Showing posts with label Oil Companies. Show all posts
Showing posts with label Oil Companies. Show all posts

Friday, March 28, 2014

Wednesday, March 06, 2013

Tuesday, May 22, 2012

Keystone XL Pipeline Will Make Gas Prices Go Up

For some time now I've been contending that the Keystone XL pipeline would cause the price of gas to go up because the fuel refined from it would be shipped off to China at world market prices instead of being "stuck" in the American Midwest where it winds up being sold as gasoline, often at lower prices than those paid on all three coasts.

Now we have confirmation. According to an analysis from the NRDC:

The Keystone XL tar sands pipeline would divert oil from the Midwest to refineries on the Gulf Coast of Texas. Midwestern refineries produce more gasoline per barrel than refineries in any other region in the United States. That gasoline is then sold to U.S. consumers. In contrast, refineries on the Gulf Coast of Texas produce as much diesel as possible, much of which is exported internationally. By taking oil from midwestern gasoline refineries to Gulf Coast diesel refineries, Keystone XL will decrease the amount of gasoline available to American consumers. 
Meanwhile the Keystone XL pipeline will increase the price that gasoline producing refineries in the Midwest pay for crude oil. TransCanada, the company sponsoring the pipeline, pitched the pipeline to Canadian regulators as a way of increasing the price of crude in the United States (emphasis mine).
Right now, Midwestern refineries are buying crude oil at a discount—a deep discount. This allows them to produce products more cheaply than they would otherwise be able to. Building Keystone XL would change that. If TransCanada’s analysis is accurate, under current market conditions, Keystone XL would add $20 to $40 to the cost of a barrel of  Canadian crude—increasing the cost of oil in the United States by tens of billions of dollars
I was unaware of the propensity for diesel refining of the Gulf Coast, but that only increases the likelihood that Canadian oil will be sold to China. Most interesting is TransCanada's selling point to Canadian regulators was that it would increase gas prices for Americans.

The lesson: don't believe anything the oil industry says about oil prices. Their goal is to maximize profits, which means they want to maximize prices.

Wednesday, February 15, 2012