Keystone XL pipeline would raise U.S. gas prices – and Obama notices

  • Published on July 30th, 2013

The oil industry has constantly touted the Keystone XL Pipeline from Canada as a glorious project to increase petroleum supplies for gas prices LOL OMG WTFU.S. consumers and provide thousands of jobs for the unemployed, but a new study reveals that the construction of the pipeline would actually cost U.S. consumers dearly at the gas pumps.

The White House has apparently read the report, according to Consumer Watchdog. Obama told the NY Times: “Oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States. In fact, it might actually cause some gas prices in the Midwest to go up where currently they can’t ship some of that oil to world markets.”

“Why approve the project, then?” Consumer Watchdog asked.

On January 4, 2012, Catherine Reheis-Boyd, President of the Western States Petroleum Association, wrote an article on the association’s website extolling the “virtues” of building the Keystone XL pipeline and expanding hydraulic fracking.

“Take the Keystone XL pipeline, for example,” Reheis Boyd gushed. “We continue to debate and delay a project that would bring more of Canada’s vast oil resource to U.S. consumers, improve our nation’s energy security, and put an estimated 20,000 Americans to work immediately. And while California and other western states won’t directly benefit from the Keystone pipeline, it’s a project with such obvious and urgently needed benefits that it should have been approved and embraced long ago.”

Reheis-Boyd then went on to tout how “green” the environmentally devastating practice of hydraulic fracturing is. “In California, we’re hearing more and more discussion about hydraulic fracturing, a technique used to release oil and natural gas from shale formations deep underground. Hydraulic fracturing has been controversial in other parts of the country but in California, where it is used to produce oil, not natural gas, it has never been linked to any environmental harm,” she claimed.

Ironically, Reheis-Boyd wrote this article lobbying for the construction of the Keystone XL Pipeline and increased fracking in the Golden State just four days after controversial “marine protected areas” created under her leadership went into effect in Southern California.

Besides serving as President of the Western States Petroleum Association, Reheis-Boyd also wore another hat – she chaired the Marine Life Protection Act (MLPA) Blue Ribbon Task Force that created these alleged “marine protected areas.” These “marine protected areas,” bowing to ocean industrialists like Reheis-Boyd, fail to protect the ocean from oil drilling and spills, fracking, pollution, wind and wave energy projects, military testing and all human impacts on the ocean other than fishing and gathering.

In contrast with Reheis-Boyd’s rosy assessment of the Keystone XL Pipeline, a new report by Consumer Watchdog reveals that pipeline will raise gasoline prices in the United States, hiking prices at the pump 20 to 40 cents per gallon in the Midwest, with no long-term economic benefit to the U.S. economy.

The report finds that:

Drivers, especially in the Midwest, would pay 20 cents to 40 cents more at the pump if the disputed pipeline were built, as the current discount of up to $30 a barrel for Canadian oil disappears.

The true goal of multinational oil companies and Canadian politicians backing the pipeline is to reach export outlets outside the U.S. for tar sands oil and refined fuels, which would drive up the oil’s price.

With U.S. oil production rising fast, any “energy security” benefit for the U.S. would vanish as American oil output exceeds that of Saudi Arabia in about 2020, according to the International Energy Agency.

The report, produced by Research Director Emeritus Judy Dugan and independent energy analyst Tim Hamilton, utilized industry data, public records and company documents. Access the report, charts and graphics here.

“Keystone XL is not an economic benefit to Americans who will see higher gas prices and bear all the risks of the pipeline,” said report author Judy Dugan. “The pipeline is being built through America, but not for Americans.”

“A vote for Keystone is a vote to raise gas prices on Americans and send the profits to a foreign oil company,” said clean-energy investor Thomas Steyer, one of America’s most successful businessmen.

Steyer, who won two campaigns for clean energy in California, has signed the “Giving Pledge” and is devoting the majority of his financial resources to clean energy research and causes. “The Consumer Watchdog reports makes clear that the Keystone XL Pipeline will lead to higher prices for American drivers at the pump and increased profits for foreign oil interests at a time when our U.S. economy is still in recovery.”

The report also found that Canadian crude oil currently being sent to the Midwest from Canada would be easily diverted to Keystone XL to satisfy overseas demand.

Much of the Canadian oil would go directly to Gulf Coast refineries owned by the same multinational companies investing in tar sands, said the report. These companies include Exxon Mobil, Chevron, Koch Industries, Marathon Oil and Shell Oil, said the report. Gulf refineries would refine the tar sands crude oil into diesel oil, which is in high overseas demand, and gasoline for export,.

Price hikes at the pump are likely to hit as far as California. Canada is the second-largest exporter of crude to the West Coast region, just behind Ecuador. California refiners are taking action to import and use more Canadian oil.

Political leaders in the Canadian province of British Columbia have officially opposed plans for a major new tar sands oil pipeline from Alberta through their province to the Pacific Coast. Two other similar proposals may meet the same fate, and are certainly years in the future. This Canadian opposition increases the motivation of tar sands investors and developers and to get Keystone XL built as sure access to overseas markets.

“Any reduction of deliveries to Midwest refineries would crimp gasoline supply, further driving up pump prices, and Keystone XL’s backers want to move cheap oil out of the Midwest,” said report author Judy Dugan. “Many major Midwest refineries have also made expensive changes to maximize their use of the tar sands oil and could not operate as efficiently using different grades of oil from other sources.”

While the pipeline developers and oil industry lobbyists like Reheis-Boyd have insisted that the pipeline would create tens of thousands of jobs, they have offered no proof of substantial jobs created beyond construction and maintenance of the pipeline itself.

The conclusion of the report is: “U.S. consumers should be wary of the Keystone XL pipeline–not just for substantial environmental and safety reasons, but because it threatens their wallets. Given the fleeting benefits of construction jobs, the unprovability of long-term benefits and the negative effect of higher gasoline costs on consumers, Keystone XL is no economic boon to the United States. U.S. consumers and the overall economy would bear the substantial risks of the pipeline without measurable permanent benefit.”


For more information, go to the Consumer Watchdog website.

About the Author

Dan Bacher is an environmental journalist in Sacramento who focuses on California's water issues, a healthy environment for the salmon fishery of the Northwest, and the attempts by big agriculture and big oil to hog all the water.