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Want an executive summary? Sure! According to documents presented by the company building the pipeline to Canada's National Energy Board, Keystone XL can be used to increase annual U.S. gas costs by $4 billion.

(Originally appeared here. I'll be publishing more on Daily Kos on Keystone XL misinformation.)

You hear many lies about the  Keystone XL Pipeline, but today we are just going to talk a bit about a document that completely refutes one of them: that that pipeline will make our gas cheaper.

A few years ago TransCanada, the company that’s building the pipeline, submitted a Section 52 application to Canada’s National Energy Board.  Section 3: Supplies and Markets and its appendixes, clearly states that the company expects the pipeline will allow Canadian shippers to add up to almost $4 billion dollars every year to the United States’ cost of gas.

How? Partly due to scarcity. Here’s the first 1.9 billion in TransCanada’s own words:

Existing markets for Canadian heavy crude, principally PADD II [the Midwest], are currently oversupplied…

Access to the USGC [United States Gulf Coast] via the Keystone XL Pipeline is expected to strengthen Canadian crude oil pricing [...] by removing this oversupply. This is expected to increase the price of heavy crude to the equivalent cost of imported crude. [...]

The resultant increase in the price of heavy crude is estimated to provide an increase in annual revenue to the Canadian producing industry in 2013 of US $2 billion to US $3.9 billion.

Now for another $2 billion, brought to you by them no longer needing to offer "discounts":
If deliveries on the Keystone XL Pipeline relieve the oversupply of Canadian heavy crudes, a price discount at the USGC should not be necessary. By 2013, Purvin & Gertz estimates the total supply of all the Canadian heavy crude blends to be 1.84 million B/D [barrels per day] ...

Based on eliminating an average discount of $3.00 per barrel on this volume of heavy crude, the annual revenue to the Canadian producing industry would increase by approximately $2.0 billion (U.S.).  

[So 1.84 mill barrels per day times $3 times 365 days]

There we have it. Why do our politicians and veiled lobbies like the American Petroleum Institute keep telling us this pipeline (headed for export from the Gulf, making oil scarcer) will “hold down the gas prices for consumers”?

Originally posted to jenesaiswha on Wed Apr 30, 2014 at 06:32 PM PDT.

Also republished by DK GreenRoots.

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Comment Preferences

  •  Tip Jar (12+ / 0-)

    If you are a lover of nonsense, check out my comics! http://www.dailykos.com/blog/jenesaiswha and www.jenesaiswha.tumblr.com

    by jenesaiswha on Wed Apr 30, 2014 at 06:32:58 PM PDT

  •  Anything that increases the cost of (0+ / 0-)

    fossil fuels, and thus dampens demand, is a good thing.

    •  Yes, as long as we can produce enough biofuels (1+ / 0-)
      Recommended by:
      unfangus

      and other sustainable fuels to replace the fossil fuels. I believe we can stop using most fossil fuels today if we really made the commitment but we would need to decentralize energy production. Every community should be able to produce the vast majority of their energy needs. The centralized model of production needs to be scrapped.  

      Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

      by RMForbes on Wed Apr 30, 2014 at 09:27:01 PM PDT

      [ Parent ]

      •  You're assuming that carbon dioxide equivalent (0+ / 0-)

        emissions from the processing of and the combustion of bioluels are benign for purposes of greenhouse gas forcing in the atmosphere in the same manner as those who claim that burning down the rain forest won't make any difference to global warming forcing because the CO2e would come from wood combustion....a ridiculous claim.

        You also apparently have never read any EPA regulations that require CO2e emissions from biofuel processing facilities to be regulated by permit conditions, best available control technology requirements and CO2e emission limitations.

        •  Biofuels produce an average of 85% less CO2 (0+ / 0-)

          than fossil fuels. Producing biofuels from our organic waste products would not require deforestation at all or we could just encourage hemp production. If we grew hemp on the 15% of American farmlands that are left not planted ever season we could produce enough biofuels using standard cellulose enzyme conversion to completely replace all current fossil fuel use. It's not impossible to replace both fossil fuels and deforestation at the same time. It only takes a little political will to do the right thing over the profits of the oil cartels.

          Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

          by RMForbes on Thu May 01, 2014 at 11:39:41 AM PDT

          [ Parent ]

  •  It's Actually Been In News-Only-Progressives-Can- (7+ / 0-)

    see for years that the pipeline would raise rather than lower gas prices in the midwest, for exactly the reasons you lay out here.

    Thanks for reinforcing a story whose false opposite continues to dominate the mainstream conversation.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Wed Apr 30, 2014 at 06:45:41 PM PDT

  •  ? (1+ / 0-)
    Recommended by:
    unfangus

    My apologies if I'm misunderstanding you, but I think you're saying that a decrease in demand is good because fossil fuels are bad. I'm assuming you mean they're bad for the environment.

    But do you know what a pipeline that size full of tar sands (and passing through our drinking and farming water and on our farming land) does?

    Whichever way you look at this project is not good. I just think it's important that we shed some light on the misinformation campaign that has been waged here.

    People that don't prioritize the environment and think that this is going to decrease gas costs need to know the truth, we need to get this information out there

    If you are a lover of nonsense, check out my comics! http://www.dailykos.com/blog/jenesaiswha and www.jenesaiswha.tumblr.com

    by jenesaiswha on Wed Apr 30, 2014 at 06:52:54 PM PDT

    •  Well (0+ / 0-)

      If the tar sands are in the pipeline they would not move! I presume you meant the heavy crude which if in the pipeline has no effect on the drinking and farming water in the land it passes through.  What you need to do is mandate safety and maintenance standards that are sufficiently high to ensure it stays in the pipeline.

      An alternative form of transport is by train but the news today inspires considerably less confidence in the environmental safeguards of that method.

      Of course you could forego using them altogether which is a legitimate position providing you accept the consequences of higher exploitation within the USA itself or a reduction in usage equivalent to the fuel being imported via the pipeline.

      As for the rest of the diary, this seems to be arguing that the Canadians should not charge the USA the market price for the fuel. Nothing like a bit of good old colonialism is there?

      "Come to Sochi, visit the gay clubs and play with the bears" - NOT a Russian advertising slogan.

      by Lib Dem FoP on Wed Apr 30, 2014 at 07:10:29 PM PDT

      [ Parent ]

      •  ... (3+ / 0-)
        Recommended by:
        RMForbes, Chi, unfangus

        TransCanada has a poor safety record. They already have switched pipe thickness on farmers to save costs on materials, they have leaks, they've been dealing with a big whistleblower case (one of their inspectors) for a while in Canada because they didn't want to address safety concerns,...

        Oh, there's also email hosted by Friends of the Earth (obtained through a FOIA request) that show that in July 2010 State Department and TransCanada employees apparently colluded, agreeing that the company would drop their request for a “special permit” to operate the pipeline at a higher pressure than is usually allowed in our country so that they could win political support and increase it again once the project had been cleared.  

        This is not a safe pipeline and this company is not responsible.

        Also, I know it's the Internet and all but please don't be a demagogue. The point of this article is not to say that we shouldn't pay market price. The point (which I reiterated in my comment) is clearly that we're being lied to when we're told that this will make our gas cheaper. They're lying this way to win over people who don't care about environment-type arguments.

        I do sincerely appreciate you reading through it though (seriously, no sarcasm, that's hard to convey here). Cheers!

        If you are a lover of nonsense, check out my comics! http://www.dailykos.com/blog/jenesaiswha and www.jenesaiswha.tumblr.com

        by jenesaiswha on Wed Apr 30, 2014 at 07:29:17 PM PDT

        [ Parent ]

        •  To be honest I am torn (1+ / 0-)
          Recommended by:
          unfangus

          The ideal of course is to reduce demand to eliminate the need to extract any of the stuff in the first place however that is not the case and frankly is unlikely in my lifetime (I'm 62)

          The second preferable option would be to process the crude into petroleum products in Canada. Again the pipeline is, I understand, to supply refineries in the USA.

          Unfortunately the only alternatives seem to be to transport the crude via pipeline or by rail. Rail appears to be even more unsafe than a poorly managed pipeline so in terms of realpolitik it is determining which is the lesser evil. That is not to say, as I hope I indicated, that the strictest safeguards shouldn't be put in place. (I wonder if the supposed saving was in fact calculated by comparing the costs of transporting by train or pipeline. Common sense would suggest a pipeline would be cheaper per barrel especially if train transport needs to be upgraded to avoid the sort of incident we saw Wednesday)

          I take your point about misleading statements - 'twas ever thus. In the early days of nuclear power they promised free unlimited electricity for all when in fact the primary reason for the plant was to produce materials for nuclear weapons.

          Another reason I am torn is that gasoline prices in the USA are about the cheapest outside of those third world countries, normally producers themselves, which highly subsidize their populations. A similar thing is happening with shale gas. So there's part of me that sympathizes with the poor over their expenditure but another that feels if it reduces consumption and encourages conservation, an increase in prices would be no bad thing.

          "Come to Sochi, visit the gay clubs and play with the bears" - NOT a Russian advertising slogan.

          by Lib Dem FoP on Wed Apr 30, 2014 at 09:01:01 PM PDT

          [ Parent ]

          •  There is no economic argument one can make for (0+ / 0-)

            building a heavy crude refinery in Canada. The producers are not going t do it when they have excess capacity at the Gulf. Might make sense in the Dakotas, to serve the Bakken and Alberta, but I guess the economics are not there either, with the excess capacity at the GC.

            "...stories of past courage can define that ingredient..... But they cannot supply courage itself. For this each man must look into his own soul." JFK Profiles in Courage "

            by ontario on Wed Apr 30, 2014 at 10:55:28 PM PDT

            [ Parent ]

  •  The Southern section (3+ / 0-)
    Recommended by:
    ontario, Roadbed Guy, unfangus

    which has this effect, is already in operation.  It also increased prices for Bakken crude.  The Northern section would actually tend to re-create the previous glut condition (all else being equal, which it isn't).  Of course, the principal effect of that situation was to move rents from oil producers in Canada and the Bakken to refiners in the Midwest, not to lower prices at the pump (which happens only to the extent refined product shipment out of the PADD is constrained).  

    Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

    by benamery21 on Wed Apr 30, 2014 at 06:55:20 PM PDT

    •  This is not the Ron Popeil pipeline (0+ / 0-)

      The reduction in price at the pump I posit above for refined product congestion would only apply to consumers within the PADD.

      For broader domestic price reduction (or reduced increases) the only mechanism (for current market structure) is increased global supply, which basically means it only reduces prices at the pump to the extent that it allows crude production that would otherwise not occur (increasing GHG emissions at the same time).  

      Cake and eating it too, is not going to happen.  This is not the Ron Popeil pipeline.

      Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

      by benamery21 on Wed Apr 30, 2014 at 07:02:57 PM PDT

      [ Parent ]

    •  Absolutely. (0+ / 0-)

      "...stories of past courage can define that ingredient..... But they cannot supply courage itself. For this each man must look into his own soul." JFK Profiles in Courage "

      by ontario on Wed Apr 30, 2014 at 10:56:09 PM PDT

      [ Parent ]

  •  Gas or gas? (1+ / 0-)
    Recommended by:
    Roadbed Guy

    Gasoline or natural gas?  Make it clear what you are talking about.

    How, exactly, does crude oil prices relate to gasoline prices?  Make that clear.

    I do not support KXL nor the diluted bitumen coming out of the Canadian tar sands.  Your argument is not clear, however.

  •  These producers are nearly all American owned. (1+ / 0-)
    Recommended by:
    unfangus

    They make the profit, Alberta gets a royalty payment.

    This stuff is worth nothing unless it is refined. There is no Canadian refinery capable of refining this heavy crude. They exist at the Gulf, where they have processed some heavy crude from Venezuela.

    I'm not arguing that this stuff is good for anyone, but the fact is that it brings way below the world price at the well-  head because of its unusable poor quality.

    Among the big rights-holders are Suncor (Sunoco), Chevron,  Koch Resources (yes, those two), Conoco-Philips, Occidental, Marathon, Exxon, Murphy. Royal Dutch Shell is right there too.  They want it shipped to the Gulf, to make more money from it - sounds like good old American business?

    Meanwhile Canadian citizens die from pollution in the waters hundreds of miles downstream and American refinery workers at the Gulf will continue to die , as they have heretofore. It's a dirty business, wrought by Americans since oil was first discovered in Alberta at Leduc.

    "...stories of past courage can define that ingredient..... But they cannot supply courage itself. For this each man must look into his own soul." JFK Profiles in Courage "

    by ontario on Wed Apr 30, 2014 at 10:50:23 PM PDT

    •  you said (1+ / 0-)
      Recommended by:
      marina
      There is no Canadian refinery capable of refining this heavy crude.
      This does not sound correct as tar sands crude comes to southern Ontario through Enbridge Line 6B last time I checked.
      •  I have read there is no heavy crude refinery in (0+ / 0-)

        Canada capable of processing bitumen, You don't refer to a refinery,just a pipeline. How is it transported from there?

        "...stories of past courage can define that ingredient..... But they cannot supply courage itself. For this each man must look into his own soul." JFK Profiles in Courage "

        by ontario on Thu May 01, 2014 at 09:47:22 PM PDT

        [ Parent ]

    •  this is essentially the situation for *any* (1+ / 0-)
      Recommended by:
      ontario

      crude oil:

      This stuff is worth nothing unless it is refined
      •  Yes, it is just where the capability is for (0+ / 0-)

        bitumen refining. All that is done in Alberta is steam cleaning it to get it flowing enough to ship.

        "...stories of past courage can define that ingredient..... But they cannot supply courage itself. For this each man must look into his own soul." JFK Profiles in Courage "

        by ontario on Thu May 01, 2014 at 09:48:55 PM PDT

        [ Parent ]

      •  Really nice stuff can be directly combusted (0+ / 0-)

        for electricity generation.  This is a horrible use of high end crude, but Japan is currently doing just that, due to the ongoing nuke shutdown (they are also burning lots of extra LNG and distillate).

        Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

        by benamery21 on Fri May 02, 2014 at 07:28:49 PM PDT

        [ Parent ]

        •  Per EIA on Japan (0+ / 0-)

          "Direct crude oil burned for power skyrocketed from 85,000 bbl/d in 2010 to 281,000 bbl/d in 2012 according to FACTS Global Energy, a 230% increase. Likewise, heavy fuel oil used for power generation grew from 100,000 bbl/d in 2010 to 280,000 bbl/d in 2012, an increase of 180%"

          http://www.eia.gov/...

          That's more oil than Alaska produces, being burned in a 1st world country to produce electricity.  Even more LNG is involved.

          Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

          by benamery21 on Fri May 02, 2014 at 08:17:25 PM PDT

          [ Parent ]

  •  Through a Great Lakes crossing at Marysville, MI (2+ / 0-)
    Recommended by:
    marina, unfangus

    over to Ontario and submerged in the swift-flowing St. Clair River which drains Lake Huron into Lake St. Clair.

  •  Won't this mainly help refinery spreads? (2+ / 0-)
    Recommended by:
    unfangus, Roadbed Guy

    Gasoline isn't entirely fungible, but it is substantially so.  Getting discounted crude due to oversupply helps refiners, not end users.

    •  Yes, the Koch Brothers currently greatly (0+ / 0-)

      benefit from this, so all the "Let's not build KXL to spite the Koch Brothers" diaries at this site are just a tad disingenuous . .. ..    The point being, policies should be based on more than personal animus.

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