Keystone XL pipeline runs afoul of the law of supply and demand
The company that is building the controversial Keystone XL pipeline no doubt wishes Energy Secretary Rick Perry had been right last week when he explained the law of supply and demand.
At a coal-fired power plant in West Virginia on Thursday, Perry dismissed worries about the future of coal by saying, “Here’s a little economics lesson: supply and demand. You put the supply out there and the demand will follow.”
In fact, as any first-year economics student learns, supply follows demand. Perry could call TransCanada Corp. of Calgary, Alberta, for verification. The company has spent $3 billion to date on what’s planned to be an 875-mile, $8 billion pipeline from Alberta’s oil sands to Steele City, Neb. There it would link up with existing pipelines that would carry the thick, high-sulfur, tar-sands oil to refineries on the Gulf Coast.
Since its inception in 2008, the project has been dogged by environmental concerns that brought opposition from the Obama administration. President Donald Trump greenlighted it in March.
But now, The Wall Street Journal reports the law of supply and demand has raised its ugly head. There’s an oversupply of oil. The benchmark price is about 38 percent of the $130-a-barrel price in 2008, when the Keystone project was proposed.
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http://www.stltoday.com/opinion/editorial/editorial-keystone-xl-pipeline-runs-afoul-of-the-law-of/article_508dad9f-ab48-5f25-99c3-6cfd922c7108.html
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