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Need for Keystone XL Shrinking as Industry Looks to Export U.S. Crude Oil

A dramatic and unexpected American oil boom is transforming pipeline networks and changing the way petroleum has flowed for decades.

Oct 25, 2012
(Page 4 of 4 )
TransCanada's Keystone XL pipeline depot

And nothing is certain in the world of oil. Politics, environmental concerns, industry accidents, world events, cost and price changes, economic trends, geologic surprises and a slew of other factors could suddenly rearrange oil markets again—and scuttle the export ambitions of North American oil producers.

"Things could change, and very quickly," Gheit said.

Oil economist and consultant Philip Verleger Jr. said the Keystone XL will be a victim of that rapid change. Verleger is a visiting fellow at the Peterson Institute of International Economics whose opposition to the Keystone project has rankled the industry.

The pipeline was planned when America's oil demand showed no sign of letting up and its production seemed in permanent decline. Now the pipeline's builder, TransCanada, and the Canadian crude producers who plan to use the pipeline face an economic double-whammy: U.S. demand is declining and U.S.-produced oil is flooding their target market with competing oil.

"The people who are saying we really need this [Keystone XL pipeline] don't recognize that circumstances have changed," said Verleger, who recently predicted that America will begin exporting more energy than it imports within the decade. 

"The Keystone XL is going to be just like an Egyptian pyramid. Useless."

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