Canada-US pipeline to strain oil prices: Experts
Experts say a controversial Canada-US crude pipeline, which is awaiting congressional approval, will send oil prices further down.
On Thursday, the US Senate approved a bill authorizing the construction of the 1,179-mile Keystone XL oil pipeline from Canada to the United States that would transport crude from Alberta’s oil sands to refineries along the US Gulf Coast.
The bill was passed with 62 votes to 36, with nine Democrats defying President Barack Obama to support the project.
“The keystone pipeline will move US oil production more efficiently in the long term, and in the grand scale of things this will further exert downward pressure on oil prices,” said Shailaja Nair, associate editorial director at energy information provider Platts.
The House of Representatives approved its own Keystone legislation earlier this month and now must decide whether it passes the Senate measure or enters into a bicameral conference to thrash out a compromise bill.
“Constructing Keystone would pump billions into our economy,” Senate Majority Leader Mitch McConnell, said before the vote. “It would support thousands of good American jobs and as the president’s own State Department has indicated, it would do this with minimal environmental impact.”
Oil prices have slumped nearly 60 percent since June last year over increased supplies by certain countries such as Saudi Arabia, the largest producer in the Organization of the Petroleum Exporting Countries (OPEC), and lackluster global economic growth.
OPEC, which pumps out about 40 percent of the world’s oil, has so far refrained from cutting its production to balance the market mainly due to opposition from Saudi Arabia, instigating the supply glut.
US crude production has also risen to the highest level since at least 1983.
“Right now with oil prices down and a glut of oil on the global marketplace, the answer is no, we don’t need Keystone right now,” Phil Flynn, senior market analyst at the Price Futures Group in Chicago, has said.
The USD-eight-billion project was first proposed in 2008. Obama has resisted prior efforts by Congress to force him to make a decision.
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