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Keystone XL Would Increase Gas Prices and Carbon Emissions Keystone XL Would Increase Gas Prices and Carbon Emissions

Keystone XL Would Increase Gas Prices and Carbon Emissions

by Sarah Laskow
May 26, 2012


Most people stopped thinking about Keystone XL, the tar sands pipeline, after months of political sniping led the Obama administration to nix the project. But Congress hasn't forgotten about it: Republicans and Democrats have been quietly fighting over whether to shoehorn a measure approving the pipeline into a transportation bill. Meanwhile, environmental groups, oil lobbyists, and independent analysts have been working to predict the consequences that would result if it was built. Their efforts have produced two new reports providing two new—but conflicting—reasons to oppose the project.

In some parts of the United States, building Keystone XL could drive gas prices up, according to the Natural Resources Defense Council in a report confirming other economists' conclusions. This may seem counterintuitive: Proponents of the pipeline (and oil drilling in general) have argued that Keystone XL will help increase oil production in Canada, which will mean lower gas prices in the long term. 

But even without Keystone XL, Canada already ships more than a million barrels of oil to the United States every day, much of which ends up at refineries in the Midwest to be turned into gasoline. Right now, Canadian oil companies are sending so much oil to the Midwest that they end up selling to these refineries at a discount—$20 to $40 less per barrel than they could get if they had access to international markets. These discounts are passed onto drivers, who pay less for gas in the Midwest than on the coasts, where crude oil is more expensive. 

Keystone XL would create an express route for Canadian oil to the Gulf Coast, where it would be broken down, processed, and sent off to distant shores, bypassing the Midwest altogether. This is currently big business for the United States: Last year, the country exported more dollars worth of petroleum products—gas, diesel, and jet fuel—than of any other product. But Keystone would allow Canadian oil companies to fetch higher prices than American ones do. And the discounts that U.S. consumers have benefited from will disappear.

For the communities that could be affected by this shift, a hike in gas prices will hurt, especially after politicians promised that Keystone XL would cause the opposite effect. There's a problem with complaining about gas prices going up, though: the price for gas is low only because Americans are consuming so much carbon-intense oil.

Climate scientist James Hansen has called Keystone XL “the fuse to the biggest carbon bomb on the planet.” If burnt, the oil that Canadian companies are digging up could dramatically increase the carbon concentration in the atmosphere. And even though the oil won’t come out of the ground all at once, any barrel of tar sands oil will have a greater carbon impact than a barrel of conventional oil.

Plenty of analysts from both sides of the Keystone XL fight have tried to quantify the carbon effects of using tar sands oil, and a new report from the Congressional Research Service provides an overview of the results. The researchers conclude that oil from tar sands is between 14 and 20 percent more greenhouse-gas intensive than conventional oil. In real terms, that means that building the Keystone XL pipeline would add as much greenhouse gas to the United States' carbon footprint as an extra 4 million more cars out on the road each year. 

Proponents of the pipeline argue that if the U.S. isn’t sending that carbon into the atmosphere, some other country will, as soon as Canada finds a way to ship tar sands oil across the Pacific Ocean. Absent an international agreement to draw down carbon emissions, some country will find it profitable to buy, process and burn Canada’s new product. It’s true that stopping Keystone XL won’t keep all of Canada’s tar sands oil in the ground. But it will slow the process of distributing it around the world. In the interim, the price of clean energy should drop even further, vehicles should become more fuel-efficient, and paying for barrels of dirty oil should seem less like a good deal. 

Photo via (cc) Flickr user ARLIS Reference

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