CEA Executive Vice President and energy-consumer advocate Michael Whatley disputed a report released today by Consumer Watchdog claiming the Keystone XL would increase gasoline prices:
“Any analysis which attempts to show that adding 830,000 barrels per day of highly-discounted oil to U.S. markets will raise gasoline prices is not worth the paper it is written on. With shipments from Mexico and Venezuela on the decline, Gulf Coast refiners will need to increase their purchases from low-cost North American sources or higher-cost overseas sources. Given that gasoline and diesel prices are pegged directly to crude oil prices, the construction of Keystone XL will reduce prices – a fact clearly understood by the 68% of Americans who support construction of this vital project.”
Citing a 2011 U.S. Department of Energy memorandum on Keystone XL, Whatley noted that:
“Experts at the Department of Energy concluded that Keystone XL and other infrastructure projects that eliminate transportation constraints from Cushing to Houston, ‘would not adversely affect Midwest gasoline consumers.’ The memorandum goes on to detail how Keystone XL would, in fact, lower gasoline prices in fuel markets served by refineries in the Gulf Coast, including consumers in the Midwest. Clearly, Consumer Watchdog and its anti-Keystone XL billionaire backer, Tom Steyer, continue to choose ideology over logic.”
From U.S. Department of Energy memorandum to the U.S. State Department (emphasis added):
Eliminating transportation constraints from Cushing to Houston would not adversely affect Midwest gasoline consumers. While Midwest refiners are currently benefiting form high crude discounts compared to PADD I and PADD III refiners, Midwest gasoline consumers are not benefiting from them. Retail gasoline prices reflect the wholesale price of marginal gasoline supplies. In 2010, marginal gasoline supplies to the Midwest were from PADD III (310 thousand barrels/day) and PADD I (180 thousand barrels/day). With substantial additional volumes of light-sweet and other crudes accessible to Gulf Coast refineries, WTI prices would increase. Brent, Argus and other marker crude prices would decline. Crude costs to PADDI and PADD III refineries would lower. Gasoline prices in all markets served by PADD I and III refiners would decrease, including the Midwest.