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AP Wonders if Keystone Pipeline ‘Still Necessary’

With OPEC nations banding together to drive U.S. oil producers out of business, the Associated Press is weighing in with a thoughtful piece titled “WITH LOW OIL, GASOLINE PRICES, IS KEYSTONE STILL NECESSARY?”

At the bottom of the piece, which says “Low oil prices could make the pipeline more important to the development of new oil sands projects … and therefore is more likely to increase emissions of carbon dioxide and other gases linked to global warming, there’s a Q&A.

Q: Will Keystone XL lower gasoline prices? A: Probably not, but that has not changed. The price of crude oil does affect the price of gasoline, and refiners set up to use heavy crude would enjoy lower priced-oil.

Huh? Hoe does the price of crude oil NOT affect the price of gasoline? Oil per barrel has plunged to less than $50, and the price per gallon of gas has plummeted to less than $2 in more than 30 states. The cost per barrel is the single largest determining factor in the price at the pump.

Q: Do lower oil prices mean a pipeline would have a bigger effect on oil sands development and emissions of the pollution linked to global warming? A: Possibly. …  At low oil prices the cheap transport provided by a pipeline would be just enough to make some new projects profitable enough to develop, and that concerns environmentalists.

Yes, environmentalists are worried about low prices making it possible for oil producers to start new projects — which would not only further dreive down gas prices but would also ease U.S. dependence on foreign oil. A big factor in OPEC deciding to allow a glut of oil onto the market is drive smaller producers out of business, when the oil monopoly would then, of course, hike prices.

But at the end of the piece, there’s this:

Q: Does it still make sense for refiners on the U.S. Gulf Coast?

A: Yes. To refiners, more oil is better, and more of the type of oil they need is better still. Many complex Gulf Coast refineries are geared to process the heavy crudes that come out of Canada, Venezuela and Mexico. Because that crude is harder to process, it is cheaper than light sweet crude. If there is more heavy crude available, the price drops, lowering the price for refiners. Venezuelan and Mexican crude production has been falling, so refiners would like another reliable source.

‘We still want that crude,’ said Bill Day, a spokesman for the refining company Valero, which would be a Keystone XL customer. ‘Canadian heavy crude is some of the lowest-priced crude on the planet.’

So, uh, yeah, more oil lowers gas prices. A doy.



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