Keystone XL rejection isn’t affecting crude-oil prices now – but will in the near future

    In case you missed the news, President Barack Obama announced on Friday Nov. 6th that the proposed TransCanada oil pipeline application was rejected by his administration.  This project has been in the review process since Obama’s administration took office, and a recent push for a decision led to the rejection of the pipeline that would have stretched from Canada all the way to Texas. 

    The President stated that the pipeline didn’t serve U.S. interests, and the project wasn’t a “silver bullet” for job creation.  In addition, it wouldn’t have boosted the nation’s energy security.  Crude oil industry reps say that the process has been in review for so long that the market has adapted.  Also, oil prices are low due an excess of crude supplies in the U.S. and around the world.  The project was much more in demand when oil prices were high and a cost-efficient method of transportation of the fuel was needed.

    Jack Gerard, president and chief executive of the American Petroleum Institute, said Friday that the amount of oil coming to the U.S. from Canada has increased by 53% during the past seven years.  With an excess of oil imported from a nearby country the price per barrel drops, but without cost-effective transportation methods the cost of oil will be raised.

    The pipeline would have created the most cost-effective method of transporting the crude oil, but with that out of the picture, companies are turning to rail modes of transit; which is the most expensive way to move the product.  By using rail, it’s an added cost of $3 to $4 a barrel.

    At this time, it’s uncertain just how much impact this project will have on oil prices, but it is certain that it will create raised oil prices in the near future.

    When oil prices rise, it is always a race for fleets to start converting to alternative fuels.  Alternative fuels create cost stability, energy security, and generate fewer emissions.  Learn what your options are now, so when the time comes you and your fleet are prepared.

    Reach out to us at [email protected] for any questions, or fill out the propose a project form on our website for assistance.  Start the alternative fuel conversion process now, and you won’t pay later when gas prices rise. 

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