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Morningstar oil and gas equities analyst David McColl has a simple message about all of the confusing and often conflicting arguments you’ve heard so far for or against building the Keystone XL pipeline.Ignore it.
“It’s very easy to create certain results to support argument by changing inputs,” he told us in a phone interview.
If completed, it would channel hydrocarbons produced in Alberta, Canada to the Gulf of Mexico. (We ran an easy-to-read infographic on the whole thing two weeks ago).
Critics On Both Sides Are Making Tons Of Noise
In January, Cornell University put out a study refuting claims made about many jobs the project would create.
“The result [of completion] would be less gasoline for American drivers—and higher prices at the pump,” NRDC Attorney Anthony Swift said in the statement.
Transcanada President Alex Pourbaix immediately responded, citing a report that said that “for a given level of demand, higher supply would lower prices for crude oil, which is the most important factor shaping gasoline prices.
“This fundamental, basic concept of supply and demand appears to be foreign to the NRDC,” Pourbaix said.
This back and forth has gone for at least three years.
Here’s What You Need To Know
McColl has learned mostly to ignore it.
As a mostly impartial observer, McColl told us five things everyone should about the pipeline:
- It is almost certainly going to get built, sooner or later. — “Probably after the election.”
- It will likely cause gas prices to rise, at least in the short term, as the bottleneck discount on prices that’s been created by its lack of completion dissipates. — “There’s a good chance those barrels [the pipeline will carry] could go overseas; the US situation may not net improve any…It should be positive for [gas] prices. That’s not necessarily a bad thing. When you look at gasoline prices, they’re determined by Brent, and the U.S. doesn’t import any crude oil that’s not priced to brent.”
- It will have a minimal effect on the U.S. economy. — “The overall impact on the economy is going to be minor.”
- By definition, it will create some jobs. — “You can’t dig up soil and lay down pipe” without employing people.
- It will not have that great of an effect on U.S. energy independence. — “It’s just gonna happen for a long time.”
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