Higher Supply = Higher Prices or NRDC Flunks Econ 101

Who could have imagined the day would come when the Natural Resources Defense Council (NRDC) crafted a report focused on relieving Americans’ “pain at the pump”? 

But there it is: the same group that once stated “there’s nothing we can do to control the price of gas in America” released a paper this week outlining the ways in which Keystone XL pipeline is apparently poised to make prices at the pump go higher – as if higher gas prices were something the group actually opposed. 

Of course, we know the truth about NRDC’s position on gas prices – that they support policies that increase the cost of fossil fuels to discourage their use. What’s tougher, though, is determining how the group came up with a methodology allowing it to argue, in effect, that greater supply of secure sources of... more »

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Study: EPA’s Tier III Proposal Would Increase Fuel-Making Costs

At a time when just everyone is understandably concerned about fuel prices, EPA apparently didn’t get the memo. Its latest thinking on a Tier III refinery rulemaking would add significant costs to the making of gasoline, according to a new analysis by Baker & O’Brien, Inc.

During a recent conference call with reporters, API’s Bob Greco, group director for downstream and industry operations, talked about the impacts on refiners of the proposed rule to further reduce sulfur levels in gasoline:

  • Nearly $10 billion in new capital costs to industry.
  • Increase of between 6 cents and 9 cents per gallon to the cost of manufacturing gasoline, according to Baker & O’Brien.
  • Increase of as much as 25 cents per gallon if a vapor pressure reduction requirement, which EPA considered, is in... more »

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A Look at the Keystone XL Export Argument

One of the more ridiculous arguments against the Keystone XL is that the pipeline is really just about exporting crude oil and petroleum products to China.  Let’s go to the facts:



Here’s a breakdown of the U.S. crude oil supply in 2011 – using data from the Energy Information Administration (EIA).  We see that 99.7 percent of the crude oil produced or imported into the U.S. was processed here.  We simply do not export crude oil in any significant way.  Nor is that likely to change.



According to the EIA, increased imports of Canadian oil sands crude oil would likely replace declining heavy crude imports from Mexico and Venezuela and Ecuador (the two OPEC members in Latin America).  Heavy crude imports from those countries are 900,000 barrels per day lower than their 2005 level... more »

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Keystone XL: Just Say Yes

Some perspective on opposition to the Keystone XL pipeline and the energy from Canadian oil sands the pipeline would deliver to U.S. refiners. Politicians and activists bad-mouthing the latest environmental review of the pipeline project by the State Department are taking issue with three impact assessments, not just one.

Last week's report reiterated environmental reviews in April 2010 and this past April. The government now has said three times that the 1,700-mile pipeline would pose only minimal environmental risk during construction and operation.

Those who don't like the message went after the messenger. "By concluding that the pipeline will have minimal environmental impact, absent the expert opinion from our government's wildlife experts, it appears that the State Department has not... more »

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Driving Oil Sands

Picture a small, but comfortable two-story house - on four wheels. Now fill in all the rooms in the house with 400 tons of bitumen-laden sand and rock, and that's what it's like to be in one of the haulers at Suncor's oil sands mine in Alberta, Canada. Here's a video from my recent tour of Suncor's operation that focuses on just one of the well-paying jobs associated with oil sands:

Oil sands is a double-bonus for the United States, a source of secure energy - up to 830,000 barrels of oil a day after the bitumen is melted out of the surrounding material, from a neighbor and ally - and jobs.

Research indicates 80,000 direct or indirect U.S. jobs by 2020 and more than 500,000 by 2035 from fully developing Canadian oil sands. Full development means construction of the Keystone XL pipeline to... more »

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