The writer is publisher of the York (Neb.) News-Times.
If you transport petroleum products through a pipeline in the U.S.A., you have to pay an 8-cents-per-barrel excise tax to the Oil Spill Liability Trust Fund. If the Keystone XL goes through and transports about 700,000 barrels a day, TransCanada would have to pay about $56,000 into the fund every day. That would be about $20 million a year.
But here’s some breaking news. The Internal Revenue Service, the agency that has to collect these taxes, has ruled that TransCanada’s Keystone XL won’t have to pay the tax. What? These high-pressure tar-sand pipelines are spilling all over the place and TransCanada doesn’t have to pay into the Oil Spill Trust Fund? Yes, you read it right. That is correct.
Why? The IRS has ruled that the tar sand, or diluted bitumen as it’s called after it’s diluted with poisonous chemicals, is not oil! The IRS says it is not even a petroleum product! If I were reading this, like you are, I would say, “Greg, you have been sniffing too many pipeline fumes! You must have your information wrong!”
As I write this, I am looking at the Internal Revenue Service TAM (Technical Advice Memorandum), dated Jan. 12, 2011. In this document the IRS cites a House Ways and Means Committee ruling from years ago that “crude oil” does not include shale oil liquids from coal, tar sands or biomass, or refined oil. The report also describes what constitutes “petroleum products.”
The IRS report concludes by stating, “The House Report clearly indicates Congress’s intent to exclude tar sand from the definitions of crude oil and petroleum product. ... Accordingly, tar sands imported to the United States are not subject to the excise tax.”
The TransCanada folks call it oil when they want to sell us on their dangerous idea. They call it an oil pipeline when they overstate the number of jobs this project would create. They call it an oil pipeline when they exaggerate the amount of property taxes they would actually pay.
The senators and representatives who have bought into this lunacy call it oil. But now, when they realize it will be taxed, suddenly it’s not oil any longer!
So, what the heck is it? Well, I am going to tell you, for two reasons. One, TransCanada won’t, and two, I think you need to know exactly what would be going right through our drinking water.
It is dilbit, diluted bitumen. We don’t worry too much about the bitumen. It is a mixture of clay and sand and petroleum product, and has the consistency of peanut butter. You can’t pump that through a 36-inch pipe, so it has to be diluted. That’s the part to worry about.
About 40 to 70 percent of what’s in the pipe is bitumen. That leaves 30 to 60 percent of something else. Those are the diluents, and they can kill you! A dilbit safety data sheet says: Smells like rotten eggs because of the hydrogen sulfide; contains benzene, which causes cancer in humans along with serous blood disorders, including leukemia, and can damage nervous systems, including fingers, feet and arms.
Dilbit contains PNAs, polynuclear aromatic hydrocarbons, which can cause skin cancers if they come into contact with skin. Inhalation of PNAs can cause lung cancer.
The safety data sheet goes on to say about dilbit: Don’t inhale the vapors as the hydrogen sulfide may cause irritation, breathing failure, coma and death without any warning odor being sensed.
If dilbit is spilled on land, the safety sheet says, “Keep public away. Vapors or dust may be harmful or fatal.” If spilled in water, “Product will submerge after a few days of weathering.”
Folks, that means it sinks in water. TransCanada says it floats. We know that is not true as Enbridge Inc. is still cleaning the bottom of the Kalamazoo River after 1 million gallons spilled in 2010.
So what is it? It’s tax-free, according to the House of Representatives, because it is not “oil.” It is oil, according to Trans- Canada.
Oh, something else Congress did. It set a $350 million liability limit on each oil spill, so if the company goes over that amount to clean it up, the Oil Spill Trust Fund kicks in. (But TransCanada won’t be paying into the fund for the Keystone XL, so who pays? The Michigan spill has cost more than $800 million so far and is still rising!)
So if you are one of those who still think this project will create 200,000 jobs, end our dependence on unfriendly oil and will never spill, then I submit it’s actually you who might have been sniffing too many pipeline fumes.
Contact the writer: greg.awtry@ yorknewstimes.com