Keystone and the Mixed Blessings of Cheap Oil

Editor's Note: Our energy industry insider - who for professional reasons must remain anonymous - yesterday explained how the Keystone XL Pipeline debate is largely a political football. Today, he advances his controversial expos é of Keystone in the context of today's cheap oil, and whether the project would do more harm than good. This shows how energy investors should position their portfolios to reap the best returns at the lowest risk. To understand the logic behind the Keystone XL pipeline requires a trip back in time. When Keystone and its associated 830,000 barrels of oil per day were announced in 2008, U.S. crude production was at lows generally not seen since 1950 - right around 5 million barrels per day. Meanwhile, U.S. oil imports were rampant, near their all-time highs of 10 million barrels a day. Worse yet, over half of U.S. imports, again a near-record high of 5.6 million barrels per day, came from countries that don't like us very much (i.e., OPEC). In a nutshell, the U.S. oil and gas industry was in decline, without much hope for a real renaissance. We were meeting a whopping two-thirds of our appetite for oil with imports, and over half of those imports were coming from potentially unstable, if not outright hostile, nations. In that context, Keystone looked like a great idea. Decisions based on these assumptions - such as the decision to green-light Keystone - seem in retrospect to be perfectly reasonable. Unfortunately for the project and the economy at large, the energy industry has since changed dramatically. These changes have altered the project's consequences for everyone... Tags: Keystone , keystone pipeline 2015 , Keystone Pipeline debate , keystone pipeline project , keystone pipeline pros and cons , Keystone Pipeline ruling , keystone xl pipeline To get full access to all Money Morning content, click here About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free . Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors. Disclaimer: © 2015 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201. The post Keystone and the Mixed Blessings of Cheap Oil appeared first on Money Morning - We Make Investing Profitable .