Irrational Exemption: Tar sands pipeline subsidies and why they must end

Attributed Authors: Doug Koplow, Lorne Stockman, Anthony Swift Published: May 2012
 

For the past decade imports of tar sands crude oil or bitumen have been increasing. Tar sands is stripmined and drilled in an energy‐and water‐intensive process from under the Boreal forests and wetlands of Alberta. In the process, Canada is destroying critical habitat while releasing three times the greenhouse gas emissions as conventional oil production.

Much of this crude oil is being delivered in the form of diluted bitumen, a blend of raw tar sands oil and thinning agents like liquid natural gas. This blend is more corrosive and more toxic than conventional crude oil. Diluted bitumen is already transported on a number of U.S. pipelines and is expected to be the primary product transported on the Keystone XL pipeline. It has a higher risk of pipeline spills compared to conventional crude oil, and when those spills happen, the environmental damage is more severe.

Despite these facts, the transport of tar sands oil through pipelines in the United States is exempt from payments into the Oil Spill Liability Trust Fund. This is a free ride worth over $375 million to tar sands oil producers between 2010 and 2017, including over $160 million for shippers on TransCanada’s Keystone pipeline system. This exemption is an unnecessary subsidy, and one that ignores the elevated risks of transporting tar sands crude oil relative to conventional crude. Logically, tar sands oil transport should be subject to a higher rate than conventional oil, not exempt. 

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Tags: tar sands pipelines Oil subsidies Oil Spill Liability Trust Fund Keystone XL Pipeline