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Keystone XL expected to boost oil prices at Cushing

The Keystone XL pipeline is expected to lead to increased oil prices at Cushing's storage hub if the $7 billion project is approved by the Obama administration.
BY JAY F. MARKS Published: January 13, 2012

Supporters of the Keystone XL pipeline have long touted its job creation potential, but the man responsible for shepherding the development of the $7 billion pipeline project says it could have an even bigger impact on the region's oil producers.

Keystone Pipelines Vice President Robert Jones estimated the new pipeline connecting the Cushing storage hub with refining centers on the Gulf Coast could increase the price of locally produced oil by about $10 a barrel.

Mike Cantrell, president of Domestic Energy Producers Alliance, said there is no way to know how the Keystone XL pipeline would affect oil prices at Cushing, but he maintains the project is a vital one.

“America needs this pipeline. We need it in the short run to alleviate the glut of oil piling up at Cushing,” Cantrell said. “We need it in the long run because Canada is a reliable and secure source of oil for decades to come.

“This pipeline makes the transfer of that oil more efficient, which means more affordable energy for Americans.”

Keystone executive Jones was in Oklahoma City on Tuesday to speak to the Rotary Club and rally support for the transcontinental pipeline project, which is expected to create 20,000 jobs in the United States.

About 1,200 of those jobs would be in Oklahoma, as TransCanada extends its Keystone pipeline south from Cushing to serve refineries on the Gulf Coast, officials said.

Jones said TransCanada already has secured easements on 99 percent of the proposed route in Oklahoma, which is the first part of Keystone XL pipeline that will be built if the project wins approval from the administration.

Oklahoma Gov. Mary Fallin sent a letter to President Barack Obama this week urging him to approve the Keystone XL, noting it could add $1.2 billion in new business activity in the state and boost the state's personal income by $874 million.

“If the president is serious about job creation and economic stimulus, then he needs to get serious about the Keystone XL pipeline,” Fallin said in a news release. “This is a project that will deliver hundreds of thousands of good, private sector jobs, and it does so without the kind of big government programs that will put our nation further into debt.

“It's time for the president to stop delaying and approve this project.”

Keystone developer TransCanada Corp. applied for a presidential permit on the project in September 2008. Such a permit is required because the project would cross an international boundary on its way from Alberta to the Houston area.

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