The Canadians are now essentially arguing it gives them the scientific back-up to carry on drilling. The headlines are all positive:  “Canada’s oil sands: Not so dirty after all“; “Oilsands as ‘carbon bomb’ debunked”; “Oil sands proponents get a PR boost”.

The Calgary Sun ploughs in “When it comes to the world’s perception of the oilsands, the truth can be elusive. Enviro-extremists paint the massive energy reserves as the greatest global warming threat to the planet. That wild-eyed claim should be laid to rest now that one of the world’s leading climate scientists has calculated that the most serious threat lies in burning coal.”

The leading climate scientist concerned is Andrew Weaver, who holds the Canada Research Chair in Climate Modelling and Analysis at the University of Victoria, and who was a lead author with the UN Intergovernmental Panel on Climate Change.

Over the weekend, Weaver and his doctoral student, Neil Swart, published an analysis in the scientific journal Nature Climate Change, an offshoot of Nature, the world’s most prestigious science journal, about several analyses of the global warming potential of various fossil fuels.

They calculated that burning the world’s vast coal reserves would raise temperatures 15 degrees, while burning the newly found reserves of shale gas would increase temperatures of just under 3 degrees.

In comparison, they argue that if all the 1.8 trillion reserves of the tar sands were exploited – which is not going to technically happen anyway- it would raise global temperatures by one-third of a degree.

The more likely scenario is that if you burnt the 170 billion barrels of tar sands that the industry currently considers economic to produce, the warming is 0.02 to 0.05 degrees Celsius.

So – hold the front page – the vast reserves of coal are dirtier than oil. Nothing new there. We already knew that coal is dirtier than oil and that the vast reserves of coal should not be burnt.

What the Canadian press and industry have forgotten as they clutch at straws is that the tar sands has never has been a coal versus oil argument.

The tar sands is an oil versus oil argument. And in that debate, the overwhelming majority of studies independent of the oil industry show that the tar sands are more polluting. More importantly, it is an argument about disinvesting out of dirty oil and beginning the transition to a clean energy future that avoids dangerous climate change.

Even Weaver argues that “We’re not giving a get-out-of-jail-free card to the tar-sands industry. This is not the purpose of our study.”

Some sections of the Canadian press quietly admit this. “Yet what’s also clear is that Dr. Weaver’s work does little to absolve an industry that continues to be Canada’s fastest-growing source of emissions,” concedes the Globe and Mail.

Indeed Weaver argues that “If North American and international policymakers wish to limit global warming to less than 2 °C they will clearly need to put in place measures that ensure a rapid transition of global energy systems to non-greenhouse-gas-emitting sources, while avoiding commitments to new infrastructure supporting dependence on fossil fuels.”

That reads to me like a recommendation of No Keystone XL, No Northern Gateway and a rapid transition away from the tar sands.

Funny that is not how it is being spun in Canada is it? No surprises there.

Last summer we produced a report entitled “Canada’s dirty lobby diary”. The report revealed the extent of Canada’s lobbying – one of the most intense ever witnessed in Brussels.

One of the issues the Canadians were threatening the EU with was over trade.

The report noted: “The Canadian campaign is using old fashioned strong-arm tactics, with them threatening the EU over trade. Although the Canadians publicly deny any link between the EU-Canada trade negotiations and the debate on the FQD, behind the scenes they are threatening with retaliation at these trade talks.”
Since the report was published we have kept digging, knowing that the threats and dirty tactics would be continuing in the run up to Thursday, when the European Parliament will vote on whether to adopt the Directive.”

Two of the new documents we uncovered were quoted by the Guardian yesterday, in an article entitled “Canada threatens trade war with EU over tar sands”,  a story which has been widely picked up in the Canadian press.

The article quoted a letter from Joe Oliver, the Canadian Minister of Natural Resources, who wrote to the European commissioner for energy, Günther Oettinger and Baroness Catherine Ashton, Vice-President of the Commission, amongst others, stating on the 19 October: “If unjustified, discriminatory measures to implement the fuel quality directive are put in place, Canada will not hesitate to defend its interests,” he huffed and puffed.

This type of threat from the Canadians has become almost routine.  The following month, David Plunkett, the Canadian Ambassador to the EU, wrote to the Commissioner for Climate Action, Connie Hedegaard, on the 8th December 2011, again threatening the EU with the WTO.

“If the final measures single out oil sands crude in a discriminatory, arbitrary or unscientific way, or are otherwise inconsistent with the EU’s international trade obligations, I want to state that Canada will explore every avenue at its disposal to defend its interests, including at the World Trade Organisation,”  he wrote.

The WTO threat was then discussed the following day at a meeting between Mark Vanheukelen, the Head of Transatlantic Relations at the Commission and David Plunkett. At the meeting Vanheukelen  bluntly told the Canadians that “the Commission window as regards the FQD was no closed”.

So the Commission has not given into Canadian pressure, but will the European Parliament? We will find out on Thursday.

MEPs who are voting on the issue should do well to read a letter from eight Nobel peace prize winners who last week wrote a letter to the EU.

“Tar sand development is the fastest growing source of greenhouse gas emissions in Canada, and threatens the health of the planet,” wrote the Nobel Peace Prize laureates, including Archbishop Desmond Tutu of South Africa and Iranian human rights activist Shirin Ebadi, said the letter. “As the tar sands have contributed to rising emissions, Canada recently stepped away from the Kyoto Protocol. Europe must not follow in Canada’s footsteps.”

It is interesting to dissect how Heartland, which has been in crisis mode for a week now, has reacted to this scandal. And it smacks of hypocrisy.

Its first response was to argue that the authenticity of the documents had not been confirmed.  It then argued that one of the most damaging documents – its leaked 2012 Strategy – was a fake “apparently intended to defame and discredit The Heartland Institute”. This was a clear attempt to stop people from quoting from it.

The Heartland then “respectfully” asked “all activists, bloggers, and other journalists to immediately remove all of these documents and any quotations taken from them, especially the fake “climate strategy” memo and any quotations from the same, from their blogs, Web sites, and publications, and to publish retractions.”

In a section on the lessons learnt it argued that “honest disagreement” over the causes of climate change “should never be used to justify the criminal acts and fraud that occurred in the past 24 hours. As a matter of common decency and journalistic ethics, we ask everyone in the climate change debate to sit back and think about what just happened.”

If Heartland had a track record of honestly portraying the science of climate change and not exploiting previous stolen information it might well have a leg to stand on. Instead we are dealing here with an Institute that is used to promoting climate denial and one that ruthlessly exploited the leaked emails from scientists, not just with the first leak in November 2009, but also the second leak at the end of last year.

Just check a short selection of some of their headlines:

• Climategate: Emails Reveal Fraud in IPCC Reports (see photo);
• Climategate Scandal Deals Blow to Global Warming Fears;
• Heartland Institute Reacts to ‘Climategate 2’ Emails;
• Climategate 2 Emails Loaded with Bombshells

So the hypocrisy and irony of Heartland asking people to refrain from using the documents has not been lost on seven scientists whose emails featured in “Climategate.”

In a letter published in the Guardian at the end of last week, the scientists wrote:

“As scientists who have had their emails stolen, posted online and grossly misrepresented, we can appreciate the difficulties the Heartland Institute is currently experiencing following the online posting of the organization’s internal documents earlier this week. However, we are greatly disappointed by their content, which indicates the organization is continuing its campaign to discredit mainstream climate science and to undermine the teaching of well-established climate science in the classroom.”

The letter continued: “Despite multiple independent investigations, which demonstrated that allegations against scientists were false, the Heartland Institute continued to attack scientists based on the stolen emails … So although we can agree that stealing documents and posting them online is not an acceptable practice, we would be remiss if we did not point out that the Heartland Institute has had no qualms about utilizing and distorting emails stolen from scientists.”

It also said: “We hope the Heartland Institute will heed its own advice to ‘think about what has happened’ and recognize how its attacks on science and scientists have helped poison the debate over climate change policy. The Heartland Institute has chosen to undermine public understanding of basic scientific facts and personally attack climate researchers rather than engage in a civil debate about climate change policy options.”

Rather than “thinking about what has happened” the Institute is now trying to gag websites  from using the information. It has sent legal notices to numerous Web sites, blogs, and publications asking them to take down documents.

For once I agree with Heartland’s Joseph Bast when he writes  “We realize this will be portrayed by some as a heavy-handed threat to free speech.”

One of those whom has received a legal letter is of course DeSmogBlog, which was leaked the original documents.

As Richard Littlemore from the blog notes: “Heartland Institute general counsel Maureen Martin has sent letters to the DeSmogBlog and several other publications demanding that we remove all Heartland-related documents that we posted on February 14, as well as all related commentary.”

So good on DeSmogBlog for not buckling under the pressure.

As they say “We will leave them in place – in the public interest”.

 …in the long term, what the industry has affected is not increased security via Canadian oil to the gulf coast, but a concentration of the nation’s refining capacity in the heart of the nation’s hurricane corridor.  The lessons of 2005 have clearly not been heeded.

Pennsylvania labor activists marched on Capitol Hill yesterday in protest against the shutdown of three refineries in the state. Politicians from both sides supported them in their call to stem the job losses and address the imminent threat to the nation’s energy security that the loss of gasoline production in the east coast now poses.

The refining companies (Sunoco and ConocoPhillips) were quick to respond with the lame retort that some of these labor unions and politicians were supportive of failed cap-and-trade legislation that would have killed the east coast refining industry if it had been successful. What the actual impact of the failed cap-and-trade legislation would have been on the refining industry is debatable, what the refiners actually did was close ranks with their competitors by failing to mention the root cause of the failure of east coast refining. The increasing concentration of the nation’s refining capacity in the US Gulf Coast.

It is an overt strategy and is significantly based on the expected riches of processing low quality tar sands crude that would be delivered to the gulf coast by the Keystone XL pipeline.

A new refinery has not been built in America since 1976. However, through expansions and upgrades refining capacity in the gulf coast has grown over 1 million barrels per day since 2000 and is set to grow a further 325,000 b/d when the Motiva (Shell and Saudi Aramco) Port Arthur refinery commissions its latest expansion later this year.

Many of these expansions, including Motiva’s as well as those by Valero, Marathon and Total, have not just increased capacity but have been designed to enable these refineries to process greater quantities of heavy sour oil such as that derived from Canada’s tar sands. While heavy oil has always been delivered to the gulf coast from countries such as Venezuela, Mexico, Saudi Arabia and Kuwait, the timing of some of these expansions, and in some cases the stated intention, is to prepare for increasing quantities of Canadian tar sands oil that would be delivered by the Keystone XL pipeline.

The gulf coast refiners will do well out of this strategy for a number of reasons. Heavy sour oil is cheap because its low quality requires special equipment and not all refineries have this equipment. Therefore its market is limited putting the refiners at a market advantage. This is especially so as Canadian production has been booming due to rising tar sands production. Investing in that equipment is expensive but has been cushioned by favorable tax treatments that enable accelerated write offs and amount to billions of dollars in subsidy from the American tax payer.

However, gasoline prices are set by the most expensive source in the market’s pool of crude oil sources and therefore heavy oil refiners are making hefty profits out of the heavy oil discount.

But east coast refineries do not have the pipeline connections to western Canadian oil, and have historically not had access to the Latin American heavy crudes, so they did not invest in the heavy oil processing equipment. They were stuck relying on expensive light oil imports which squeezed their profit margins and led to their demise.

Meanwhile, certain gulf coast refiners have been tightening the screws further. Valero, with six major refineries on the gulf coast, many of which have significant heavy oil capacity, has been investing in European refineries with a view to exploiting the gap between diesel and gasoline prices in the Atlantic Basin (see graphic below). That means selling diesel into the European market while selling surplus (read cheap) European gasoline into the U.S. east coast market. A barnstormer of a profit making scheme for Valero; a final nail in the coffin of east coast refiners.

The result is great for the Canadian oil industry (if it gets its pipeline), great for gulf coast refiners, but has been devastating to east coast refiners. It is also quite detrimental to overall U.S. energy security.

The capacity to move gasoline and diesel from the mid-west and gulf coast refineries to the east coast will come, although will probably not come in sufficient quantity this year to prevent a painful price spike on the east coast this summer. But in the long term, what the industry has affected is not increased security via Canadian oil to the gulf coast, but a concentration of the nation’s refining capacity in the heart of the nation’s hurricane corridor.  The lessons of 2005 have clearly not been heeded.

In the end, the profit maximization maneuvers of the oil industry will never truly serve the nation’s energy security interests. The U.S. will never be able to insulate itself from the vagaries of the global oil market. That politicians and the public continue to swallow the industry’s rhetoric on energy security is a sad state of affairs precipitated by multi-million dollar advertising campaigns and a bought-and-paid-for Congress.

A price on carbon may serve us better by encouraging efficiency and diversification away from oil. Moving the oil pieces around the board, within the United States, North America, or around the world, simply maintains the status quo, and the U.S. is as vulnerable as ever to the global oil hegemony.

But after years of exploiting ClimateGate and leaks from climate scientists, yesterday they were on the receiving end of their very own leak.

The climate denial watch-dog, DeSmogBlog, was leaked details of Heartland’s strategy and funding documents exposing the heart of the climate denial machine.

The documents confirm what many people have suspected for a while: That Heartland not only receives money to fund its own climate sceptic work, but it also funds other leading sceptics, such as Craig Idso who gets $11,600 per month and Fred Singer who receives $5,000 per month, plus expenses.

Heartland is also spending a whopping $388,000 for a team of sceptics to undermine the findings of the UN climate body, the Intergovernmental Panel on Climate Change.

One of the documents leaked is Heartland’s  Fundraising plan for this year, which exposes some of the world’s best known companies, such as Altria (parent company of Philip Morris) Bayer, Eli Lilly, General Motors, GlaxoSmithKline, Microsoft, Pfizer and Time Warner, as funding the climate denial movement.

The Fundraising plan also reveals that the Koch Brothers are once again funding the Institute’s global warming disinformation campaign. Up until yesterday it was thought that the last funding was over a decade ago.

One leaked document, the January 2012 Confidential Memo: 2012 Heartland Climate Strategy states: “We will also pursue additional support from the Charles G. Koch Foundation. They returned as a Heartland donor in 2011 with a contribution of $200,000. We expect to push up their level of support in 2012 and gain access to their network of philanthropists, if our focus continues to align with their interests. Other contributions will be pursued for this work, especially from corporations whose interests are threatened by climate policies.”

So here is confirmation in writing what many people have known for years. That the Heartland Institute is effectively acting as a front group for big oil and energy, raising money from companies which are threatened by climate policies, so that it can essentially do their dirty work in undermining legislation that threatens their corporate bottom line.

And in that sense, the boys from Heartland are essentially guns for hire.

And this is where it gets interesting. The documents show that Heartland’s climate change denial machine is chiefly funded by one donor, who is just called “Anonymous”: Their identity is not even disclosed in the confidential documents. But the accounts reveal that this one donor has donated $13 million to Heartland’s climate denial work over five years, with another $1 million planned this year.

For one person to have such a huge influence on a key climate sceptic think tank is both interesting and worrying. For years the climate sceptics have operated to clear double standards. On the one hand they have repeatedly argued that climate scientists must be transparent with their work and have inundated them with Freedom of Information requests, but at the same time they have refused to come clean over who funds them.

Surely it is now beholden on the Heartland to come clean and tell everyone who their “key Anonymous Donor” is?

In the interests of transparency and credibility, it is the least the Institute can do…

The initiative came as a response to moves within the Senate to vote as early as today on a deal that would give the green light to the construction of the pipeline.

As Steve Kretzmann, the director of OCI said yesterday “After President Obama rejected Keystone XL last month, many Senators are rushing to resurrect it in order to protect their friends: Big Oil. As you read this, the oil industry is tightening the screws on the remaining senators they need to get this thing passed.”

The Washington Post reports that the bill currently has the backing of 44 Republicans and one Democrat, although Senate Democratic leaders oppose it.

The Post argues that “the amendment indicates the debate over TransCanada’s Keystone XL pipeline — which would transport heavy crude from Canada’s oil sands to Gulf Coast refineries — will continue to help define the two parties this election.”

In an amazing show of strength against the KXL, the goal of 500,000 signatures was reached just before 7 pm last night. It currently stands at over 600,000 signatures.

These will be delivered later today to the offices of Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.). Gene Karpinsky, who heads the League of Conservation Voters, told ENS Newswire that handing over 50 giant boxes each holding 10,000 signatures would be a “unified show of our power: our voices against the dollars of Big Oil.”

“Anyone who thought environmentalists were graying into irrelevance was wrong,” added Bill McKibben, the co-founder of 350.org, and one of the leading opponents of the pipeline.

McKibben continued: “The arguments by now are clear. This pipeline won’t create jobs (that’s why the biggest labor unions in the country support the President). It puts the heartland of the country at risk from spills – the kind of leaks that devastated the Yellowstone and Kalamazoo Rivers in the year past. And after the year with the most weather disasters in the nation’s history, and amidst this weird and out-of-kilter winter, the fight against climate change must start here.”

So if you haven’t already go here and sign the petition that says: “Senators: Block any efforts to revive the dangerous Keystone XL tar sands pipeline.”

So why take the time to do it? As Steve Kretzmann says the petition “will be a unified show of our power: our voices against the dollars of the fossil fuel industry.”

So please add your voice..

This could just be a great game of diplomatic brinkmanship where neither side really wants a repeat of the conflict from decades ago.

However this time at stake is not just the sovereignty of the islands but the reported large oil reserves that lie deep under the island’s waters.

For now tensions are rising. Last Friday, Argentina’s government lodged a formal protest at the United Nations over what it calls Britain’s “militarization” of the disputed Islands.

Argentinian Foreign Minister Héctor Marcos Timerman met several key UN officials including the UN secretary-general, the president of the Security Council and president of the General Assembly to present his complaint.

After his meeting, the UN Secretary-General Ban Ki Moon urged Argentina and Britain to “avoid an escalation” in the “increasingly fierce verbal crossfire” between the two countries.

Meanwhile, Timerman told reporters that Britain has increased its naval power in the South Atlantic “four-fold,” recently, including warships, fighter jets and a nuclear submarine. If such a submarine has been deployed it would violate Latin America’s status as a nuclear weapons free-zone, argues Timerman.

Meanwhile the British have hit back at the accusations, calling the charges of increased militarisation as “manifestly absurd”, adding that “nothing has changed” in the Britain’s defence of the islands “in recent months or recent years.”

What has changed since the last conflict is the islands have become one of the potential hotspots of frontier oil exploration.

Oil is now at the centre of the diplomatic row.

The British ambassador to the UN, Mark Lyall Grant argues “It may not be coincidence that this new bout of rhetoric has come about after there was some suggestion that there may be oil and gas reserves in the Falkland.”

And it looks set to get worse. A study to be handed to the UK Government this week could further escalate the conflict by arguing that if all four oil and gas projects that are currently being explored were successful the potential tax riches are likely to reach just under $180bn.

The report by oil and gas analysts at Edison Investment Research predicts the waters off the islands hold billions of barrels of oil. The largest, Loligo, potentially holds in excess of 4.7bn barrels of oil. By comparison Catcher, the biggest discovery in the British North Sea of the past 11 years, is believed to hold only 300m barrels.

Ian McLelland, co-author of the report, said the islands look set to be transformed by the oil industry, although “The proverbial spanner in the works that remains is the ongoing political dispute between Britain and Argentina regarding sovereignty of the Falklands.”

British Conservative MP Rory Stewart believes Argentina’s rhetoric will only get tougher if commercial discoveries of oil are made: “They will be saying that we have a chance to get our hands on this oil.”

Meanwhile the majority of Britons now think the dispute over the Falklands is more about oil than the rights of the islanders, but also agree that potential oil makes them worth defending.

A poll conducted last week revealed that 53% of those asked thought the UK and Argentinian governments were more concerned about securing the rights to oil than the islands themselves.

The refineries that are linked to the Keystone XL tar sands pipeline as committed shippers will receive between $1 billion and $1.8 billion in tax breaks. They are paid specifically for investing in equipment to process the heavy sour oil the pipeline promises to deliver.

The largest of these refineries, Motiva, is half owned by Saudi Refining Inc., and will receive between $680 million and $1.1 billion in U.S. taxpayer support.

Keystone XL, like all oil industry projects, is enabled by substantial taxpayer subsidies. Three of the refineries that are planning to process the pipeline’s oil have invested in special equipment to handle the extra heavy tar sands oil. According to our conservative estimates, the U.S. taxpayer is subsidizing these investments to the tune of $1.0-1.8 billion. Here’s how it works.

Tar sands oil is not like most other crude oil. It is a semi-solid bituminous sludge that has to be diluted with much lighter oil in order to be transported by pipeline. Once it arrives at a refinery, the diluent is removed and the bitumen is refined into petroleum products using special equipment. The equipment required includes cokers and hydrocrackers.

In anticipation of the Keystone XL pipeline, three refineries in Port Arthur, Texas have added this equipment in order to be able to profitably process the bitumen. Their goal is to maximize their production of high value fuels such as gasoline and diesel rather than be left with less valuable fuels such as residual oil (for shipping and industrial burners) and Petroleum Coke, a coal like substance that is burned in aluminum smelters and the like. Heavy oil yields high proportions of these less valuable fuels if you do not have the specific equipment to increase the higher value yield.

Special tax rules apply to these investments that are unique to the refining industry. Title 179C of the tax code allows the refining companies to deduct the value of these investments from their tax returns at a highly accelerated rate. Rather than spread the expense over the life time of the equipment, say 20-30 years, the refiners are allowed to expense (i.e., deduct from their taxable income) 50% in the first year and expense the rest through the next 9 years. This is tantamount to a massive interest free loan from the taxpayer to big oil refiners, making it cheaper for them to process a particularly dirty form of foreign oil. In the case of the three Port Arthur refineries preparing to process Keystone XL crude, we calculate this to cost the taxpayer between $1.0 billion and $1.8 billion.

In the case of the Valero Port Arthur refinery’s hydrocracker project, the company has described the project to investors as one that will enable the refinery to process Canadian heavy oil into diesel and jet fuel for the export market. See below.

Does that look like the ‘national interest’ to you?

Of the three refineries involved, two of them, Valero Port Arthur and Total Port Arthur made these investments explicitly to process Canadian heavy oil that would be delivered by Keystone XL. Both companies are committed shippers on the pipeline meaning they have signed contracts committing them to a specific proportion of the pipeline’s capacity.

The other refinery, Motiva Port Arthur, jointly owned by Shell and Saudi Aramco, is expected to take some Keystone XL oil but it is also expected to use the new equipment to process large quantities of heavy sour oil imported from Saudi Arabia.

When the work finishes later this year, this refinery will become the largest in the United States.  It will have the capacity to process up to 325,000 barrels per day of heavy sour oil. The United States is not a significant producer of heavy sour oil. Countries that are expected to increase their production of this difficult-to-process crude include Canada (tar sands), Venezuela, Colombia, Saudi Arabia and Kuwait among others. So the subsidy received by this refinery is directly to enable the processing of a particularly dirty form of oil that is not produced in America.

Hmm, what was it pipeline proponents, including the owners of these refineries, were saying about reducing dependence on oil from hostile and unstable countries?

The special tax treatment of refinery investments that allows the 50% accelerated depreciation was introduced in the 2005 Energy Policy Act and was targeted at refinery investments that expand the capacity of the refinery. However, in August 2011, the act was amended specifically to extend the tax break to refinery investments that enable the refinery to process tar sands oil or enable an increase in capacity to refine tar sands oil if the new equipment is commissioned between 2008 and 2014. All of these projects qualify.

We have calculated the value to these three companies of this accelerated depreciation for the investments listed in the table below. These investments were made specifically to process heavy sour oil in refineries closest to the terminus of the proposed Keystone XL pipeline and owned by companies who are known committed shippers on the pipeline.

Finally, all the refineries that will receive Keystone XL tar sands crude operate are in a Foreign Trade Zone (FTZ), which gives tax benefits to companies that use imported components to manufacture items within the United States (FTZ Act – 19 USC 81a-81u). Usually, refineries importing oil tax-free will still pay taxes when selling the refined products into the U.S. market. By both importing into and exporting from foreign trade zones the companies will avoid paying tax on the product sales.  In other words, it’s a great deal for the oil industry, and a raw deal for the taxpayer.

Nobody in the oil industry can claim that Keystone XL, or any other oil and gas project, is free of taxpayer support. The subsidies we have revealed here are just a few examples among many forms of fiscal support to Keystone XL and the tar sands industry. Further, the full costs of our oil addiction in terms of health, environment and security are never included in an official analysis of these projects.

The public has the right to both know how our money supports Big Oil and see a thorough evaluation of any proposal the oil industry has for expanding its infrastructure. Such an examination would throw light on the true costs of expanding fossil fuel infrastructure at a time when we need to reduce our dependence on oil, rather than simply trumpeting the short term benefits to companies involved. Now that the project has been stopped, the true cost of Keystone XL is only just coming to light.

For full details of our analysis see here.

Table: Three refinery refit projects intended for processing Keystone XL oil

Yesterday, Bloomberg reported that “the U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo triggered a recession and led to lines at gasoline stations.”

On the surface, at least, America’s recent gas revolution is great news for people worried about energy security and jobs. Domestic oil output is said to be the highest in eight years.

And as Bloomberg reports “The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal.”

So America is moving from an importer to having so much gas it has a gas glut. Bloomberg reports that so great is the gas boom that it could even become the world’s top energy producer by 2020.

Other media outlets are full of stories of even more unexplored basins that could have huge gas reserves too.

As any regular reader of this blog will know the expansion in gas production isn’t without a hugely controversial downside – fracking – which has been shown to cause widespread water contamination and ever minor earthquakes.

Ironically Bloomberg points out that gas glut is forcing down the gas price which is also making the use of alternative energy sources such as solar, wind and nuclear power less attractive. Still, says Bloomberg, “those concerns probably won’t be enough to outweigh the benefits of greater energy independence.”

But there is another major downside about gas that the oil industry doesn’t want you to know about.  One which has major ramifications for climate change.

Proponents of natural gas have long argued it is a “clean” fossil fuel, cleaner than oil and a great transition fuel that bridges our addiction to fossil fuels as we head towards renewable energy sources.

But gas may not be as clean as the industry would like you to believe, due to high leakage of methane.

As Nature reported yesterday:  “When US government scientists began sampling the air from a tower north of Denver, Colorado, they expected urban smog — but not strong whiffs of what looked like natural gas. They eventually linked the mysterious pollution to a nearby natural-gas field, and their investigation has now produced the first hard evidence that the cleanest-burning fossil fuel might not be much better than coal when it comes to climate change.”

Nature reports that researchers at the National Oceanic and Atmospheric Administration (NOAA) and the University of Colorado, Boulder, estimate that gas producers in an area known as the Denver-Julesburg Basin are losing about 4% of their gas to the atmosphere and this does not include potential losses in the pipeline and distribution system, which could also be significant.

This is more than double official estimates by the industry.  As Nature argued “And because methane is some 25 times more efficient than carbon dioxide at trapping heat in the atmosphere, releases of that magnitude could effectively offset the environmental edge that natural gas is said to enjoy over other fossil fuels.”

“If we want natural gas to be the cleanest fossil fuel source, methane emissions have to be reduced,” argues Gabrielle Pétron, an atmospheric scientist at NOAA and at the University of Colorado in Boulder, and first author on the study, currently in press at the Journal of Geophysical Research. “I think we seriously need to look at natural gas operations on the national scale.”

Sources: Compiled from the quarterly results of each company, publicly available on the investor pages of each company’s websites.

$135 billion

Not the 2010 GDP of Hungary or Kuwait, no it’s slightly more than either of those. In fact, if it was a figure for the 2010 GDP of a nation, it would rank 54th, between Kuwait and Ukraine.

It is in fact the combined 2011 profits of the five largest international oil companies.  These are the same companies that receive much of the over $10 billion in subsidies and tax breaks that the federal government lavishes upon the oil and gas sector every year.

All in the name of maintaining our addiction to oil at precisely the time when we should be reducing oil use to prevent catastrophic climate change.

We need to get the money out of politics and get serious about standing up to Big Oil.

Watch this space…