New Report Confirms Keystone XL Boosts Exports to China and Midwest Gasoline Price

Last updated on 2014.08.11

Consumer Watchdog posts a new report confirming pretty much everything I've told you about the Keystone XL pipeline: it will send North American tar sands oil overseas, raise our oil prices, and boost Big Oil profits at our expense.

Long-time Los Angeles Times journalist Judy Dugan and independent petroleum analyst Tim Hamilton authored the report for Consumer Watchdog. They confirm that Keystone XL's business case revolves around putting Canada's currently landlocked oil on the international market—i.e., selling it to China, not the United States. Alberta energy minister Ken Hughes, whose province depends on growing oil royalties, says exporting that tar sands oil is in his province's interest:

If TransCanada’s Keystone XL pipeline to the Gulf Coast were approved, that would be “an important step” to connect Alberta to international markets.... said Ken Hughes, Alberta’s energy minister. “[I]t is a strategic imperative, it is in Alberta’s interest, in Canada’s interest, that we get access to tidewater... to diversify away from the single continental market and be part of the global market” [J. Van Loon, quoted in Judy Dugan and Tim Hamilton, "Keystone XL: Oil Industry Cash Machine," Consumer Watchdog, 2013.07.16, p. 7].

Dugan and Hamilton note that tar sands oil has consistently sold for $30 less per barrel, due to the lack of access to the export market. Build Keystone XL, let the Gulf refineries take that 900,000-barrel-per-day slurp of Alberta's milkshake, and that price discount shrinks, meaning the Koch Brothers, Exxon, Shell, and the Chinese, Korean, and Russian tar sands investors make a whole lot more money.

Dugan and Hamilton also conclude that Keystone XL is the only immediately viable way for the Kochs et al. to realize that windfall. The report says provincial opposition to a tar sands pipeline running west through the Rockies and British Columbia to the Pacific is too strong for Big Oil to prevail, at least in the near term. Block Keystone XL, and you keep the tar sands oil cheap on on the U.S. market for some time.

Build Keystone XL, and the tar sands profits come at America's and especially the Midwest's expense. Reducing our regional oil supply naturally raises our prices, wiping out the economic benefits TransCanada promises us from building Keystone XL:

In the Midwest alone, each year of only a 20-cent-a-gallon increase could rip $3 billion to $4 billion from more productive spending. The up to $4 billion in Midwest economic loss is close to the amount that TransCanada would spend on the pipeline project, canceling a major claim of U.S. economic benefit. While the company says it will spend $7 billion, some of that will be spent in Canada and some has already been spent, so it is has no future economic effect [Dugan and Hamilton, 2013].

Keystone XL offers South Dakota and the United States little to gain and much to lose. Let's not play patsies to Big Oil. Say no to Keystone XL.