Keystone pipeline would likely increase Midwest gasoline prices in the short term

Proponents of the Keystone XL pipeline say building it would help "ease supply bottlenecks" and lower gas prices for consumers, but John Schoen of msnbc reports they're only half right. The pipeline would distribute the "glut of crude oil backing up in the Midwest," he writes, redirecting it to the Gulf of Mexico, where it would be shipped overseas and sold at higher prices. This would mean higher short-term prices for Midwesterners, though, since low pipeline capacity keeps supply high and prices low in the region.

Gas prices have risen since October mostly because the U.S. and Europe have placed sanctions on Iran for its nuclear program, Schoen writes. In the past month, prices have jumped 20 cents a gallon, but prices differ greatly across the country, with those on the coasts paying much more than those in the Midwest and Rocky Mountain region, where oil is plentiful. (Energy Information Administration map shows county-by-county gas prices; click on map for larger version)

"These little-publicized findings are contained in the studies and testimony of experts working for TransCanada, the company that wants to build the pipeline from Alberta’s tar sands across America’s heartland to Gulf Coast refineries," Mark Clayton reports for the Christian Science Monitor.

Technological advances have made more oil reserves available. According to the Energy Information Association, U.S. oil production in the Midwest has risen since 2009. This is creating "pipeline bottlenecks," Schoen reports. Cambridge Energy Research Associates chairman Daniel Yergin said the U.S. lacks infrastructure to catch up with the boom in oil production: "We need new pipelines, and the lack of those pipelines - the lack of catching up - is reflected in the disparity in prices." (Read more)