Click for an enlarged version of the pipeline map (image source: US Department of State)

NRDC Report: Keystone XL Pipeline Will Raise US Gas Prices

Vincent Schilling
6/7/12

During a press tele-conference call on May 21, experts speaking on behalf of the Natural Resources Defense Council (NRDC), said American drivers will face higher gas prices if the proposed Keystone XL Pipeline stretching from Canada to the Gulf of Mexico is built. The conference was also an announcement of a published report and analysis of the NRDC entitled “Keystone XL: A Tar Sands Pipeline to Increase Oil Prices.”

At the teleconference in May, Anthony Swift, the NRDC’s published report author and attorney; Lorne Stockman, director of research at Oil Change International; and Ian Goodman, an economist at the Goodman Group discussed how gas prices would potentially rise, the reasons behind their assertions and refuted the claims of supporters of the Keystone XL Pipeline who have stated the pipeline would lower gas prices and create jobs.

According to Swift, “The pipeline’s proponents say it’s the solution to high gas prices. The truth is exactly the opposite —the pipeline would raise gas prices. This is one of the most misunderstood issues surrounding this misguided Canadian project.”

Swift maintained Midwestern refineries the Keystone XL Pipeline would transport up to 830,000 barrels of the world’s dirtiest oil to the Gulf Coast of Texas and that the current pipelines, which currently deliver under capacity to Midwestern refineries will have even less crude oil due to the proposed amounts that will be sent to the gulf.

In Swifts report, northern Midwestern refineries produce 22 gallons of gasoline from every barrel of crude while refineries on the Gulf Coast of Texas have produced only 17 gallons per barrel – a 25 percent less yield which would result in an estimated 1.2 billion gallon of gasoline gallons per year.

“Even without incorporating these factors, the numbers show that by reducing available gasoline supplies in the United States, the Keystone XL Pipeline will likely increase pressure on retail gasoline prices,” the report said.

Goodman, who offered comments during the tele-conference, also offered comments to Indian Country Today Media Network to explain how prices for consumer gasoline prices would rise.

“Crude prices in the U.S. Midcontinent are now substantially below prices on the Gulf Coast (which reflect imports from the global oil market). In effect, the U.S. Midcontinent is getting a discount, because it is now close to the source,” he said.

“Keystone XL Pipeline will shift tar sands crude from refineries in the Midwest to Gulf Coast refineries which are configured to maximize diesel productions and export much of their output. So KXL will reduce gasoline supply, and it will also increase production costs for gasoline,” Goodman said.

Stockman, who also spoke with ICTMN, said, “Senators and Representatives that support the Keystone XL Pipeline bear a great responsibility to the American people to come clean about the costs and benefits of the project. It is clear that the project will not lower gas prices, enhance energy security or make a dent on America’s unemployment. When they forego contributions from the companies that are set to profit from the project then we can take them more seriously.”

Oglala Sioux Tribe Vice-President Tom Poor Bear agrees with the sentiment expressed by Stockman. “It is not going to make money or create jobs,” he said.

In addition to the possible raising of gas prices, Poor Bear is also concerned that the pipeline that will be passing through his reservation, Pine Ridge Reservation, raises considerable environmental concerns and a violation of treaty promises. “First of all, these are treaty lands and the treaties were signed with the promise of undisturbed lands. This was an agreement between the great Sioux Nation and the United States. It is a treaty violation.”

“We also have the Mni Wiconi project,” Poor Bear said. “This project is bringing water from the Missouri River not just to the reservation but people outside of the reservation will benefit from the water. The KXL is going to cross over this water three times. If that pipeline leaks, there will be a lot of drinking water for a lot of people contaminated.”

When asked about their stance on the KXL, the National Congress of American Indians responded with a reference to their statement made on August 18, 2011 which demonstrates a fixed stance against the pipelines construction which they assert the proposed pipeline expansion could severely impact Native American communities and “poses grave dangers if it is constructed.”

“The Keystone XL pipeline … would threaten, among other things, water aquifers, water ways, cultural sites, agricultural lands, animal life, public drinking water sources and other resources vital to the peoples of the region in which the pipeline is proposed to be constructed,” NCAI said in its statement.

The proposed expansion of the pipeline would cross through northern Alberta, Saskatchewan, Montana, South Dakota, Nebraska, and Oklahoma with potential devastating impacts on communities in surrounding areas and states.

NCAI’s statement mentioned a study by a University of Nebraska hydrologist that outlined a worst case spill scenario, estimating that Keystone XL Pipeline could spill as much as 7.9 million gallons in Nebraska's Sandhills, polluting 5 billion gallons of groundwater with benzene, contaminating water used for agriculture and drinking drawn from the Ogallala Aquifer, and more than 6.9 million gallons of tar sands crude at the Yellowstone River crossing.

When approached by ICTMN, the White House State Department responded with a press release that had announced the TransCanada application for the construction of the Pipeline.

The report states: “Under Executive Order 13337, it is the Department’s responsibility to determine if granting a permit for the proposed pipeline is in the national interest. We will consider this new application on its merits. Consistent with the Executive Order, this involves consideration of many factors, including energy security, health, environmental, cultural, economic, and foreign policy concerns.”

“We will begin by hiring an independent third-party contractor to assist the Department, including reviewing the existing Environmental Impact Statement (EIS) from the prior Keystone XL Pipeline review process, as well as identifying and assisting with new analysis.”

Those in support of the Keystone XL Pipeline, including U.S. Sen. John Hoeven (R-N.D.) and Senator Claire McCaskill (D-Mo.), have said the pipeline means good jobs for American workers.

ICTMN attempted to contact several Senate offices for opinion on the Pipeline, but no calls were returned by press time.

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