4-25-2014
http://www.bloomberg.com/news/2014-...won-t-be-getting-any-cheaper-.html?cmpid=yhoo
Keystone Weirdonomics Means Gas Prices Wont Be Getting Any Cheaper
Canadian Prime Minister Stephen Harper missed the signs of growing opposition to the proposed Keystone XL pipeline, Bloomberg reporters describe in a
behind-the-scenes investigation today. It took just one phone call with President Obama, on Nov. 10, 2011, to bring him up to speed.
Keystone opposition has been shocking to many Americans, too. The worlds biggest oil consumer relies on some of the worlds cheapest gas prices to power its economy. How could the U.S. possibly turn down a new artery to deliver the stuff, even if it does come with new environmental risks?
The answer is that Keystone isnt meant for U.S. consumption.
In Keystones weirdonomics, the pipeline would actually increase prices of gasoline for much of the country
Keystone would divert crude from Midwest refineries to Gulf Coast refineries, where it would then be shipped to more expensive markets.
Bypassing heartland refineries could drive up prices at home.
The Canadian plan was to use their market power to raise prices in the United States (UNG) and get more money from consumers, Philip Verleger, founder of Colorado-based energy consulting firm PK Verleger LLC, said in an interview. Canadian oil producers like Exxon and Suncor would be the real winners, not American consumers.
Increases at the pump could range from 25 cents to 40 cents a gallon, depending on how regional refineries respond to paying $20 to $30 more per 42-gallon barrel for Canadian crude oil.
KXL will divert Tar Sands oil now supplying Midwest refineries, so it can be sold at higher prices to the Gulf Coast and export markets.
These additional costs (estimated to total $24 billion) will suppress other spending and will therefore cost jobs.
Theres much at stake over Obamas Keystone decision, which the administration
again delayed last week. Building the pipeline would create 3,900 temporary construction jobs (50 permanent jobs) and contribute $3.4 billion in economic growth. It would also add to the threat of climate change by speeding up production of oil-sands crude, which is about 17 percent more carbon-intensive than the conventional barrel.
One thing thats not at stake: cheaper gas prices.