Keystone Pipeline To Increase Gas Prices In The United States?

Could the keystone pipeline actually increase gas prices in the United States? That’s the claim being made by several studies who have considered the impact that making it easier to transport crude oil across America could somehow cause local prices to go up by a noticeable amount.

In a related report by The Inquisitr, Secretary of State John Kerry delayed the Keystone pipeline in order to allow agencies to consider other options. Some union officials have called the delay by the Obama administration a “gutless” move considering how long the Keystone XL pipeline has been in the planning stages:

“This is once again politics at its worst. In another gutless move, the Administration is delaying a finding on whether the pipeline is in the national interest based on months-old litigation in Nebraska regarding a state level challenge to a state process — and which has nothing to with the national interest. They waited until Good Friday, believing no one would be paying attention. The only surprise is they didn’t wait to do it in the dark of night. It’s not the oil that’s dirty, it’s the politics.”

The politics of the Keystone pipeline might be swayed if it turns out it’s true that gas prices could increase if it is built. For example, Rep. Fred Upton (R-MI), chairman of the Energy and Commerce Committee, claimed in 2012 that the Keystone Pipeline would help gas prices:

“The [Keystone XL] pipeline will bring secure energy to America, support the creation of thousands of jobs, and help bring down prices at the pump.”

Bloomberg explains the theory that the opposite may occur:

“The answer is that Keystone isn’t meant for U.S. consumption. In Keystone’s weirdonomics, the pipeline would actually increase prices of gasoline for much of the country, according to at least three studies that have looked into it. Keystone would divert crude from Midwest refineries to Gulf Coast refineries, where it would then be shipped to more expensive markets. Bypassing heartland refineries could drive up prices at home.”

Philip Verleger is an oil market economist and agrees with this view:

“US farmers who spent $12.4 billion on fuel in 2009 could see those costs rise to $15 billion or higher if the [Keystone XL] pipeline goes through. Millions of Americans will spend 10 to 20 cents more per gallon for gasoline and diesel fuel as tribute to our ‘friendly’ neighbors to the north. The Keystone XL pipeline will move production from Canadian oil sands to a deepwater port from where it can be exported.’”

But the Washington Times has pointed out that other experts believe the Keystone XL pipeline may only affect gas prices by a “few cents” and will have a “small impact,” whether higher or lower.