Top oil economist: Pipeline would increase gasoline prices in the upper Midwest 5 to 10 cents a gallon.
Amidst the mind-numbing array of hollow political promises to lower U.S. gas prices, there’s one really important point everyone should know: the Keystone XL tar sands pipeline, which supporters say will “bring down prices at the pump,” wouldn’t be built until 2014.
And that’s if everything went forward today without a hitch.
Keystone XL has become a political mantra for supporters of the carbon economy. But experts continue to warn that promises of cheaper gas prices are unfounded.
What would be the impact of opening up that giant pool of carbon and piping it through America’s heartland? “A few cents at the pump,” said Blake Eskew, senior vice president at the oil consulting firm Purvin & Gertz, Inc., speaking to the Washington Post this week.
Other analysts are far more pessimistic. In a Washington Post fact-checking column today on claims about Keystone XL and gas prices, oil economist Philip Verleger explained that the pipeline would actually raise prices in the Midwest by pulling more crude from refineries in the region down to the Gulf Coast:
There is a lively debate among oil-industry analysts about whether Keystone will impact gasoline prices in the Midwest. Philip K. Verleger, a noted oil economist, has argued that the pipeline would increase gasoline prices in the upper Midwest. He said yesterday that he stands by that estimate, figuring it would amount to between five and ten cents per gallon.
“Overall, the pipeline will have no impact on prices consumers pay. None. The reason is that the products produced from the crude will be sold into the world market — exported — if prices fall below world levels,” he said in an email. “This means that consumers outside the Midwest will get no benefit from the line while consumers in the upper Midwest may pay more.”
Although some have disputed Verleger’s analysis of the hike in Midwestern gas prices, there are no analysts who believe building Keystone XL will have an impact on gas prices in the short-term — if at all in the long-term. The Washington Post fact checkers backed this up today:
We could not find any experts, even those referred to us by Upton’s staff, to say that the prospect of the pipeline being built in the future would somehow impact the price of gasoline today.
As gas prices continue to climb in the U.S., stoking fears about $5 a gallon fuel, supporters of Keystone XL will continue to hold up the project as a solution. But this is nothing more than a political talking point — a hollow promise that simply not grounded in reality.
Even TransCanada, the company building the pipeline, is careful not to claim the project will lower gas prices: “Prices are set on a global level,” writes the company in a fact sheet.