Tuesday, May 22, 2012

These tricky little things called facts

You may remember not too long ago there being this big debate over the Keystone XL pipeline. The pipeline would ship oil from Canada to refineries in the US, and proponents said it would create jobs and lower the price of gas here in the States. Opponents, meanwhile, claimed that the effect of the pipeline would be negligible, both for job growth and gas prices, and that more needed to be done to preserve the environment that he proposed pipeline would go through. It was this last bit that drove Obama to stopping the original pipeline plan, pending an investigation into the environmental impacts and looking for alternative routes.

Now we know that both groups were wrong. Opponents to Keystone XL were wrong that the pipeline would have minimal impact on gas prices. Supporters were wrong that the pipeline would cause gas prices to drop.

In a new report, the National Resources Defense Council indicates that the Keystone XL pipeline would actually cause an increase in gas prices. The reasons for this are a bit tricky. Basically, the pipeline would ship oil to Texas, whose refineries are more prone to developing diesel instead of gasoline like in the Midwest. This would mean that those refineries would cut their gasoline production, causing supply to drop and prices to rise. When TransCanada proposed the pipeline, they said it would cause a price hike in gas that would translate into greater returns for Canadian oil-producers.

What's so interesting about all of this is that it shows what a difference time and investigation make. If we had simply OK'd the project, we might never have heard about the impact it would have on our gas prices and production. This also serves as a strong reminder that any gasoline produced by oil coming through Keystone XL belongs to a private company and not the US. In other words, we have to spend the money to bring it here, spend the money to refine it, and then pay the company to purchase that product. Keep that in mind.

So, should we go ahead with the Keystone project? I think it's probably inevitable. Some places are already putting people to work building some of the less-contested sections of the pipeline. I doubt this new information will make much of an impact with those who strongly support the project, but it should at least get people thinking.

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