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.
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Testimony and supporting documents north of the border stating that Keystone XL would raise Canadian crude prices has set off alarm bells with several US legislators – while leaving others unmoved.Skip to next paragraph
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Legislators react to findings
Rep. Ed Whitfield (R) of Kentucky, who chaired two hearings into the Keystone XL, heard positive testimony about the pipeline – as well as contradicting testimony that it would do little or nothing for energy security while raising Midwest oil prices. He still likes the project, however.
“If our president decides that sending aircraft carrier strike groups to the Strait of Hormuz to defend oil flow is in the national interest, then one would also think a pipeline from Canada that would help eliminate our Middle East oil imports also serves the national interest,” Mr. Whitfield said in a prepared opening statement for the hearing he chaired.
In an e-mailed statement, Whitfield's press secretary adds that the pipeline “will help lower the price of gasoline by bringing more oil supply to the market” and says the Department of Energy “specifically states that gasoline prices in all connected markets would go down.”
But Sen. Ron Wyden, an Oregon Democrat, was alarmed enough to call last year for a Federal Trade Commission (FTC) investigation into the matter based in part on the Canadian National Energy Board testimony.
“While the full nature of the arrangements agreed upon by the Canadian shippers is unclear, there is clear indication that there is a coordinated ‘strategy’ among Canadian suppliers to gain higher prices,” Senator Wyden wrote Jonathan Liebowitz, chairman of the FTC in an April 6, 2011, letter. “This will have the effect of manipulating supply levels allowing prices of oil refined in [the Midwest oil market] to rise and ultimately benefitting the Canadian companies with higher prices.”
On Thursday, it was Wyden who put forward an amendment to the transportation bill that would have prohibited the sale of the Keystone oil overseas and imposed other regulatory requirements. His amendment was defeated 64 to 34.
Reacting to Obama’s previous decision to bar approval for Keystone XL, TransCanada made it clear it considered the project too vital to delay for long.
“Until this pipeline is constructed, the US will continue to import millions of barrels of conflict oil from the Middle East and Venezuela and other foreign countries who do not share democratic values Canadians and Americans are privileged to have,” Russ Girling, TransCanada's president and chief executive officer said in a statement.
“This project,” he continued, “is too important to the US economy, the Canadian economy and the national interest of the United States for it not to proceed.”
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