The Natural Resources Defense Council (NRDC) has released a report titled “Keystone XL: A Tar Sands Pipeline to Increase Oil Prices,” arguing that the Keystone XL pipeline will increase gas prices in the United States.
The report argues that the pipeline would take Canadian crude oil that has historically gone to Midwest refineries – which produce gasoline sold to U.S. consumers – and divert it to refineries in the Gulf Coast of Texas, which historically have produced diesel that is exported internationally. Diesel fuel has over the past few years become more expensive in non-U.S. markets, providing an incentive for U.S. producers to continue to export it.
According to the report, this shift from Midwestern, U.S.-focused refineries to Gulf Coast, export-focused refineries would decrease the supply of gasoline in America, thereby increasing its price. The report estimates that the Keystone XL pipeline would increase the cost of a barrel of Canadian crude oil by $20 to $40, with an associated jump in gasoline prices.
Pipeline proponents have argued that Keystone XL will create jobs, boost the economy, improve national security, and reduce prices at the pump.
What do you make of NRDC’s analysis and findings? If the Keystone XL pipeline were to raise gasoline prices, what reasons would there be to complete the project?