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The Koch Brothers' Chavez Problem

The Venezuelan president won't hand over the crude. So the Koch's are pushing for Keystone.
 
 
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Photo Credit: Flikr/Cláudio Vaz

 
 
 
 

I’ve been tracking a tube of black putrid ooze, a toxic viper slowly slithering 2,000 miles across the belly of America, swallowing all water aquifers, politicians and reason in its path.

The XL Keystone Pipeline.

As Nagini, the murderous snake in the Harry Potter tales, had its master Voldemort, I figured the Keystone XL Pipeline must also have its own dark lords.

And the Dark Lords of the Keystone Pipeline left clear clues: environmental horror, political payouts and the odour of sulphur stronger than explained by the stinking hot tar inside it. I smelled Koch.

David and Charles Koch are each worth $20 billion (£12.7 billion), and they’re quite certain that’s not enough. And so they need the XL Keystone Pipeline.

The XL Keystone will take Canadian tar-sands oil, the filthiest crude on the planet, and suck it down to Texas’ Gulf Coast refineries. Alberta’s oil-glop reserve, if it can get to the US market, will warm the planet by nearly 0.4°C all by itself.

Why in the world would America pistol-whip Mother Nature to bring oil to Texas? I mean, it’s just plain weird to suck heavy tar oil out of Canada to drag it across the entire middle of the USA and import it into the oil-exporting Lone Star State.

Here’s where a little lesson in oil chemistry comes in. You can’t just throw any old crude oil into an oil refinery. These giant filth factories are actually quite sensitive. The refineries of the Texas Gulf Coast are optimised for heavy crude.

It would cost billions of dollars to rebuild the giant Flint Hills Corpus Christi Refinery, owned by Koch Industries, to use the less-polluting Texas oil drilled nearby.

The Kochs need heavy crude. But the Brothers Koch have a problem. Heavy crude is controlled by a heavy dude – President Hugo Chavez of Venezuela.

In case you haven’t heard, the US Department of Energy now says Venezuela, not Saudi Arabia, has the world’s largest petroleum reserve – including the overwhelming bulk of the planet’s heavy crude.

And Chavez is not giving it away. “We are no longer an oil colony, Mr Palast,” Chavez told me during one of our meet-ups in Caracas.

He wasn’t kidding. Venezuela’s export price now averages around $100 (£64) a barrel.

So the Kochs have turned their gaze upward – to Canada, where Alberta oil men are selling their tar-sands gunk for a whopping $33 (£21) a barrel less than Chavez’s heavy. Do the maths: With 289,000 barrels a day refined at Corpus Christi, switching from Venezuela heavy to Canadian tar could put an extra $3 billion (£1.9 billion) a year into the pockets of the Kochs.

However, there’s a problem. Between Canada and Houston is the United States. At the moment, there’s no pipeline that can take all that cheap crude south. The southbound pipeline network now chokes at Cushing, Oklahoma, which is already blocked with 47 million barrels of crude sitting in storage tanks with nowhere to go.

So all the Kochs have to do is get the US government to agree to pop a pipe through Cushing to Houston: the Keystone XL. But that would require that the US government go stark raving mad, commit environmental suicide and reverse all policy to slow global warming – all to bring in foreign oil while the US itself is suffering from a major oil and gas glut.

How will the Kochs pull that off?  Easy. They only need a diplomatic war with Venezuela, and their “Themis” machine, a unique tool which can drill deep into huge reserves of heavily-oiled politicians.