January 19, 2018 10:59 pm CST
Why the Keystone Veto is Meaningless
By Alex Koyfman, Wealth Daily


If you thought the partisan atmosphere in D.C. couldn't get much pettier, the President threw a tanker car of fuel on the fire earlier this week with a polarizing veto of the Republican bill to approve the Keystone XL oil pipeline.

For environmentalists who saw the pipeline as a threat to wildlife and ecosystems and a "step in the wrong direction," as it promoted the use of carbon-hungry tar sands oil production, this was seen as a victory and a clear indicator of future policy.

keystonepipe

For the oil industry, it was a defeat.

The controversy it's spawned on the web — with representatives from both sides of the argument squaring off against one another in a contest of fact and myth slinging — has been intense. But ultimately, does this legislative chess play even matter?

Not particularly.

And I say this despite having seen the facts behind the arguments.

Environmentalists will argue, until their anemic blood turns their faces blue, that tar sands oil production is upwards of 17% more taxing on the environment in terms of greenhouse emissions and that this pipeline will bring close to 900,000 barrels of tar-derived crude from central Alberta into Nebraska daily.

They will argue that certain species, like the Whooping Crane, will be threatened by the construction.

They will argue that over the next 50 years, this pipeline is expected — even by its owner, TransCanada — to suffer at least 11 spills of 50 barrels or greater, putting local ecosystems into even more peril.

And Here's Why It's All a Bunch of Hot Air

While all of this may stir the soul and make you want to dance around a bonfire and chant for death to the oil companies, it completely ignores the fact that demand for oil — pipeline or no pipeline — isn't going anywhere anytime soon.

We'd all like to live in a world where the air and water are clean, but as it stands, we consume 19 million barrels of oil per day — and that number continues to grow.

The environmentalists that say traditional oil is cleaner to produce than tar sands-derived oil? They could be right, but the fact is, regardless of its origin, this fuel is going to get produced, refined, sold, and burned.

At this rate, it may run out long before we've got a viable replacement for it — which means finding alternative ways of producing it is up there with keeping the oceans from rising.

It's fuel we need, and we will be exploiting it for decades to come.

And all of this business about spills? Well, that's also very compelling until you look at a list of the biggest spills in history.

oilspills

Only two of them involved pipeline ruptures — a vast majority came from tanker accidents, and the biggest ones came from offshore rigs like BP's Deepwater Horizon.

Taking this into consideration, delaying the pipeline or even closing it down altogether, as many hope will happen, is just rerouting the problem and the associated risk to potentially costlier and riskier methods of delivery and production.

...Unless, of course, a magical technology comes around in the next few years that not only produces clean energy but can also easily be adapted to the current industry.

So What's to Be Done?

As much as I enjoy immersing myself in fantasies of all shapes and sizes, I prefer to make my investment decisions based on realistic possibilities and trends.

And one certain trend — regardless of the grandstanding and politicking that our leaders may be engaging in to fill in their ranks heading into next year — is more oil from less traditional sources.

I know this may sound somewhat cynical or even reactionary, but there's actually a method for producing oil that's coming into popular use by some of today's most cutting-edge petroleum companies.

The technology uses the fuel you've almost definitely seen getting wastefully burned away through flaring vents at oil refineries.

gasflare

This fuel, called APG (associated petroleum gas), is a byproduct of the oil refining process and is flared off at a rate of 150 billion cubic meters per year — worth an estimated $30 billion.

Russia is the biggest offender in burning off this potentially useful fuel, but in North America, a new trend is beginning — using gas-to-liquid (GTL) technology.

The method is called the Fischer-Tropsch process, and it was once used by Hitler's oil-starved war machine to produce precious liquid fuel for the country's tanks, trucks, and aircraft.

Today, however, it's being implemented by some very forward-thinking North American oil producers to take what was once seen as a waste product and turn it into useable, valuable fuel for use in everything from jet aircraft to standard surface vehicles.

And unlike empty political gestures — like delaying the construction of what could be a very useful, statistically safer method of delivering oil — GTL actually has the potential to lower an oil company's carbon footprint while increasing its net energy output.

Efficiency... It's the New Clean

There is one very promising company taking advantage of the benefits of GTL right now.

It's not big — meaning the profit potential is strong — but it's also not small enough to make this a pie-in-the-sky investment.

This is a real company run by people who understand the true mechanics of the fossil fuel industry — not a bunch of bureaucrats or politicians whose main goal is to smile or pout to the cameras.

Just recently, my colleague and oil industry insider Christian DeHaemer profiled this company in detail for his readers.

I couldn't help but get sucked into the simple genius of this idea. After all, its time is long overdue.

And remember, regardless of where you stand on the issue of environment, this is a win. It takes what we have and allows us to make more while polluting less.

We have to live with the realities of oil dependency. And this is not just the best investment for that — it's one of the most responsible ones, too.

To get instant access to Christian's report and learn all you need to know about this overlooked but crucial oil-refining technology, click here.

You may never look at oil the same way again.

Fortune favors the bold,

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Alex Koyfman

Coming to us from an already impressive career as an independent trader and private investor, Alex's specialty is in the often misunderstood but highly profitable development-stage microcap sector. Focusing on young, aggressive, innovative biotech and technology firms from the U.S. and Canada, Alex has built a track record most Wall Street hedge funders would envy. Alex contributes his thoughts and insights regularly to Wealth Daily. To learn more about Alex, click here.

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