Pipelines and Prices: Race to the Gulf Coast is in Big Oil's Interest, But is it in the Nation's Interest?

Yesterday, the U.S. benchmark for oil jumped above $100 a barrel for the first time since this spring. A big factor was an announcement by Enbridge to pipe more oil to the Gulf Coast but would then be exported to Latin American markets - something the Keystone XL tars sands pipeline would do but in much larger volumes.  Despite all the talk of energy security of late this is another clear indication that the Keystone XL pipeline is all about oil industry profits and not the national interest.

Enbridge Inc. announced  it would start sending more oil to the Gulf Coast (something the proposed, and now delayed, Keystone XL tars sands pipeline would---do but in much larger volumes).  Oil companies cheered this announcement as they will increase their ability to sell oil from the Gulf Coast and export overseas. Here is how the AP story on the scheme outlines the issue:

"Oil prices jumped Wednesday after Canadian pipeline company Enbridge announced it would ship crude away from a key delivery point in Cushing, Oklahoma. The company bought a 50 percent stake in the Seaway pipeline from ConocoPhillips and plans to use it to transport oil from Cushing to refineries along the Gulf Coast, where much of it will be shipped overseas because of rising demand from Latin America."

If the Keystone XL tar sands pipeline were approved, even more oil will flow to the Gulf Coast and then to international markets and not provide the United States with energy security.  And building Keystone XL would very likely lead to even higher oil prices according to IHS CERA. This confirms the findings of Oil Change International's report. Keystone XL has always been about increasing US oil prices and finding a route to export tar sands on the world market.

To be clear, the U.S. doesn’t have an oil supply problem.  The U.S. oil market is shrinking and will continue to do so for several decades.  According to the U.S. Energy Information Administration, U.S gasoline demand is in decline and will continue through at least 2030.  This is the result of stronger fuel economy standards already in place. The United States can further reduce oil use use by over 4 million barrels a day by 2025 through fuel economy for heavy trucks, improvements to air travel, and building efficiency.  The Environmental Protection Agency suggests that even deeper cuts – around 7 million barrels a day – are possible by 2030. Yesterday’s landmark announcement by the Obama administration establishing new fuel economy standards further reduces the nation’s oil consumption by 2.2 million barrels a day.

In the end, Keystone XL has never been about serving the American people.  It is a project to boost the profits of oil companies.  There is too much harm the pipeline will have to farmland, air and water across 1700 miles and six states.  Here is yet one more reason the Keystone XL pipeline is not in the national interest and why the pipeline should be denied.

About the Authors

Danielle Droitsch

Senior Policy Analyst, Canada Project

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