Where Keystone’s Oil Will Go
By Steve Hargreaves
If the proposed Keystone pipeline expansion gets built, oil will flow from Canada to the Gulf of Mexico. But will it stay in the United States, or get shipped elsewhere?
Supporters of Keystone say the project will benefit Americans because it will reduce the country’s reliance on foreign oil.
But critics claim the oil Keystone carries will simply be exported to other parts of the world.
Which argument is right? Refining analysts say both.
Reducing dependence on foreign oil
It’s true that the 830,000 barrels a day the pipeline is slated to carry would probably replace some of the 2 million barrels a day of heavy oil currently imported to the Gulf Coast. It’s generally cheaper to transport oil by pipeline than by ship, so refiners would likely opt for the Canadian crude.
“They want the additional Canadian barrels to displace higher cost barrels from Venezuela, Mexico or Saudi Arabia,” said Allen Good, an oil company stock analyst at Morningstar.
The energy boom in both the United States and Canada is already reducing imports. In 2008 the United States imported 9.8 million barrels of oil a day, according to the Energy Information Administration. By 2012 that number had fallen to 8.5 million barrels a day.
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