Today, a post has been making the rounds which claims that the Keystone XL pipeline would raise gas prices in the US Midwest by, “20 to 40 cents per gallon, based on the $20 to $30 per barrel discount on Canadian crude oil that Keystone XL developers seek to erase.” Further, the report claims that, “such an increase, just in the Midwest, could cost the U.S. economy $3 billion to $4 billion a year.” Both of these claims deserve to be challenged, since they are not supported by any evidence.
Before I take on these two claims in turn, it’s worth noting that claims about the effect of Keystone XL on gas prices have been floated by proponents of the pipeline as well, such as this piece from TransCanada which states that, “Keystone XL will increase supply to the broader US market – namely the US Gulf Coast. For a given level of demand, higher supply would lower prices for crude oil, which is the most important factor shaping gasoline prices.” What follows applies to those claims as well.