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Inside the Keystone pipeline: How much would it really help US consumers?

Politicians paint a rosy picture of lower gas prices and abundant supply, but Canadian firms behind the Keystone pipeline expect it to supply Gulf Coast export markets and raise Midwest oil prices.

By Staff writer / March 9, 2012

In this September 2005 file photo, the marker that welcomes commuters to Cushing, Okla. is seen. Canadian company TransCanada says it will build an oil pipeline from Oklahoma to Texas after President Obama blocked the larger Keystone XL pipeline from Canada.

Matt Strasen/The Oklahoman/AP/File

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Often lost in the political wrangling over the controversial Keystone XL pipeline – on hold after President Obama rejected TransCanada’s initial construction proposal – are some key findings that run counter to the rosy picture of abundant supply and lower prices so often painted by US politicians.

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Canadian companies backing the Keystone XL – touted as enhancing US energy security with a big new surge of imported Canadian oil – actually expect it to supply more lucrative Gulf Coast export markets as well as raise Midwest oil prices by reducing “oversupply” in that region.

These little-publicized findings are contained in the studies and testimony of experts working for TransCanada, the company that wants to build the pipeline from Alberta’s tar sands across America’s heartland to Gulf Coast refineries.

Some of these concerns popped up, albeit briefly, in US congressional testimony last year on the pipeline project, and have given rise to a recent proposal to bar the sale of Keystone oil overseas.

In the latest round of Capitol Hill fighting over the pipeline, Senate Democrats on Thursday defeated a Republican amendment to the transportation bill that would have fast-tracked the project by stripping the State Department of its approval authority and giving it to Congress.

In February, legislation to force US approval of the pipeline passed the House 237-187. That bill would strip the president of authority to block the project and give the Federal Energy Regulatory Commission 30 days to approve the pipeline.

But most of the heated partisan rhetoric over job creation and gasoline prices glosses over what Keystone would or wouldn’t do for the US.

TransCanada’s case

“Keystone will bring many benefits to the United States, but I believe the most important role that Keystone will play is to bring energy security to the United States during what has been recently some very unsettling times overseas,” Alex Pourbaix, TransCanada’s president for energy and oil pipelines, said in a congressional hearing in December.

So, would TransCanada support US legislation requiring Canadian oil and products refined from it, such as diesel, to be sold only in the United States, asked Rep. Ed Markey (D) of Massachusetts, “so that this country realizes all of the energy security benefits your company and others have promised?”

“No, I can't do that,” Mr. Pourbaix said.

In an e-mailed statement, TransCanada spokesman Terry Cunha writes that Keystone XL could help cut US reliance on Mideast and Venezuelan imports “by up to 40 percent.” He cites a 2010 US Department of Energy study that he contends says more Canadian oil would “help reduce US imports of foreign oil from sources outside of North America.”

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