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Yes, the Koch brothers don't have a stake in the Keystone XL oil pipeline, but cancellation of the project would be a stab in the heart to Koch Industries.

Fossil Fuels

The Transportation Game: Keystone XL Pipeline, & Why The Koch Brothers Can’t Let Go

Yes, the Koch brothers don’t have a stake in the Keystone XL oil pipeline, but cancellation of the project would be a stab in the heart to Koch Industries.

A few weeks ago, the formerly close-to-the-vest Koch brothers openly put out the word that they’ll be putting up close to $1 billion to influence the upcoming 2016 US presidential election. Whether or not they succeed is not the point. Forget about 2016 — the point is that the promise of a torrent of campaign cash will keep the Koch’s favored lawmakers pushing hard for the Keystone XL pipeline right now, in 2015.

To be clear, the Keystone XL pipeline is not a Koch brothers project. But like the saying goes, follow the money…

Keystone XL Pipeline

Northern sections of the Keystone XL Pipeline (green dots are pumping stations).

The Keystone XL Pipeline

For those of you new to the topic, Keystone XL is a tar sands oil pipeline proposed by the Canadian company TransCanada. It requires State Department approval before it can be built, because it crosses an international border.

Keystone XL would carry oil from Canada down to Gulf Coast refineries for export, so despite assertions by supporters it would not benefit US consumers. For that matter, the US is already pockmarked with pipelines and this new one would only create about three dozen permanent jobs.

Nevertheless, certain lawmakers (ok, so mostly Republicans) have been pitching Keystone XL hot and fast as a uniquely important job-creating juggernaut.  In the latest development, mainly Republican lawmakers in both houses of Congress voted to approve measures that would push the project forward.

The $1 billion sure goes a long way toward explaining why so many stewards of humanity’s greatest experiment in democratic governance would engage the full force of their legislative privilege in such a misrepresentation, but we’re more interested in why two of the wealthiest men in the world — that would be Charles and David Koch — have a stake in such a sketchy premise.

The Tar Sands Connection

As noted above, Koch Industries is very clear about its connection to Keystone XL:

Koch Industries has no financial stake in the Keystone pipeline and we are not party to its design or construction. We are not a proposed shipper or customer of oil delivered by this pipeline. We have taken no position on the legislative proposal at issue before Congress and we are not cited in any way in that legislation.

Fine. However, as reported last year by The Washington Post, the Koch brothers do have a large stake in Canadian tar sands, which provides a simple explanation for their interest in Keystone XL, as reflected in their overall lobbying activities and campaign donations.

Beyond The Tar Sands Connection

That brings us around to the transportation issue. The Koch brothers understand fossil fuel transportation as much as anyone, specifically pipeline transportation.

Koch Industries has a substantial stake in pipelines through an indirect subsidiary:

Koch Pipeline Company, L.P. (“KPL”) owns or operates about 4,000 miles of pipelines that transport crude oil, refined petroleum products, natural gas liquids, ethanol and chemicals.

The numbers start to add up when you consider that a KPL subsidiary, Koch Alaska Pipelines, is a minority stakeholder in the 800-mile  Trans Alaska Pipeline.

Then there’s the Koch’s financial interest in the massive 5,500 mile Colonial pipeline system:

Colonial Pipeline Company is a privately held company with headquarters in Alpharetta…Colonial is owned by the following five entities:

  • CDPQ Colonial Partners, L.P.
  • IFM (US) Colonial Pipeline 2, LLC
  • KKR-Keats Pipeline Investors, L.P.
  • Koch Capital Investments Company, LLC
  • Shell Pipeline Company, LP

There may be others, but the point is that the cancellation of Keystone XL would be a stab in the heart to Koch Industries. It would be a dramatic indication that the US is reaching the breaking point in terms of tolerance for fossil fuel transportation infrastructure, that new transportation projects don’t necessarily add up to the kind of public benefit needed to justify eminent domain takings, and that sustained, concerted opposition to major new transportation projects can succeed.

Those new projects are especially important now that the US domestic market for petroleum is set for long-term stagnation, if not a steep decline, as renewables and energy efficiency technology penetrate the mainstream and natural gas replaces coal power plants.

Getting oil (and for that matter, natural gas) around the US and out to the export market as quickly and cheaply as possible is the name of the game now. With new pipelines springing up all over the map, communities along the proposed Keystone route aren’t the only ones feeling the pain.

Not helping much is the recent series of episodes involving existing oil pipelines.

More generally, we’ve previously noted that the emergence of renewable energy shines a harsh light on the risks and impacts of transporting massive quantities of fossil fuel around the world.

We were just recalling that none other than former Saudi Arabia oil minister Sheikh Ahmed Zaki Yamani predicted that pretty there will soon be no market for petroleum, and  now we’re thinking that pretty soon there will be no market for new pipelines, either.

As hard as it is to let go, let’s keep in mind that while thousands of US oil industry workers lost their jobs due to the ongoing price collapse, over the weekend our friends over at Fuel Fix noted that Charles and David Koch increased their combined net worth to $1oo billion as a result of the modest recovery last week, putting them at spots five and six in the wealthiest-person-in-the-world rankings.

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Image credit (screenshot): Courtesy of US Department of State.

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Tina specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.


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