Gregg Laskoski is a senior petroleum analyst for GasBuddy.com
A lot of folks have an interest in pushing the proposed Keystone XL Pipeline to a timely completion. That's the $7 billion TransCanada project that would bring nearly 1.3 million barrels per day of crude oil from Alberta, Canada and North Dakota to land-locked Midwest and East Coast refineries, and, to the Gulf of Mexico.
According to TransCanada, the proposed Keystone Gulf Coast Expansion Project is an approximate 2,673-kilometer (1,661-mile), 36-inch crude oil pipeline that would begin at Hardisty, Alberta and extend southeast through Saskatchewan, Montana, South Dakota, and Nebraska. It would incorporate a portion of the Keystone Pipeline (Phase II) through Nebraska and Kansas to serve markets at Cushing, Oklahoma before continuing through Oklahoma to a delivery point near existing terminals in Nederland, Texas to serve the Port Arthur, Texas marketplace.
As chairman of the House Energy & Commerce Committee, Rep. Fred Upton, representing Michigan's 6th district, is among its most ardent and unequivocal supporters. In a July interview with CNBC he stated:
According to the Department of Energy, this one project will "essentially eliminate" oil imports from the Middle East. It will create more than 100,000 jobs and strengthen our relationship with a close ally and trading partner. A project like this should be a no-brainer, and there's simply no good reason it has been stuck in the State Department's red tape for nearly three years.
The U. S. State Department is scheduled to make a decision on the pipeline by November 1. Canada has already approved it.
Rep. Upton also stated that the project would likely help lower gasoline prices and reduce volatility. In that same interview he said:
If we take steps today to safely develop our resources for the future, we can quickly and consistently hold down prices. I think the American people understand supply and demand, and they understand if we increase the supply of American-made energy, prices will come down. It's as simple as that.
Clearly, politicos get excited when there's money to be spent and jobs that can benefit many families. And we all know that today's mantra is "Jobs!" But, are we expecting too much?
As always, the devil is in the details. Where oil goes, few things are ever "as simple as that." When the U.S. Department of Energy issued its weekly petroleum report for the week ending September 9, it noted that Midwest PADD refineries operated at the highest utilization rate in the country (91.3 percent) yet posted decreases in gasoline inventories ... and that's what pushes retail gasoline prices higher.
It appears that key issues need answers. What assurance is there for U.S. consumers that the Keystone XL pipeline will indeed deliver the improved supply of gasoline and price stability—particularly in the Midwest—so confidently announced by Representative Upton and many others?
When refineries are able to export—without limitations—diesel and gasoline to secure greater profit margins offshore, why would Americans believe the Keystone XL pipeline would bring any measurable benefit to them when greater rewards can be had by the refineries expediting delivery to overseas buyers?
And, has anyone seen any rational projections on the pipeline's probable impact on the price of Canadian crude oil and its primary market of end-users—U.S. motorists?
More immediate discussion is needed with greater transparency for Americans and Canadians alike. The Keystone pipeline may indeed bring a measure of stability to retail gasoline prices ... But, elected representatives who want to advance Keystone XL owe the electorate reliable answers from informed entities other than those with vested interests.
At the same time, the clock is ticking. By accessing Canada's crude oil the United State moves closer to its goal of reducing reliance on oil from the Middle East, a goal shared and expressed by every U.S. president since Dwight D. Eisenhower.
If the U.S. State Department does not awaken from three years of indecision and the folks in charge kill the pipeline's development here, China is ready now to finance any engineering necessary to seize the opportunity and bring Canada's energy resources to China.
- Read: Keystone XL Pipeline Decision a Test on Obama, Environmentalism
- See a collection of political cartoons on energy policy.
- Read the U.S. News debate: Should offshore drilling be expanded?