The Administration Pushes for PTC, NRDC Study on XL Keystone Pipeline Raises Questions on Price of Gas

 

President Obama will travel to Iowa on Thursday to put pressure on Congress to quickly extend key renewable-energy tax credits.  Obama will tout the tax credits during a speech at TPI Composites, a wind turbine blade manufacturer in Newton, Iowa.  The White House has made extending the tax credits a top policy priority, including it on Obama’s to-do list for Congress. Obama’s speech will focus on extending the production tax credit for renewables and expanding the 30 percent tax credit for clean energy manufacturing.The wind industry has launched an aggressive public relations and lobbying campaign to extend the production tax credit, which provides a credit for each kilowatt-hour of electricity produced from wind.

NRDC has a new study by  Anthony Swift which says that the pipeline's impact on gasoline prices is"one of the most misunderstood issues surrounding the proposed Keystone XL," adding that when TransCanada originally proposed the pipeline, they pitched it as a way to increase the cost of oil in the United States, providing increased revenue for Canadian producers. Since then, proponents of the pipeline in the United States have pitched it as a means of decreasing U.S. gasoline prices.  Swift's study examined these two conflicting claims, and findings suggest that the former is the true one. According to Mr. Swift, "Our study has found that Keystone XL is likely to both decrease the amount of gasoline in U.S. refineries for domestic markets and increase the cost of producing it, leading to even higher prices at the pump".  The result in the immediate to short term will be a decline in gasoline production and an increase in diesel, according to the report.  Other findings in the report include that the pipeline will increase the price of crude oil in the Midwest and Rocky Mountains by over $20 a barrel, increasing the cost of Canadian tar sands by as much as $27 billion annually. These higher crude oil costs are expected to lead to deteriorating financial conditions in Rocky Mountain and Midwestern refineries, which could in turn result in decreased production. That's because if Midwestern refineries are forced to pay a higher price for oil, as East Coast refineries already do, they will be forced to respond by reducing their production and further decreasing U.S. gasoline supplies, according to the report.