Situation One: There is a lot of noise about the how the Pipeline from Hardisty in Canada all the way to Houston could increase oil production in the U.S., reduce our dependency on Canada, Mexico, and the Middle East for our unrefined crude oil, and thus hold down or reduce gas prices.
Situation Two: The present pipeline from Hardisty through Regina in Canada now goes to a refinery-storage area in Patoka, Illinois so the cheap crude coming from Canada is being refined at huge profits to the refineries/oil companies in southern Illinois and is being pumped into vehicles largely in the Midwest. You could say “The Oil Pipe stops here.”
Here is what seems to be the “Bottom PipeLine“: [Hopefully you are aware of at least half of this]
- The Government wants to lift U.S. Oil production—and has pretty much done so.
- There is currently an oversupply of crude in the Midwest.
- U.S. Oil production is at its highest level in 8 years.
- The Number of rigs drilling has quadrupled in last 3 years.
- The decision by the government to delay the Keystone XL pipeline was and still is vastly misunderstood. (Hopefully you’ve really taken the time to read the papers and ignore the rhetoric.)
- The Army Corps of Engineers were/are very concerned about this pipeline crossing several major rivers in the mid-part of the country, as are various state governments.
- The proposed new 1,700 mile pipeline from would pass through a large environmentally sensitive areas in Nebraska, Montana and South Dakota.
- The pipeline from Cushing OK to Houston would move 700,000 barrels per day, and would create some price competition with imported foreign oil.
- There is an oversupply of crude oil in the Central U.S. that cannot be efficiently delivered to markets.
- Obama really has little influence over this project, and it is marginal that the pipeline would actually decrease the price of oil and subsequently gas in the U.S.
- 4,000 jobs would be created, but would only last for about a year.
- The new pipeline is acknowledged as a “step in the right direction.”
- Construction of the pipeline would show that the Government is trying to do something about an oil policy.
- Shale oil production, centered in North Dakota, has made advances in horizontal drilling and provides hope for T Boone and Wall Street.
- The effect of Obama or a Republican president approving the Cushing –Houston pipeline will have minimal effect on crude oil supply, and minimal effect on gas prices.
The Only Energy Gap: Both the President and the Republican Wanna-Be(s) are overstating the problem, the impact and return on the pipeline, and are reflecting the continued frustration with the need for most Americans to afford gas to get to work and the kids to school. The Obama Energy Gap has been with the U.S. for at least 30 years.
The Real “Gap” is in Congress, with our leadership (the Republicans are no better than the Democrats) and mostly in the heads of a U.S. population that insists on remaining almost totally ignorant of automotive economics – whether they are buying a vehicle or just putting fuel in it.
Your Link to Enlightenment: If you really want to understand what all this means to you, see if this link to the Financial Times works – if not subscribe – you will be a great dinner conversationalist immediately.