What percentage of the oil reaching the Gulf Coast from the Keystone XL would actually remain in America vs. being exported to places like China?
99.7 percent of crude oil produced or imported into the United States is processed here and, although the United States is a net exporter of finished petroleum products, about 92 percent of on-road transportation fuel refined in the United States is used in the United States. However, refineries produce lots of products from a barrel of oil – gasoline, diesel, heating oil, bunker fuel and more – and they need markets for each. The majority – 79 percent – of energy products the United States exports are things like propane, ethanol and kerosene, which are produced in amounts that surpass U.S. demand.
Of the finished motor gasoline that is exported, 60 percent goes to Mexico. This exchange benefits the United States since we import crude oil from Mexico. Gasoline is worth more than oil, so we’re purchasing a good and then selling back a more expensive good, not only creating a net value-add for the U.S. economy, but also creating manufacturing jobs and generating tax revenue.
According to the EIA, increased imports of Canadian oil sands crude via the Keystone XL pipeline would likely replace declining heavy crude imports from Mexico, Venezuela and Ecuador. Heavy crude imports from those countries are already 900,000 barrels per day lower than their 2005 levels. Furthermore, they are projected to decline by an additional 540,000 barrels a day by 2020 and 845,000 barrels a day by 2035. Because of these declines, the additional Canadian crude arriving in the U.S. Gulf via the Keystone XL pipeline would not be likely to create a surplus. In its review of the Keystone XL project the EIA concluded, “Without a surplus of heavy oil in PADD III, there would be no economic incentive to ship Canadian oil sands [crude] to Asia via Port Arthur.”
The no-export legislation being floated by Congressional Democrats is about political grandstanding – not sound economics – and is as unwise as ending U.S. exports of wheat or other commodities that are in demand on the global market. Participating in the global market for refined petroleum products actually protects U.S. refining jobs. Stopping refiners from exporting products with low U.S. demand will threaten their ability to remain competitive globally.
Ultimately, having a stable, secure source of crude oil – like that from Canada via the Keystone XL pipeline expansion – enhances U.S. energy security regardless of how much is exported because those exports can be reduced or eliminated in times of crisis.
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