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With low oil gasoline prices is Keystone still necessary

first_imgWASHINGTON — A 50-percent plunge in the price of crude oil, resulting from abundant global oil supplies, and cheaper gasoline at the pump raise critical questions about whether the Keystone XL oil pipeline is still needed or even makes financial sense.Oil prices always have been volatile, and both the pipeline company and the oil refiners and producers that would use the pipeline expect prices to rise and plunge throughout the project’s life.When Keystone XL was first proposed in the fall of 2008, for example, oil was in the midst of an even bigger plunge, from nearly $150 a barrel to below $35, and the global economy was collapsing into recession.Opponents will use lower prices to argue that the pipeline now could pose a greater threat to the environment than originally thought.Higher prices assumedLow oil prices could make the pipeline more important to the development of new oil sands projects in Canada than anticipated by the State Department, which is conducting the environmental review, and therefore is more likely to increase emissions of carbon dioxide and other gases linked to global warming.The review found the pipeline was not likely to exacerbate global warming, but it based that conclusion on higher oil prices.At such prices, producers can afford the higher cost of transporting oil by rail or other means and still make a profit.At low oil prices, they might decide only to expand drilling if they have an inexpensive way of getting the oil to market.The price of oil closed at $48 a barrel on Friday.Proponents say that during periods of low oil prices, the pipeline is more important because oil companies would otherwise have less incentive to deliver what they say is important oil from a reliable source to U.S. refiners on the Gulf Coast.last_img read more