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President Obama s March 22 speech at the site of a TransCanada ( TRP ) pipe yard in Cushing, Okla., was an attempt to highlight hisadministration s energy policies as both economically sensible andenvironmentally sustainable. Its political symbolism was even moresignificant. Rising gas prices have eroded the president sapproval ratings, with some 23 percent of Americans blaming him for the spike. In particular, Republicans havehammered Obama for his rejection of TransCanada s application tobuild its Keystone XL pipeline from Alberta to Texas, claiming thatby passing up the opportunity to increase the flow of oil fromCanada s tar sands, the administration has directly contributed tohigher gas prices. Obama s appearance in Cushing was intended to blunt those attacks.He promised to expedite the building of the southern portion ofthe Keystone pipe, which runs from Cushing to the Gulf Coast. Theadministration, he said, will cut through the red tape, breakthrough the bureaucratic hurdles, and make this project apriority. In the process, the White House hopes to show it sdoing what it can to ease pain at the pump. If only it were that easy. In reality, building the southernportion of the Keystone XL pipeline might help to alleviate supplybottlenecks and get more domestic oil to refineries. But it won tbring down gas prices. After Obama turned down TransCanada s application to build theKeystone XL pipeline, the Canadian company realized that theportion of the pipe that doesn t cross the Canadian border couldbe built without White House approval. It announced last month itwould seek permits from the Army Corps of Engineers for a sectionrunning from Cushing to the Gulf Coast. TransCanada s new plan is significant to the current politicaldebate because a recent ramp-up of production from North Dakota,Montana, and Colorado has created a glut in supply at the big oildepot in Cushing. The spread between the price of oil that changeshands at Cushing and Europe s grade of crude has increased in recent years, partly as a result of this oversupply. (Onereason the company is pursuing Keystone south is that it knowsthe pipeline will be easy to fill.) Just as supporters of the pipeline project claim that building itwill bring gas prices down, opponents argued last fall thatKeystone XL would eliminate this oversupply of oil feedingMidwestern refineries, leading to higher gas prices in the region.In fact, the relationship between local oil supplies and gas pricesis weak because many factors affect the price of gas. Americans,for instance, pay less than Europeans because our taxes are lower.Californians pay more than other Americans because of stringentair-quality requirements. In fact, week-by-week gas prices in the Midwest, compared with therest of the country, have not tracked the spread between West TexasIntermediate crude and Brent crude. In November 2011, Enbridge ( ENB ) , a second Canadian oil-and-gas infrastructure company, bought aninterest in an existing pipeline that runs between Cushing and theGulf and announced it would now be moving oil from the Midwest,rather than to it. Since then, the WTI-Brent spread hasnarrowed but the Midwest s discount at the pump has almostdoubled, to 6.8 cents a gallon. So what s going on? Ken Green, who studies environmental scienceand policy at the American Enterprise Institute, a conservativethink tank, says supply and perceived future supply is more of afactor in oil prices than in gas prices, where more variables comeinto play. A lot of variables can eat up a small difference inthe local price of gas: weather, the cost of electricity therefiners pay, and other factors. Although reliable data aresparse, Green says industry analysts think the margin is being eaten up by the downstream supply chain of refiners whose profitmargin is notoriously low transporters, blenders, etc. In his speech in Cushing, President Obama said that producingmore oil at home isn t enough by itself to bring gas prices down because the price of oil will still be set by the globalmarket. Economists agree that this is true. Indeed, even as domestic production has increased , gas spikes in the U.S. have become an annual occurrence: They ve come earlier and abated less during every year since 2009. All of which is to say that for the immediate future and maybelonger, high gas prices are here to stay. Neither presidents norpipelines can do much about it. We are high quality suppliers, our products such as 3D Shaggy Rug , Kids Play Rug Manufacturer for oversee buyer. To know more, please visits Floral Area Rug.
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