Keystone Pipeline Decision

Earlier this month the Obama Administration finally made a decision about the XL Keystone Pipeline 6 years after the plan for the first pipeline was introduced.  The Obama Administration rejected the proposed plan for the controversial pipeline.  

The Keystone Pipeline system runs from the Western Canadian Sedimentary Basin in Alberta to refineries in Illinois and Texas, and also to oil tank farms and an oil pipeline distribution center in Cushing, Oklahoma.  Keystone XL Pipeline would have expanded the first phase of the pipeline by duplicating the part of the pipeline between Hardisty, Alberta, and Steele City, Nebraska. It would also include a shorter route and a larger diameter pipe. Additionally, the pipeline would run through Montana and North Dakota where American-produced oil would be added to the Keystone’s current circuit.

The Obama Administration officially rejected the Keystone XL Pipeline proposal on November 6th, 2015. Some believe that this is due to the change in the oil supply of the United States from when the pipeline addition was first proposed. Seven years ago when the pipeline was first proposed, the oil production in the United States was declining at a rate that analysts thought it would never recover. Since the pipeline was first introduced domestic production has doubled, which has caused oil prices to lower significantly.

   The Keystone XL Pipeline would have been beneficial to the oil industry. It would make producers’ investments in Canadian oil sands production more valuable, while ensuring American refineries a source of oil for decades.

   Even though the Obama administration rejected the proposed plan for the Keystone XL Pipeline, they approved a shorter section that connects a storage field in Cushing, Oklahoma with Texas refineries. This will increase both Canadian and domestic shipments of 700,000 barrels a day.

The Obama administration’s decision has lifted the pressure off of Justin Trudeau, the prime minister of Canada. Trudeau said that he would push for Keystone XL when he was elected, but the promise was made with little enthusiasm. Now with the rejection from the Obama administration, Trudeau no longer has to keep his pipeline promise.

Researchers have said that despite the Obama administration rejecting the plan for Keystone XL, American consumers should feel no difference.


Sources and more information:

http://www.nytimes.com/2015/11/07/business/energy-environment/oil-supply-picture-has-changed-since-keystone-was-proposed.html?ref=topics&_r=0

http://www.nytimes.com/2015/11/07/world/americas/obamas-call-on-keystone-xl-pipeline-takes-pressure-off-trudeau.html?ref=topics