Keystone Oil Pipeline

http://www.futureofcapitalism.com/2011/10/keystone-oil-pipeline

USA Today has an editorial that comes out in favor of American government approval for the Keystone oil pipeline, which would stretch from Canada to the Gulf of Mexico:

Critics further charge that companies plan to use the pipeline to export petroleum through the Gulf of Mexico, not distribute it within the USA. That would be a powerful criticism if it were true, because it would undercut the argument that the pipeline will help meet U.S. oil needs. TransCanada, which is building the line, says the charge is false, and Valero Energy, which would be a user of the line, says it has no intention of using the Canadian oil for export. Those assurances are welcome; even so, it would be wise for the State Department to make them a condition for approval.

This seems to me to misunderstand the nature of a global market for energy. It doesn't make much difference whether a particular barrel of oil is exported or used in America; the stuff is all the same, a highly substitutable or interchangeable commodity. If the oil is exported, it increases the global supply in a way that would decrease the price for American consumers almost identically to the effect if it were used in America. Why not let the owners of the oil, rather than the State Department, decide who to sell the oil to?

by Editor  |  Oct 27, 2011 at 7:29 am Related Topics:  Energy receive the latest by email: subscribe to the free futureofcapitalism.com mailing list