Banning Keystone XL exports would backfire for US: industry group
Washington (Platts)--21Dec2011/446 pm EST/2146 GMT
What if TransCanada's Keystone XL pipeline that many in US Congress
are fighting so hard to get built carries crude oil hundreds of miles
through the Heartland only to have it loaded onto tankers and shipped
overseas?
Opponents of the pipeline have drawn on that export scenario often
during the ongoing debate in Washington.
"There's nothing to stop Gulf Coast refineries from simply exporting the
refined product," Representative Henry Waxman, Democrat-California, said
during a House hearing December 2. "That doesn't improve our energy
security."
Except it does, argues a report issued Wednesday by the Energy Policy
Research Foundation, an industry-backed think tank.
Energy security should not be seen solely as a measure of how much the
US imports or exports, the group said.
Rather, the US faces threats to energy security when unstable parts of
the world hold the largest concentration of low-cost reserves. Wealth
then transfers from US consumers to foreign oil producers, and the US
economy sits vulnerable to price shocks if supplies get disrupted.
"The US is well integrated into the world market and reducing imports
provides some 'energy security' benefits, but these are limited," the
report said. "The large payoff in terms of energy security is bringing
on new and diversified supplies into the world petroleum market free
from the instability of war and domestic turmoil."
The foundation argued that surging production from Canada's oil sands
fits that picture, as it comes from one of the most stable regions of
the globe. It added that the integrated investment patterns with Canada
sends benefits the US.
If Keystone opponents insist on banning exports from the pipeline, as
some have suggested, transportation costs would soar for US refiners,
the report said.
"The net effect of a ban on petroleum products would be to raise the
cost of petroleum use in the national economy since gains in
transportation efficiencies would be unavailable and refinery
utilization rates would fall as refiners faced rising costs from higher
transportation fees," the paper said. "Such a policy would be
counterproductive and increase the volume of net imports and forego the
value-added benefits from higher utilization rates at US refineries."
--Meghan Gordon,
meghan_gordon@platts.com
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