Big Oil Lies About Tar Sands Pipeline

Written by Brant Olson

Topics: Oil

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Tar sands activistThe American Petroleum Institute (API) is making false claims about a massive new oil pipeline through the Midwest that contradict the Industry’s own research.

In a conference call last week reported today by Politico, API previewed a national advertising campaign supporting the TransCanada KeystoneXL oil pipeline set to launch in January. Critics including Senator Mike Johanns (R-Neb.) are concerned that the pipeline risks contamination of the Ogallala Aquifer, one of the world’s largest and a critical source of drinking water for Midwestern states.

According to reports from the call, API will focus its message on energy security. “Every barrel we import from Canada will replace oil from less secure sources” said API’s Cindy Schild, according to the Oil and Gas Journal.

A report commissioned by TransCanada themselves, however, shows those claims to be false. According to the report from Purvin & Gertz, the supply from the KeystoneXL pipeline would primarily displace domestic oil flowing into Midwestern refineries (see chart below).

Midwestern Crude Oil Refining Forecast by Source

Oil imports from KeystoneXL would displace domestic oil in the Midwest, not foreign oil.

Meanwhile, new demand from Gulf Coast refiners enabled by the new pipeline would constrain supplies available to Midwestern refiners, pushing oil prices up for Midwestern consumers. According to the report, after KeystoneXL

Midwest demand for Canadian heavy crude would exceed the available supply and the market price of Cold Lake Blend would be approximately $6.55 per barrel above the 2008 price level at Patoka. (p.27).

The report also describes the real economic basis behind support for the pipeline: big profits for the oil companies.

In summary, if the Keystone XL Pipeline causes the USGC price discount to be eliminated, the annual revenue increase to the Canadian producing industry is estimated at $2.0 billion (U.S.). In addition, if the Keystone XL Pipeline causes the Midwest price to rise above USGC parity, the annual revenue could increase by another $1.9 billion to reach approximately $3.9 billion (U.S.). (p.29)

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  1. The Understory » Keystone XL Won’t Decrease “Unfriendly” Oil Imports Either
  2. Keystone XL Won’t Decrease “Unfriendly” Oil Imports Either | My Nice Planet

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