Obama and Economics

In the question and answer period following President Barack Obama’s end-of-year Friday press conference, Obama offered this regarding the Keystone XL pipeline, gas prices in the US, and global markets [emphasis added]:

So there’s no—I won’t say ‘no’—there is very little impact, nominal impact, on US gas prices—what the average American consumer cares about—by having this pipeline come through. And sometimes the way this gets sold is, let’s get this oil and it’s going to come here. And the implication is, is that’s going to lower gas prices here in the United States. It’s not. There’s a global oil market. It’s very good for Canadian oil companies, and it’s good for the Canadian oil industry, but it’s not going to be a huge benefit to US consumers. It’s not even going to be a nominal benefit to US consumers.

Pick one, Mr Obama. It’s either a global market or a Canadian one. If it’s global—which includes US consumers buying gas—the large increase in supply, especially if it’s more cheaply delivered to the global market via Keystone and Gulf Coast ports than via truck and train to British Columbia ports, most assuredly will have a salubrious effect on the prices US consumers pay for our gas.

And that ignores the fact that a lot of that Canadian oil going to the Gulf Coast via Keystone will be sent to US refineries there, and a lot of the refined product will be sold in the US—a prompt and nearby increase in supply.

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