Why You Should Oppose the Keystone XL Pipeline

by Chris Mayer.

There is one reason why you should oppose the proposed $5.3 billion Keystone XL Pipeline. And it has nothing to do with “green religionists,” as The Wall Street Journal calls the opposition in today’s paper.

Instead, it has everything to do with a foreign oil company using U.S. government power to force Americans off their land in the name of “eminent domain.” It has everything to do with putting a 78-year-old grandmother in jail, pepper-spraying protesters and using other bullying tactics that would make the Mafia proud.

This pipeline would connect the oil and gas producers in Western Canada with various U.S. endpoints. There are all kinds of economic benefits for a new pipeline. You’ve probably heard about the 16,000 jobs, for instance. I’m not disputing the supposed benefits.

What I don’t like is the eminent domain abuse. In fact, I don’t like eminent domain at all. The fact that a government can force you off your own property shows that property rights are not secure, even in the U.S. As the great economist Murray Rothbard put it:

“Certainly no one can say that the inviolability of private property is protected by the government. And when government confers this power on a particular business, it is conferring upon it the special privilege of taking property by force.”

The latter is what’s happening here. There have been many eminent domain actions against property owners in Texas, for example. One of the most famous is the case of the 78-year-old grandmother, Eleanor Fairchild. Police arrested her and threw her in jail for a night. Why? She was trespassing — on her own farm! A Texas court condemned the property at TransCanada’s request after she refused to sign over her property. They seized it anyway.

There are many more such stories. All you have to do is Google “TransCanada Pipeline” and “eminent domain.” You will find a long trail of news stories covering the struggles of property owners against the thuggish oil company and its bullying government henchmen. You’ll find the pepper-spraying protesters, threatening letters and other nastiness. And you’ll find TransCanada stealing a lot of property.

Here is an excerpt from an article from the Austin-based Statesman:

“The pipeline’s southern segment doesn’t require an international permit. It crosses about 800 tracts of land in Texas. According to The Associated Press, TransCanada has claimed eminent domain to condemn more than 100 of those tracts — an unusually high condemnation percentage (about 12.5%) for a pipeline project in Texas.”

Proponents of the pipeline overlook all this.

Even The Wall Street Journal, in today’s editorial “No More Keystone Excuses,” doesn’t even mention the word “eminent domain” at all. Instead, it paints the opposition as a bunch of loony lefties who “want the world economy to run on windmills and solar panels.”

Shame on The Wall Street Journal.

Shame on them for saying nothing about the ranchers and farmers who don’t want to give up their land. I can’t imagine a more American cause than the simple defense of someone’s property.

And don’t bother writing me emails telling me all the good the pipeline will do. I don’t care. I don’t care if 99 people benefit and one guy gets the shaft. I’m for that one guy. What is liberty if not for the minority against the majority? It is nothing. If a minority of one cannot make his legitimate rights stand up against the onslaught of majority opinion, then those rights are a legal fiction and there are no rights for anyone.

I also don’t care how unintrusive the pipeline may seem to you. If a property owner doesn’t want to grant the right-of-way, then that is the end of the discussion. It doesn’t matter if the pipeline is largely hidden or takes up only a tiny percentage of a ranch or farm.

In my view, the government should have nothing to do with the pipeline.

If TransCanada wants to build a pipeline, then it should be able to build that pipeline — provided it finds other consenting parties to grant it the required easements. If not, then too bad. That is the price of liberty. The oil will have to find some other way to market, or perhaps never will.

And here, at least, the Journal and I can agree. As the editorial says:

“If the Alberta oil doesn’t flow south to America via the Keystone XL, it will flow west to China via other pipelines or rail. It will also flow to the Gulf Coast by other means, including pipelines and rail to East Coast ports, and then via tankers in the Atlantic and around Florida.”

That is true. The oil will get out. There is too much money at stake.

Sincerely,

Chris Mayer

Original article posted on Laissez-Faire Today

Chris Mayer is managing editor of the Capital and Crisis and Mayer's Special Situations newsletters. Graduating magna cum laude with a degree in finance and an MBA from the University of Maryland, he began his business career as a corporate banker. Mayer left the banking industry after ten years and signed on with Agora Financial. His book, Invest Like a Dealmaker, Secrets of a Former Banking Insider, documents his ability to analyze macro issues and micro investment opportunities to produce an exceptional long-term track record of winning ideas. In April 2012, Chris released his newest book World Right Side Up: Investing Across Six Continents. 

  • Noirceuil

    I trust, Chris, that you never drive on any of the Interstate highways in protest of the land that was expropriated for their construction.

  • ROAS

    Chris – all pipelines face the same situation as doesTransCanada. You single out TransCanada for extreme condemnation with high emotionals – as if this is an international incident and a brash land grab by a dastardly entity from that pariah to the North that must be resisted with all the patriotic fervor that can be mustered. A little over the top don’t you think?

    I am far from an expert on pipelines but does not a pipeline right of way ordinarily involve a temporary use of the subsurface? The land owner suffers a temporary loss of use of their property – for which they are compensated – the pipeline will be laid and then the land owner can resume access over the right away, and typically even farming and most other land uses – except building. THis should be because the pipeline is buried deep enough to permit most ordinary uses of the land. You probably drive a car that is somehow serviced by a pipeline that transported oil over some land that was “taken” by someone at some time by an eminent domain action. With so much indignation – stop driving a car and using gasoline or other fossil energy to show that you are REALLY as principled and against the concept as you claim to be.

    If you want to condemn all uses of eminent domain – you are free to do so, but remember TransCanada is no different than a 10000 plus US based companies which are doing similar (and including entitie other than pipeline companies that may have taken “land” for other “permitted” purposes. So why was TransCanada signled out for condemnation? You come across as if TransCanada is some kind of ruthless foreign invader (and like you do not find US companies doing the same)? Your emotional patriotism clouds your report and is as distasteful as the real underlying issue of eminent domain that you profess to rail against. TransCanada is not the only company that may access eminent domain, and in the end it is the legal system that permits and enforces it. So if you want to rail against that – do so, – my suggestion – tone down the unproductive anti Canadian business rhetoric and direct your vitriol towards the entity with whom I believe your real quarrel exists – the government.

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  • Scijapophis

    What a great article Chris. How do you think the CEO of TransCanada would feel if he were forced from his home through eminent domain action? and because I live in Alberta, there is no secret about the rare cancers on the rise throughout communities in the North especially among the young indigenous people. How sad that no one considers the impact on them.

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  • Rusty Fish

    Seemingly the appropriation has inalienable link to capitalism.
    A common phenomenon occuring especially when a state turns socialism
    to capital privatisation. In the hand of a bunch of zombie, that would be maximize
    individual profit by all means be it decent, dirty or unscrupulous. The added
    net cashflow inevitably may be squandered away in the name of giving
    the populace a better living, leaving the earth surface tattered with
    moon craters. The pertinent engineering wave has only lately manifest itself
    across the ocean.

  • Roger

    Chris, thanks for a great article.

    In essence, the “taking” of private property by eminent domain is not any different than the “taking” of private property for other uses: zoning, setbacks, urban renewal, even taxation, just to name a few. In every single case of taking, whether legal or illegal, someone is forced to give up private property for the use and/or abuse of someone else.

    We understand that illegal taking is wrong–theft, fraud, murder, rape, slander, etc. What is not so clearly seen is that legal taking is just as wrong. In the eighth commandment to the Hebrews, Moses said, “You shall not steal.” Ever since people have corrupted that in many ways. “You shall not steal, except by majority vote.” “You shall not steal, except by government action.” “You shall not steal, unless you are driven to it by external circumstances.”

    Private property in America today is not private at all. It is controlled and regulated, perhaps even expropriated, by society in general and civil governments in particular. A man’s home is not his castle. It can be taxed away from him. It can be zoned out of existence. It can be condemned and taken by eminent domain. It can be seized and destroyed because it doesn’t meet the “standards” of the community. In short, private property doesn’t really exist at all. Everything is owned by the State or society. This is not liberty or freedom, it is socialism and far too many people buy into it because they do not understand what it really means to be free.

    I would rather live next to a junkyard and breathe free than to live in a gated community where every blade of grass must be manicured to exact specifications.

    Keep up the good work.

  • Miss Red

    People need to do more research. Here’s a good article about the pricing & money the oil companies make. Plus – there are refineries on the EAST coast where jobs have been lost that are able to produce with little criss-crossing around the states.http://www.washingtonpost.com/blogs/keystone-down-the-line/

    Typical one sided reporting!

  • george

    So, you believe foreign companies should be able to seize the private property of Americans? That’s your argument? Transcanada IS a foreign invader to the people affected.

    Try that out on the public and see how it goes over.

  • nofabians

    As a Canadian who lives in BC I prefer the “Northern Gateway” to Kitimat, or the Kinder Morgan twinning proposal to Burnaby BC. Both are being protested over by the “environmental movement” largely funded by the US based Tides Foundation…which seems to be a slush fund for US oil interests to keep Canadian oil flowing south, where it costs X as opposed 1.5X if sold off shore. As Asian interests continue to acquire ownership in Canada’s oil patch I wonder which projects will proceed?

  • A F

    I loathe eminent domain as much as the next guy. But I wonder if a compromise position might be to pay the landowner ten times the market or business value of the property. Would that be reasonable?

  • Roy

    Here in Canada we’re used to foreign companies pushing their weight around. Most of them used to be American but now they’re being replaced by the Chinese. I truly don’t believe it’s the fault of a corporation if it does what is legally allowed. It’s the eminent domain laws that need changing but that won’t happen because corporations own your politicians. After all, unlike anywhere else in the world, in America, politicians and the Supreme Court have elevated corporations to the status of people with the same rights.

  • NoybSon

    10,000+ US cos. are doing the same thing? Ten thousand, hmm…

    Wouldn’t go so far as to equate the power/effect (distasteful or not) of Chris’s conviction with that of eminent domain. Unless you truly do believe he is that ‘over the top,’ which is fine. I didn’t gather that impression, but you bring up some good points. As for driving a car that is indirectly (supposedly) benefited by eminent domain, that’s a bit of a stretch. Might as well disengage from any number of routine daily activities, lest they have tenuous, roundabout ties to the enforcement of eminent domain ‘by someone at some time.’

  • asiequana

    India is a case in point of what happens without some state right to acquire land. Infrastructure build is at a standstill because any one individual can put any infrastructure project on hold. Highways have to go from 6 lanes to 2 because some farmer refuses to sell his land at any price. I think the US system does a relatively good job of balancing between the rights of the individual land owner and the need to consolidate land holdings to reduce distribution inefficiencies that ultimately limit economic growth.

  • Stephen N. Jacobs

    I am a dual citizen with Canada and a Social Democrat NDP in Canada and a strong Obama Democrat in America ( Lean Forward ) in America so we finally get some progress, socialism and new thinking in the United States……. My goodness, we need the Keystone Pipeline built to get the oil shipped southward to the Gulf of Mexico that will be taken by busting through the shale (fracking the shale) in Alberta and fracking the shale all the way southward from south-eastern BC, Alberta……. And this pipeline can collect oil from fracking shale in southern Saskatchewan, southwestern Manitoba, eastern Montana, western North Dakota, eastern Wyoming, southern Idaho, eastern Colorado, western North Dakota, western South Dakota, western Nebraska, eastern Colorado, western Kansas, western Oklahoma and northwestern Texas. This can be a real bonanza of an opportunity for an artery of domestic oil to be constructed to upset the control that the environmental movement ( especially the Sierra Club ) and OPEC ( and its allies in the Middle East ) both have had over planning and development across the entire continent of North America for the past fifty years

    A few short sentences to sum-up: We need the Keystone Pipeline because we need the jobs and the cheap oil. We don’t want OPEC control anymore. We need to bust the shale since the oil is plentiful in North America, both in Canada and in the U.S. …. Also President Obama needs to tell the environmentalists to f-off….. Finally with the Keystone Pipeline built, we won’t have to put up with the arrogance coming from the environmental movement and especially their Sierra Club.

  • Stephen N. Jacobs

    Let me put this in algebra to make this real simple for slow learners like myself:

    For energy, here is what we we need to cut our energy bills down to nothing and start to prosper and enjoy life here in North America

    ( atomic power ) + [ Keystone Pipeline: oil + natural gas ] + ( hydro-electric power )

    In politics, here is what we need to keep doing in America:

    NDP in Canada everywhere except BC, and Obama Social Democrats in the U.S. everywhere.

    And in the U.S, we put the Republicans, conservatives, liberatarians and corporatists out-to-pasture, forever.

    In economics: we export oil, and we pay-down the national debt in both Canada and the U.S.

    In ideology on college campuses: We exile libertarians and environmentalists. We welcome back once again social democrats and progressives.

    In language, we welcome all languages and cultures as much as possible after 9/11.

    In immigration, we welcome Canadians, Mexicans, Americans and most everyone as much as possible after 9/11.

  • Stephen N. Jacobs

    Chris: I am sure that problem with the issue of eminent domain and a grandma’s farm in Texas could be solved very easily with money. Can I show kids here in middle school how to convert one million dollars into one billion dollars, in arithmetic using a power of ten? (These are great applications of applied math for middle school kids, and I am sure grandma down in Texas would approve of this application totally here. )

    $ 1,000,000 x 1000 = $ 1, 000,000,000 = 1 x 10^6 x 1 x10^3 = 1 x 10^9 = one billion dollars.

    And all of a sudden: the eminent domain problem goes away, and grandma is a friend of the oil companies. :)

    My name is Stephen N. Jacobs, and I am so sick of listening to this horse manure about freedom coming from the Republican Party and global warming coming from the environmentalists in the Democratic Party…….. Wouldn’t you agree?

  • bilejones

    Agree.

  • bilejones

    In the eighth commandment to the Hebrews, Moses said, “You shall not steal.”

    And those people have assiduously followed that precept ever since, of course.

  • http://www.facebook.com/james.macinnis.129 James MacInnis

    Corporations have more rights then the people. They have al the money with which they can buy and corrupt politicians. We on the other hand think we are free but elections are just a facade to decieve us into thinking we have some control over the direction our country is going. Nor can we reckon on the charactor of the Canadian or American people, most of whom are living in a matrix, to change this!iThe dye is cast, total collapse is coming and power is placed in the hands of those who will use it.

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