Keystone XL pipeline could raise Midwest gas prices by $.40 a gallon

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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