The Seaway Pipeline which carries imported crude oil from the ports in the Gulf to refineries in the Midwest will be reversed in 2012. It will carry crude from the Midwest to the Gulf.
There are many factors and outcomes from this decision. First, it will raise the value of US crude oil There has been an uptick in US oil production. Domestic crude is collected in Cushing, Oklahoma and shipped north and east. Production has outstripped demand at Cushing, depressing the value of WTI, or West Texas Intermediate Crude. By eliminating this bottleneck, WTI will not sell at a discount to imported crude.
Second, the oil market has decided the Keystone Pipeline will never be built. Keystone was to bring Canadian crude to the Gulf. Combined with Obama’s postponement of that project and Canada’s response, the owners of Seaway gets a jump on that and may support Canada’s decision to sell their oil to China.
Last, and most significant, shockingly, US exports of finished fuel has risen to 15%, or 2.6 million barrels a day. This has doubled in 3 years. Moving this crude to the Gulf will increase those export numbers and increase the imports of foreign finished products. It may result in more refinery closings. It will move us into an Iran-type situation, where the best sanctions against Iran are closing down imported gasoline to Iran. Iran is awash in crude oil, but imports most of it’s finished products.
Markets dictate decisions, not Obama. When US crude is discounted in Cushing, the market will find a solution. Just move it south instead of north where open refining capacity exists.
It will displace what might have been Canadian crude which sells at a big discount over WTI since it’s heavy crude. And, many Gulf refineries have cokers to handle turning that heavy crude into finished products. That would put downward pressure on finished product prices in the US. Killing Keystone and reversing Seaway will put upward pressure on those prices.
You will pay more for gasoline, diesel, heating oil, and jet fuel because of this. Obama not only turned his back on the Canadians and the unions workers who would have had jobs building the pipeline, but he turned his back on every American.
To Obama, environmentalist trump all of that.
