The idea behind the politically contentious Keystone XL pipeline is to bring oil from Canada through the Midwestern US and then on to Texas for export throughout the world, mostly Europe and Latin America. A January 2012 report by NRDC and Oil Change International pointed out that the pipeline "will not increase America's oil supply (PDF)," but we now hear that the pipeline just might affect the US after all. Trouble is, the effect is negative, not positive.

A new report by Consumer Watchdog says that Keystone XL will instead "raise gasoline prices in the United States, hiking prices at the pump 20 to 40 cents per gallon in the Midwest, with no long-term economic benefit to the US economy (PDF)" The reason is that, currently, when Alberta tar sands oil is sold in the Midwest, the price is around $70 a barrel. This is about $30 lower than the global price, but that discount will go away if the crude is instead pumped down to Texas. Consumer Watchdog says that its 20-to-40-cent increase estimate is "conservative" and that pipeline proponents who say the oil the Keystone XL pipeline brings will not be used for export are not being straightforward with the public. Specifically, CW says the "Keystone XL is likely to become the main export outlet for the companies producing, processing and shipping tar sands oil from Alberta, at least for the medium term." And, in any case, the US is producing "substantially" more oil now than in 2008 and so we don't need the tar sands oil. Thus, it appears, the only effects the pipeline will have on the us are increased environmental risks and higher gas prices.

There's a short animated video describing the pipeline's history below.


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  • 59 Comments
      mylexicon
      • 1 Year Ago
      Consumer Watchdog is just exploiting the political laws of economics. The rate of production is higher in the Midwest PADD than the rate of transport so the PADD has a glut of oil. If the Keystone XL pipeline is built, the price in other PADD sites will only have minor declines, but the Midwest PADD should have a relatively sharp increase in price. Since the the costs are narrowly focused and the benefits are widely spread, Consumer Watchdog is hoping to stymie the Keystone XL pipeline by persuading Midwesterner consumers to hoard oil. Obviously, mercantile policy is self-destructive, particularly since it reduces the economic productivity of the region by suppressing oil revenues. I'd like to think that Consumer Watchdog are pushing mercantilism to protect the environment, but the oil is being moved by rail, Buffet's rail to be precise. Rail transport historically has higher leakage and spill losses so this new marketing campaign seems more like wanton idealism or crony capitalism than advocacy for eco-conscious policy.
      Rotation
      • 1 Year Ago
      This situation is so theoretical it hardly matters. The oil market is so complex (and manipulated, IMHO) that other effects on the oil markets will likely outweigh the effects of this situation.
      2 wheeled menace
      • 1 Year Ago
      I don't believe it. The market will correct this imbalance, one way or another. The truth is that the cost will be imposed upon the environment. Just wait until this thing dumps toxic crude into one of the rivers it crosses. Might take decades for it to happen, but it will. There are lots of pipelines criss-crossing through where i live ( Utah ). We have a few of them bursting and poisoning a major body of water every year. But these are small pipelines compared to Keystone ;(
        Spec
        • 1 Year Ago
        @2 wheeled menace
        That is the point . . . it will correct the imbalance right now which is a glut of oil in the mid-west and mountain states due to all that Canadian tar sands oil and North Dakotan Bakken oil. As soon as that oil is able to easily access world ports like Texas and Louisiana, it will fetch world market prices which are higher. Thus, the price of gas will rise in the mid-west and mountain states. It won't rise much though because most of the profit from the glut has been pocketed by the oil refiners lately.
        Vlad
        • 1 Year Ago
        @2 wheeled menace
        People see environmental disaster as something remote and not likely to affect them. But even a tiny rise of gas prices gets folks up in arms. So groups that are concern about the former are talking about the latter.
          Spec
          • 1 Year Ago
          @Vlad
          What long tail pipe in California? I live in PG&E territory where we have more EVs than I can count. Our electricity is less than 1% coal. We have a renewable portfolio standard that requires a lot of wind & solar. We have 1 nuke. We buy hydro from our friends up north. A lot of natural gas. It is pretty clean energy.
          motorhead
          • 1 Year Ago
          @Vlad
          Long tailpipe for EVs in California.
          2 wheeled menace
          • 1 Year Ago
          @Vlad
          Yeah - always eager to not have it in their backyard and push the externalities onto someone else. California does that to us in Utah. We burn coal and send the electricity all the way to southern California. Looks good for their co2/particulate numbers! not so much for us!
        2 wheeled menace
        • 1 Year Ago
        @2 wheeled menace
        It does not take a lot of crude to poison a water supply. You'd think that the companies operating these pipelines would have a built in profit incentive to maintain their friggin' infrastructure, but it seems that they don't. They will wait until things break down rather than fix them pre-emptively because the cost of losing business while the pipeline is offline for repairs exceeds the cost of being hit by a lawsuit/fines for polluting a body of water.
      Allch Chcar
      • 1 Year Ago
      When the bosses changes every 8 years what do you expect? [/sarcasm] The government does make long term plans and programs. When things take decades to happen, they tend to plan things out ahead of time. Long before the space shuttles were shut down there was a 15 year plan to replace them. And in R&D there have been research programs for fusion going back many years. Even conservative candidates espouse the virtues of renewable fuels. But Americans as a whole tend to be limited to the very short term, less than 5 years. And the budget deficit is starting to cut into the future programs.
      raktmn
      • 1 Year Ago
      The thing is that Canadians don't want a long pipeline going all the way across their nation either. That is why Canadian oil companies see running their pipeline through the US as their best option. Folks in Vancouver and Halifax don't want the pipelines coming to their shores and polluting their ocean ports (Vancouver and Halifax are both major port cities). While Texas has already screwed up the Gulf so badly that hardly anybody down there cares enough to block this there.
        Spec
        • 1 Year Ago
        @raktmn
        Yeah, the Canadians have 3 big problems with running pipelines to the Pacific: 1) First nations (AKA native American tribes) 2) The Rocky Mountains 3) People in BC that do not want a pipeline and oil port. That's why they want to run a pipeline through the USA. We roll over easier.
          Vlad
          • 1 Year Ago
          @Spec
          Yep. Hard to believe, but it is easier and cheaper to buy the entire US government than the government of a single Canadian province.
      EZEE
      • 1 Year Ago
      Are you talking about the constellation program, which was cancelled?
      Ryan
      • 1 Year Ago
      Yeah, and how much water do they have to frack and process it in the southern outback? How about refining it and transporting it?
      EVnerdGene
      • 1 Year Ago
      Are a few more thousand miles of pipeline such a big deal considering we already have 2.3 million miles of pipeline in the US ? ans: No; the issue is increasing capacity and it will be replacing some aging pipelines that are beyond their useful (safe) lives. Will the government be paying for the pipeline, adding to our already disgraceful national debt ? ans: To my knowledge no government funds are involved - or there shouldn't be. When it makes economic sense, private industry will invest. Does the oil and gas industry make pretty sound economic decisions ? ans: Demonized, but they have a darn good record of having gas available at my neighborhood gas station whenever I want it; and supplying us with all the energy we've needed for not only our other transportation uses, but also for a good portion of our electric power generation and home heating - for over 100 years. Wouldn't it be wise to supply America with more North American energy as opposed to buying from middle eastern countries that have irrational hate for us, and that funnel money to terrorist organizations. ans: well duhhh Does it make any sense that the price of gasoline would increase if supply is increased ? ans: Only if you are a moron; like the people that made the video, and obviously the enviro-wacko "Consumer Watchdog" group that make such propaganda to spoon-feed brain-dead lemmings. Why don't we build refineries in ND, or SD; nearer to the deposits ? ans: If we did that, we'd still need to build pipelines to get the refined gas and oil to major markets like Chicago, Denver, and beyond. Makes more sense to pipe the crude to existing refineries and distribution networks. Why don't we have better alternatives ? ans: Well the DOE was instituted in 1977 with the mission of reducing our dependence on foreign oil and achieving energy independence. If those brilliant physicists and engineers, after spending billions and billions every year for 30-something years couldn't figure out some better way, then maybe we should hedge our bets by allowing this pipeline. Someday private industry will find an alternative source that is economically viable and reliable. Q: All this time, have we been wasting billions on bureaucrats that spend more time on politics instead of practical solutions ? ans: don't ask, don't tell Why are so many people against this pipeline ? ans: Does seem irrational. The same people have been against building new nuclear power plants, new hydro, clean coal, and not in my backyard wind, , , , They call themselves "progressives."
      purrpullberra
      • 1 Year Ago
      This is what I referred to a couple days ago in another article. This pipeline is only going to help move oil out of the country easier and more cheaply than keeping it local so it will get shipped off. There are no questions about it, this is exactly what happens, economics rule. The oil has no patriotism and we can't just keep it. It all goes on the open market. How is any of this reasonable thinking 'drivel'? 'Conservatives' lie to the public by claiming this pipeline will lower prices. They try to confuse the public and purposefully mis-educate people. They attempt to deride anyone who has reasonable points to make against it. The pipeline doesn't need to exist. We don't need to aid Canada and take on the environmental risks while gaining very little in return. I think all pipelines and companies related to pipelines need to update the ones they have and keep them from blowing up and killing lots of people. They need to do better maintenance for a long time if I'm going to be willing to allow more. The insatiable desire for oil doesn't mean we should ream the whole US to satisfy it. None of it stays, it goes away to the highest bidder.
        EVSUPERHERO
        • 1 Year Ago
        @purrpullberra
        Oil was a patriot in the early 1900's and even in the 50's,60's. Oil became a little less a patriot when it wrapped it's fingers around the neck of America's economy in the 70's. It's been a struggle ever since. Oil keeps us going, cheap fuel prices, easier to grow economy, high fuel prices push the economy down. However sending a billion dollars a day out of the US isn't cool no matter where it's going. Energy independence is a lark made up by the oil corps. For coal, oil and natural gas, as long as it can be put on a tanker, and it will, we will never be energy independent nor will we see lower energy prices.
        raggtopp
        • 1 Year Ago
        @purrpullberra
        Typical remark by a liberal. One thing this old man has noted, a liberal covers his lies by calling another a lie. Most of you have never heard of the Big/Little inch pipe line built in 1943 from TX to NJ under the Mississippi river to deliver gas/oil to the NE.It has pumped for 67 years 1000 of gals a day with no problem. It has safely delivered need energy and lower the cost to one of the most populated areas of the nation. Pipelines reduce pollution caused by trucks and ships which consume large amounts of energy to deliver small amounts of the product. Remember social liberals lie when they tell you the supply and demand do not work. The larger the supply, the less the price. Iran, and the near East Nations control the gas price. If there is a bottle neck because of war, gas goes up. The more of anything a nation exports the higher the standard of living.
      raktmn
      • 1 Year Ago
      The concept of Peak Oil dates back to the 1950's, and the genesis was from projections from Texas oil drillers (inside the industry). The 73 oil embargo was a direct result of the Yom Kippur war in Israel. It was a real crisis, not something imagined or part of some fraud conspiracy under your tin hat. Yes, it did help expose more people outside of the oil industry to the concept of Peal Oil, as the rest of the world literally did not have the pumping capacity to overcome impact of the embargo. The primary reason why we have very expensive oil right now is because we did hit the Peak Oil limit that was described by the early theories, meaning oil production as they knew it back then. Our lifeline out of the crisis has been new ways of producing oil that is much more expensive than ever previously considered to be a reasonable cost to extract oil. These expensive extraction methods have only become rational due to record oil prices, and have effectively pushed out the date of Peak Oil. It has not proved the concept wrong. Yes, the 2008 global economic crash also pushed out Peak Oil, and yes the commodity markets have also unnaturally pushed up oil prices to a level where high cost extraction is profitable.
      DaveMart
      • 1 Year Ago
      At the moment Canada is making a free gift of several billion dollars a year to the US by not making sure they get world market prices for oil. If I were Canadian I would be pushing hard for an alternative pipeline to the coast if this one does not get built.
        Vlad
        • 1 Year Ago
        @DaveMart
        Foreign company using eminent domain to push American landowners off of their land and endangering the remaining land forever is a free gift?
          Spec
          • 1 Year Ago
          @Vlad
          Yeah, if anything, it is Canada that will be getting a free gift if we go ahead and build the pipeline. And we are already building it. It is only the border crossing with Canada that is at issue.
        brotherkenny4
        • 1 Year Ago
        @DaveMart
        Yes, but Canadiens don't want a broken pipeline either. The benefit is to a few and the risk to the many. Is that difficult to understand. How good are fossil companies at fixing water contamination? Ask the rural people of Texas and Pensylvania and soon North Dakota. Isn't it the conservative government of Nebraska who is holding up the pipeline? I think so. The GOP is losing member in the countryside of Texas, Nebraska, and North Dakota, where they don't take lightly to outsiders coming in and forcing anything on the land owners.
        2 wheeled menace
        • 1 Year Ago
        @DaveMart
        Maybe it is a gift in exchange for military protection.
          motorhead
          • 1 Year Ago
          @2 wheeled menace
          Who would invade Canada? Mexicans?
        Spec
        • 1 Year Ago
        @DaveMart
        It is not a 'free gift'. That is offensive. They are free to sell that oil wherever they want. It is not our fault that the oil is in the middle of their country and they can't figure out a way to get it to a port. They have the same issues we do . . . mountain ranges, safety concerns, landowner rights, etc.
        DaveMart
        • 1 Year Ago
        @DaveMart
        It is being sold at way below the normal price of oil. I doubt that the Canadian public realise how much revenue they are losing.
          Spec
          • 1 Year Ago
          @DaveMart
          WRONG. It is being sold at local market prices. It is getting fair market prices. They are not 'losing' anything. If anything, they are getting artificially high prices because they are not paying for the damage that oil does to the atmosphere and climate.
          purrpullberra
          • 1 Year Ago
          @DaveMart
          raktmn: I hit -1 accidently again. Sorry.
          Rotation
          • 1 Year Ago
          @DaveMart
          No one is forcing them to sell it. If the price doesn't pass muster, don't produce it and don't sell it.
          raktmn
          • 1 Year Ago
          @DaveMart
          Having access to the US market actually allows Canada to sell their oil for a higher price than if they couldn't sell into the US market right now. If we shut down all Canadian oil imports into the United States, Canada would have to sell their oil for even less profit, because the cost to transport their oil to their own coasts for export would have to come out of their bottom line. So are we giving Canada a gift by allowing them to sell their product in the US? According to your logic, we must be.
      EZEE
      • 1 Year Ago
      Lets see.....prior article says gas prices will be cut in half.... Gas at my station was $3.50.....so 1/2.....(don't anyone shout, I have to lern to do this) $1.75 a gallon, but then Obama caves in to Big Oil and builds the keystone pipeline, so add 40 cents (whatever happened to the 'cent' symbol on a keyboard anyway?) so now we are looking at $2.15 a gallon. Of course, I have a gas card from my company, so it really doesn't affect me much, but still cool. Of course, this is all ignoring Iran getting fussy with Israel, or vice versa, the Arab spring spilling into Saudi or Kuwait, Venezuela getting fussy with the USA, china or Russia being china or Russia, India deciding to say eff it to an austere lifestyle and getting more cars, etc. So ignore all of that and gas will be $2.15 a gallon.
        Marcopolo
        • 1 Year Ago
        @EZEE
        @ EZEE The price of crude, and the price of gasoline at the pump, are very different things. The price of gasoline is a very complex set of dynamics, only a small factor is the price of crude.
          EZEE
          • 1 Year Ago
          @Marcopolo
          I was being fun....
          EZEE
          • 1 Year Ago
          @Marcopolo
          Although I did do a search, and found this from the ny times, the last time oil was $50 a barrel: Last week, however, gasoline prices jumped 5.1 cents a gallon, to a national average of $1.917 a gallon, still below the record average of $2.06 a gallon in May but 33 cents higher than a year ago, the Energy Department said. If crude oil prices keep going up, as many oil industry officials predict, gasoline prices are expected to keep climbing as well, as is the price of home heating fuel. I was close.....
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