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Canadian Pipeline Co. Says Keystone XL Pipeline Not Needed

December 18, 2009

Cross section of Keystone XL pipe

Enbridge, a Canadian pipeline company, says TransCanada’s Keystone XL pipeline is not needed and will result in too much pipeline capacity being built.

Enbridge is building its own tar sands oil pipeline to the U.S., the controversial Alberta Clipper. This week, the company also said that it doesn’t think the closing of a U.S. oil refinery will decrease how much oil is piped to the Midwest from Canada.

While it’s tempting to think that pipeline overcapacity would mean cheaper gasoline prices, overcapacity is actually more likely to raise the cost of gas. That’s because both TransCanada and Enbridge will have costs for debt service on their new pipelines, costs that will be passed on to consumers. Even if only one pipeline is needed, as Enbridge alleges, consumers will still be stuck with paying debt service for both pipelines.

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