Would the Keystone XL pipeline raise US petrol prices?
It seems a counter-intuitive query, given that the new infrastructure would enable hydrocarbons to be moved easily, and more cheaply, from tar oilfields to refineries.
The proposed Keystone XL pipeline will move 830,000 barrels of oil each day from Alberta's tar sands and producers in the Bakken formation oilfields of North Dakota and Montana to the Gulf of Mexico Coast and midwestern refineries.
"It will not only bring essential infrastructure to North American oil producers, but it will also provide jobs, long-term energy independence and an economic boost to Americans," according to TransCanada.
However, a recent report by the US consumer advocate group Consumer Watchdog argues the Keystone XL pipeline will result in higher petrol prices, up to 25 to 40 cents more per gallon for US drivers, especially in the midwest.
Petrol price hikes are expected to reach as far as California. Costs are predicted to amount to US$3 billion to $4bn per year in higher prices for Americans.
The construction of the pipeline would probably send much of the oil to refineries in Texas, bypassing the midwest and reducing supply, according to the report.
"It is likely that the higher oil price and gasoline prices would offset any provable jobs or manufacturing benefit from the Keystone XL pipeline," says the Consumer Watchdog report.
"A vote for Keystone is a vote to raise gas prices on Americans and send the profits to a foreign oil company," says the alternative energy investor Thomas Steyer, the founder of Farallon Capital Management.
According to the report, the goal of multinational oil companies and Canadian politicians backing the pipeline is to reach export outlets outside the US for tar sands oil and refined fuels, which would drive up the oil's price.
"Keystone XL is not an economic benefit to Americans, who will see higher gas prices and bear all the risks of the pipeline," says Judy Dugan, the research director emeritus for Consumer Watchdog.
"The Keystone XL Pipeline will lead to higher prices for American drivers at the pump and increased profits for foreign oil interests at a time when our US economy is still in recovery," says Mr Steyer.
The report adds much of the Canadian oil would go directly to US Gulf Coast refineries - owned by the same multinational companies investing in tar sands. These include ExxonMobil, Chevron, Koch Industries, Marathon Oil and Shell Oil.
Gulf facilities would refine the tar sands crude oil into diesel oil, which is in high overseas demand, and petrol for export, says the report.
According to Josh Mogerman, the spokesman for the Natural Resources Defence Council, Keystone XL is "an export pipeline".
"The US is on a mission to get oil out to international markets that they can't access at the moment," he adds.
Sierra Club, another environmental group opposed to the pipeline, agrees.
"It doesn't make any sense for our national interests to work on getting this super dirty, very expensive source of oil just to export," says Eddie Scher, a spokesman for Sierra Club in San Francisco.
But Keystone XL supporters believe the pipeline will actually reduce petrol prices.
This expectation comes from the idea that, according to the US energy information administration, in setting the price of petrol, approximately two thirds of the cost is determined by the global market price of crude oil.
The construction of the Keystone XL pipeline could strengthen the US energy partnership internationally and positively affect global energy demands.
TransCanada says the oil that would be delivered through the pipeline is needed in the US and that increasing the supply would mean lower prices for crude oil, resulting in lower petrol prices.
It seems the debate over the benefits or otherwise of the Keystone XL project will not run out of fuel any time soon.
