The Keystone XL Pipeline Isn't the Answer to the U.S. Oil Problems — Here's Why

Amid record high oil prices and the Russia-Ukraine crisis, there have been calls to revive the Keystone pipeline. What kind of oil will the Keystone pipeline carry?

Anuradha Garg - Author

Mar. 14 2022, Published 8:44 a.m. ET

Keystone pipeline project
Source: Wikimedia Commons

Gasoline prices have been touching record highs lately. Amid the surge in oil prices and the ongoing Russia-Ukraine war, there's more urgency to search for new oil supplies. There have been calls to revive the Keystone XL pipeline. What kind of oil will the Keystone pipeline carry and could it help replace Russian oil imports to the U.S.?

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Amid the ongoing unprovoked invasion of Ukraine, many countries including the U.S. have been cutting ties with Russia and slapping it with more sanctions. On March 8, President Joe Biden signed an executive order to ban Russian oil imports, LNG, and coal to the U.S. In 2021, the U.S. imported nearly 700,000 barrels per day of crude oil and refined petroleum products from Russia. While the move will deprive Russia of billions of dollars in revenues, it will put more pressure on U.S. oil supplies at a time when the prices are already spiking.

However, even before the U.S. banned Russian oil, many U.S. oil traders were shying away from Russian imports in general because they didn't want to be seen as funding the invasion of Ukraine.

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There have been calls to revive the Keystone XL pipeline.

Jason Kenney, premier of the Canadian province of Alberta, is now pushing for the Biden administration to revive the Keystone XL pipeline. This oil conduit would have carried 830,000 barrels of Alberta oil sands crude per day to Nebraska. From there, existing pipelines would carry the oil to points in the U.S., including refineries in the Gulf South.

oil rig
Source: Pixabay
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In 2021, Biden revoked the key permit needed for a U.S. stretch of the 1,200-mile project on his first day in office. He canceled the permit over longstanding concerns that oil sands crude would make climate change worse. After a few months, the $9 billion oil pipeline’s owner TC Energy halted the project.

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Could reviving the Keystone XL pipeline make the U.S. energy independent?

Many politicians have been criticizing Biden for canceling the project, which, according to them, would have been enough to offset what the U.S. imports from Russia. They also claim that not completing the pipeline is keeping the U.S. from being energy independent.

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However, a quick fact-check reveals that the offset wouldn't have been that simple. First, the pipeline would have required years of construction. Therefore, canceling the project had a minimal impact on current prices. The project would also have likely faced legal challenges. It wasn't certain that the net increase would have been 800,000 barrels a day.

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The Canadian producers would be supplying some of the oil to the U.S. some other way already. According to several experts, the existing Keystone pipeline has plenty of excess capacity to handle the increased volume of oil from Canada.

Oil prices will likely remain high for at least a few months.

Some of the current outcries regarding the U.S. becoming energy independent by reviving the Keystone XL pipeline don’t seem to hold much water. As far as the rising price of oil is concerned, the price is expected to remain high for at least a few months as the demand rebounded strongly from the COVID-19 pandemic and supply couldn't keep pace. The ongoing Russia-Ukraine crisis has tilted the equation in favor of suppliers even more.


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