYPE OF
INVESTMENT TOWARD RENEWABLE ENERGY OTHER ENERGY.
WE'VE HAD CRONY CAPITALISM IN THIS REGARD FOR A VERY LONG
TIME AND IT IS NICE TO SEE THAT EVEN THOUGH WE STILL HAVE
CRONY CAPITALISM, THERE ARE FORCES THAT ARE FIGHTING
AGAINST IT AND HOPEFULLY WE CAN DEFEAT SOME OF THE DIRTIER
FORMS OF ENERGY THAT WE ARE REDUCING.
AND YOU GUYS SAY LOOK, WHY DON'T YOU JUST LET THE FREE
MARKET DECIDE.
DO COAL COME ALL THIS STUFF AND THEN MAYBE YOUR RENEWABLE
ENERGY WILL WIN OUT IN THE END.
IS LIVING OUT RIGHT NOW, BUT THERE ARE ALSO COSTS YOU
ARE NOT TAKING INTO ACCOUNT.
WHEN THEY TAKE THE FOSSIL FUELS OUT OF THE GROUND, THEY DON'T
PAY THE COST OF THE COMMON THAT GOES INTO THE SKY AND THE CARBON
IN THE AIR IS A COST THAT IS PAID BY ALL OF US.
WHEN YOU GET TO PRIVATIZE THE GAINS AND SOCIALIZE THE LOSSES?
THAT IS NOT FREE MARKET EITHER.
IT IS PERFECTLY RATIONAL TO SAY THAT IN TERMS OF THE CARBON COST
OF THIS CRUDE OIL IS NOT WORTH IT TO CANADA, THE CITIZENS
OF CANADA OR AMERICA THE WORLD AND WE'RE NOT GOING TO DO
THAT I'M WE'RE GOING TO SAY IT'S OKAY BECAUSE RENEWABLE ENERGY
IS GOING TO COME UP ANYWAY AND IT TURNS OUT WE WERE RIGHT.
YOU DIDN'T HAVE TO THIS KIND OF FOSSIL FUEL.
ALL IT DID WAS HURT THE PLANET AND THEY NEVER PROPERLY
PAID FOR ITS COST.