US House Democrats propose blocking exports from Keystone XL pipeline
Washington (Platts)--3Feb2012/554 pm EST/2254 GMT
US Representative Ed Markey and other opponents of the proposed Keystone
XL pipeline introduced legislation Friday requiring that all petroleum
products refined from crude carried by the controversial project be sold in
TransCanada wants to build the 1,700-mile pipeline to carry heavy crude
from Alberta's oil sands to refineries on the Texas Gulf Coast. The Obama
administration last month rejected TransCanada's application for a key
license to build the pipeline, but the company said it would reapply and
hopes to put it into service in late 2014.
Market observers expect refiners to export some of the Keystone XL
supplies, but just how much remains in dispute. The US has exported more
refined products than it imports for nine of the last 12 months, according to
the Energy Information Administration, a dramatic turnaround that made fuels
the top US export last year.
Markey, Democrat-Massachusetts, said his bill would "call the bluff of
Keystone XL supporters" by questioning their claims that the project serves
national security interests by increasing US oil imports from friendly
governments. He added that exporters would unfairly dodge US taxes because
Port Arthur, Texas, is a foreign-trade zone, a duty-free area for products
handled and then re-exported.
"You can't sneak a 1,700-mile pipeline past the American people, and you
shouldn't be able to sneak the oil out of the United State either," Markey
said. "Other countries shouldn't be allowed to bisect our country with a
pipeline and then bypass our citizens to send the oil abroad."
A spokeswoman for the International Trade Administration could not
immediately confirm that Keystone XL exports would be tax free.
The bill has little chance of getting a vote in the
Republican-controlled House, but Markey said the exports issue deserved a
higher profile in the seemingly never-ending Keystone XL debate.
'NORTH KOREAN STYLE' ECONOMICS
During a hearing of the House Energy and Commerce Committee,
Representative Morgan Griffith, Republican-Virginia, said the possibility of
exports did not trouble him or sway his support for the project.
"If you accept the argument that the oil's going to come in and the
oil's going to go out to other countries... you also have to accept the
argument that before it goes to the other countries it's going to be refined
in the United States, thus adding value," Griffith said. "To do that you have
to add jobs. And when you add that value, you add strength in our economy and
Representative Charlie Gonzalez, Democrat-Texas, agreed that selling
Keystone XL supplies overseas after refineries in his state processed it
posed no problems, as long as those plants refined it safely. "Exporting is
good. Balance of trade creates jobs and such," he said.
Committee Chairman Ed Whitfield, Republican-Kentucky, said the US should
aspire to increase its exports.
"Not of oil," Markey interjected. "Not of oil. That's our security."
The American Petroleum Institute later Friday highlighted that crude
brought to the Gulf Coast on Keystone XL would mostly be used by refineries
there, adding that occasional exports would also be beneficial to the US.
"Any effort to restrict market forces on commodities like oil and
natural gas is a North Korean style model of economics and has no place here
in America," said API Chief Economist John Felmy. "Having the flexibility to
export more should there be an occasional surplus of supply would go a long
way to help reduce our trade deficit. We don't think that American farmers
would appreciate Mr. Markey calling on them to restrict their products, and
it makes no sense for an elected official to suggest this backward approach
--Meghan Gordon, email@example.com