“Understand what this project is,” Barack Obama said earlier this week when pressed on why his administration continues to stall on the Keystone XL pipeline after almost six years of waiting for a decision. “It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else.”
Understand what that was, Glenn Kessler responds today in a Washington Post fact check. It’s a three-Pinocchio lie based on an ignorant-at-best interpretation of a presentation slide from environmental activists. The refineries in the Gulf certainly do export products, but a “vast majority” of the product stays in the US — as a moment’s thought or a modicum of familiarity with pricing and cost would make clear:
For the sake of argument, let’s look at the percentage of exports currently from the Gulf Coast area, using data for refining output and product exports from the Energy Information Administration. In 2013, annual exports of distillate fuel oil were 898,000 barrels per day, out of 2,589,000 produced. That’s about 35 percent exports, 65 percent domestic. Finished motor gasoline is exported at a rate of 323,000 barrels per day, out of 946,000 produced. That’s also about 35 percent exported, 65 percent domestic.
In other words, about two-thirds of the oil that is refined in the Gulf Coast stays in the United States. Market conditions could change, of course, but there is little basis to claim that virtually all of the product, or even a majority, would be exported. (The Fact Checker has previously noted that, contrary to the claims of advocates of the project, Keystone XL is unlikely to have much impact on gasoline prices.)
Opponents of the Keystone project have seized on slides, such as the one below from one of Valero’s presentations to investors, to suggest the plan ultimately is to export the production from Canadian oil sands.
But Bill Day, a spokesman for Valero, says “it’s a mistake to interpret this to mean that Gulf Coast products would ONLY go to export markets.” The slide is simply showing the flow of trade, from various refineries; diesel currently is more popular in Europe while gasoline is king in the United States, though demand for diesel is growing in both markets. Day noted that currently the vast majority of the company’s products stay in the United States for domestic consumption.
Of course it does, because — surprise, surprise! — it costs less to sell product domestically than it does to ship it long distances to other countries. Since oil, diesel, and gasoline prices tend to homogenize in global commodities markets, the shipping costs take their bite right out of the bottom line. Saving money on shipping therefore makes a lot more sense. The US has a huge demand for both gasoline and diesel and the markets for both are open, so producers can realize more profit selling here in most conditions. The surplus can get sold overseas, where prices might fluctuate a bit due to demand but probably not enough to upset the price/cost balance that would favor domestic sales. If it did, then supply restrictions would force prices up here in the US to rebalance that equation.
The most embarrassing part of this answer is that all of this gets explained in the report on the Keystone XL pipeline project prepared by none other than Obama’s own State Department — published almost a year ago. “The president might want to study it before he addresses the Keystone question again,” Kessler tartly recommends before issuing three Pinocchios to Obama for an absolute falsehood that his own administration has roundly debunked. That presumes, however, that Obama cares about getting to the truth on Keystone, rather than lie to the Grubes on behalf of his progressive agenda, just as his administration repeatedly did with ObamaCare.
The alternative, mind you, is that Obama took nearly six years to study Keystone and still can’t properly read an analysis on his own. Neither interpretation is particularly commendable, and it’s even money as to which is the most problematic in a President.