Keystone XL Pipeline Will Raise Gasoline Prices, Not Just Environmental Concerns

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The last thing Americans, or the American economy needs, is another jump at the gas pump. A new report by Consumer Watchdog finds that's what America will get if the president approves Keystone XL pipeline: a 25 cent to 40 cent gas price hike in the Midwest, and pain at the pump all the way to California.

Environmental security has rightfully been a rally cry of clean air advocates opposed to the Keystone XL pipeline, which poses tremendous environmental hazards from leaks of the oil itself to emissions of toxic additives on the line to greater carbon output in refining of tar sands oil. New evidence shows economic security and energy security are equally important reasons for the president to oppose the pipeline.

Statements from pipeline developers reveal that the intent of the Keystone XL is not to help Americans, but to use America as an export line to markets in Asia and Europe. As Alberta's energy minister Ken Hughes acknowledged, "[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."

Relatively cheap Canadian tar sands crude, which is more than half of the crude oil used in Midwest refineries, and increasingly the source of Western refiners, will get a lot more expensive if the XL pipeline developers have their ways. Their articulated goal for the global market: raising the price per barrel of Canadian tar sand oil by $30, from $70 now charged to the $100 per barrel now commanded by Mexican Maya crude oil in the Gulf.

As a businessman, I can understand that profit motive. But what it means for U.S. drivers is higher gasoline prices. When crude prices go up, gasoline prices go up. Why build the Keystone XL if it will hurt the consumer and the environment?

As reported this morning in the Des Moines Register, in the Midwest, in particular, the 40 cent per gallon increase at the pump that the report identifies is going to do grave damage to the economy.

High gasoline prices ripple through the economy with devastating impact on economic activity — the price of everything goes up. Consumers pay the price not only at the gas pump, but in increased costs for the food they eat, the clothes they wear, their airfare, their electronics. When fuel costs go up, the economy takes a big hit. This report shows that the risks from the Keystone XL are not just environmental, but economic, and they are dire.

Current events also put into question the alternatives to Keystone XL for anything other than an export pipeline. The Quebec crude oil train disaster on July 6 (50 dead, tremendous destruction) has strengthened opponents of rail transport, sharpening focus on Keystone XL. If pressure will mount against the tar sands crude being transported via rail to the Canadian coast for export, and if there will be no pipeline through West Canada, then the Keystone XL is the main line to markets in Asia and Europe for the cheap tar sands crude. That means Americans will bear the risk of the pipeline and not see any reward. Why would the President of the United States of America want that?

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