New Report Undercuts Keystone XL Supporters’ Claim To Lower Gas Prices

A new Consumer Watchdog report that indicates the pipeline will actually increase the cost of gasoline in the U.S.
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    (AP/Seth Perlman)

    (AP/Seth Perlman)

    Supporters of the Keystone XL pipeline have sold the proposed project as one that would cut costs at the gas pump and lead to energy independence. But they are battling a new Consumer Watchdog report that indicates the pipeline will actually increase the cost of gasoline in the U.S. by up to 40 cents per gallon.

    The reason? Canadian tar sand oil is currently shipped to America’s Midwest, where it is absorbed into the U.S. market. The pipeline, which would stretch more than 1,700 miles through the U.S., would send more than 800,000 barrels of oil a day to the Gulf of Mexico, where it would be refined and shipped out to the global market.

    The expected bump at the gas pump could cost American consumers up to $4 billion a year, according to the Consumer Watchdog analysis. According to the report, the pipeline isn’t about the American oil supply — it’s about TransCanada profits.

    “Their explicit intention is to export to the Gulf and abroad, which would increase the price of crude oil and gasoline in the United States and, in particular, the Midwest,” the Consumer Watchdog study states.

    Lower gas prices aren’t the only selling point for TransCanada in its bid for American approval of the pipeline, which it needs to proceed. The company has also attempted to sell the product on the promise of manufacturing jobs. In a 2012 press release, TransCanada said the $7 billion pipeline would be the largest infrastructure project “on the books,” adding 20,000 jobs to the U.S. economy — 13,000 in construction and 7,000 related to manufacturing.

    “These are new, real U.S. jobs,”  TransCanada CEO Russ Girling said in the press release.

    The new Consumer Watchdog report says that might not be so.

    “TransCanada and Canadian producers, knowing that the price of their oil will rise, have focused instead on their construction and manufacturing spending in the U.S.,” the report states. “They have exaggerated such spending and the jobs that would be created. It is likely that the higher oil prices and gasoline prices would offset any provable jobs or manufacturing benefit from the Keystone XL pipeline.”

    The latest findings are confirming what anti-Keystone advocates have been claiming for quite some time. Thomas Steyer, a vocal opponent of the pipeline and clean-energy investor, claims the new report adds to the argument that the pipeline is not in America’s interest.

    “A vote for Keystone is a vote to raise gas prices on Americans and send the profits to a foreign oil company,” Steyer said in a Consumer Watchdog press release. “The Consumer Watchdog report makes clear that the Keystone XL Pipeline will lead to higher prices for American drivers at the pump and increased profits for foreign oil interests at a time when our U.S. economy is still in recovery.”

    The study, published this week, was authored by Judy Dugan and Tim Hamilton. Dugan is the former editorial page editor for the Los Angeles Times and has authored energy reports for Consumer Watchdog for more than six years. Hamilton is a petroleum analyst and founder of Automotive United Trade Organization.

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