Consumer Watchdog Report Shows Keystone XL Will Raise American Gas Prices

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Santa Monica, CA — Following a Nebraska court’s ruling that the Keystone XL pipeline can be built, the nonprofit Consumer Watchdog said the issue should be moot for the Obama administration, the decision-maker, because the building of the pipeline will raise American gasoline prices – which are at historic lows.

“The Keystone XL pipeline extension will take cheap crude oil from the Midwest and move it through the Gulf to Asia,” said Jamie Court, President of Consumer Watchdog. “Our report on the pipeline extension shows that goal of the pipeline backers is cheap oil for Asia, which means more expensive gasoline for Americans. Approval of the pipeline would upset historically low gasoline prices in the Midwest.”

The report, “Keystone XL: Oil Industry Cash Machine,” found the Keystone XL pipeline will hike prices at the pump 20 to 40 cents per gallon in the Midwest, with no long-term economic benefit to the U.S. economy. Read it here:
The report finds that:

        – Drivers, especially in the Midwest, would pay 20 cents to 40 cents more at the pump if the disputed pipeline were built, as the current discount of up to $30 a barrel for Canadian oil disappears.
        – The true goal of multinational oil companies and Canadian politicians backing the pipeline is to reach export outlets outside the U.S. for tar sands oil and refined fuels, which would drive up the oil’s price.
        – With U.S. oil production rising fast, any “energy security” benefit for the U.S. would vanish as American oil output exceeds that of Saudi Arabia in about 2020, according to the International Energy Agency.

The report, produced by Research Director Emeritus Judy Dugan and independent energy analyst Tim Hamilton, utilized industry data, public records and company documents.  

“Keystone XL is not an economic benefit to Americans who will see higher gas prices and bear all the risks of the pipeline,” said report author Judy Dugan. “The pipeline is being built through America, but not for Americans.”

The report also found that Canadian crude oil currently being sent to the Midwest from Canada would be easily diverted to Keystone XL to satisfy overseas demand.

Much of the Canadian oil would go directly to Gulf Coast refineries owned by the same multinational companies investing in tar sands, said the report. These companies include Exxon Mobil, Chevron, Koch Industries, Marathon Oil and Shell Oil, said the report. Gulf refineries would refine the tar sands crude oil into diesel oil, which is in high overseas demand, and gasoline for export.

Price hikes at the pump are likely to hit as far as California. Canada is the second-largest exporter of crude to the West Coast region, just behind Ecuador. California refiners are taking action to import and use more Canadian oil.

Political leaders in the Canadian province of British Columbia have officially opposed plans for a major new tar sands oil pipeline from Alberta through their province to the Pacific Coast. Two other similar proposals may meet the same fate, and are certainly years in the future. This Canadian opposition increases the motivation of tar sands investors and developers and to get Keystone XL built as sure access to overseas markets.

“Any reduction of deliveries to Midwest refineries would crimp gasoline supply, further driving up pump prices, and Keystone XL’s backers want to move cheap oil out of the Midwest,” said report author Judy Dugan. “Many major Midwest refineries have also made expensive changes to maximize their use of the tar sands oil and could not operate as efficiently using different grades of oil from other sources.”

While the pipeline developers have insisted that the pipeline would create tens of thousands of jobs, they have offered no proof of substantial jobs created beyond construction and maintenance of the pipeline itself.

The conclusion of the report is: “U.S. consumers should be wary of the Keystone XL pipeline–not just for substantial environmental and safety reasons, but because it threatens their wallets. Given the fleeting benefits of construction jobs, the unprovability of long-term benefits and the negative effect of higher gasoline costs on consumers, Keystone XL is no economic boon to the United States. U.S. consumers and the overall economy would bear the substantial risks of the pipeline without measurable permanent benefit.”

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Jamie Court
Jamie Court
Consumer Watchdog's President and Chairman of the Board is an award-winning and nationally recognized consumer advocate. The author of three books, he has led dozens of campaigns to reform insurance companies, financial institutions, energy companies, political accountability and health care companies.

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