After all, oil is one of the most global commodities around. Whether used here in the States or shipped off to Uzbekistan, new oil capacity and new refined products on the market will only serve to increase global supply and lower the global price of energy. That looks like a good thing to those of us who've had to make sacrifices elsewhere to put the fuel in our cars to get to work so we could afford to pay for gas.
Efficiency and jobs
Besides, regardless of where the gasoline is used, the new pipeline and refinery utilization will bring two huge benefits that will be seen in the United States -- efficiency and jobs. From an efficiency perspective, the more products that are refined, the more volume the refinery's fixed costs are spread across. Given that refineries generally have huge fixed costs, running more oil through the process will improve Valero's coverage, lowering its total per-unit cost and potentially the price it can charge consumers at the pump.
Then there are the jobs that are expected to be created by the pipeline. Approximately 20,000 direct and 180,000 indirect ones will become available from building the pipeline, according to the Canadian ambassador. That's hardly a number to ignore, especially when the most recent employment report indicated no net new jobs were created nationwide last month.
On top of that, there are some very real geopolitical benefits from securing significant oil capacity from a country like Canada that is politically stable, friendly with the U.S., and reachable by land. Earlier this year, for instance, an oil tanker was seized by pirates off the coast of Benin.
The Canadian government is a decent steward of its citizens' and companies' rights as well, which is hugely important in the oil business. It was only a few years ago that Shell
There's nothing like good old-fashioned nationalization to choke off investment in new capacity. Just ask Mexico's nationalized Pemex how well it's replacing its production with new capacity (it's not). Contrast that with Suncor Energy
The world -- and the United States -- needs oil and the products refined from it, and that need isn't likely to go away in any of our lifetimes. Having significant capacity close to home, produced by companies with incentives to keep finding new sources of energy, under the auspices of a friendly government that respects property rights seems like a big win.
A huge win, in fact
Whether it's jobs, increased locally sourced energy, more efficient refinery operations, or long-run supply stability from corporate rather than government owned oil, the benefits of the Keystone pipeline expansion are huge. So what if a refiner at the end of the pipeline can produce enough to not only meet domestic demands but some export needs as well? The economic benefits from those exports only add to the total gains from the pipeline and the businesses it supplies.
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