Why There's So Much Interest In Half A Keystone XL In One Graph

A blog about business and economics.
Feb. 28 2012 5:00 PM

Why There's So Much Interest In Half A Keystone XL In One Graph

1330466407343

As you can see above, the spot price of West Texas International crude oil in Cushing, Oklahoma is always approximately the same as the price of Brent crude oil in the global market. That's because oil is a non-perishable commodity that you can pipe around to different places or even load onto giant ships. What matters is the global price, not idiosyncratic supply and demand conditions in some particular location.

But not recently. New oil discoveries primarily in North Dakota have created a situation where the quantity of crude that can be easily shipped to Cushing exceeds the quantity that can be piped down to Texas refineries for global markets. This has depressed the price of crude in Cushing, and created a situation where gasoline prices in the American midwest are lower than the prices that prevail elsewhere. If TransCanada succeeds in its effort to get the southern half of the Keystone XL pipeline built then this price anomaly should go away. All else being equal (which it won't be) Midwesterners will wind up paying more at the pump and everyone else will wind up paying less and presumably we'll see even more investment in extraction in North Dakota.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

Florida State’s New President Is Underqualified and Mistrusted. He Just Might Save the University.

  News & Politics
Politics
Sept. 30 2014 9:33 PM Political Theater With a Purpose Darrell Issa’s public shaming of the head of the Secret Service was congressional grandstanding at its best.
  Business
Moneybox
Oct. 1 2014 8:34 AM Going Private To undertake a massively ambitious energy project, you don’t need the government anymore.
  Life
Gaming
Sept. 30 2014 7:35 PM Who Owns Scrabble’s Word List? Hasbro says the list of playable words belongs to the company. Players beg to differ.
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Sept. 30 2014 3:21 PM Meet Jordan Weissmann Five questions with Slate’s senior business and economics correspondent.
  Arts
Brow Beat
Oct. 1 2014 8:46 AM The Vintage eBay Find I Wore to My Sentencing
  Technology
Future Tense
Sept. 30 2014 7:00 PM There’s Going to Be a Live-Action Tetris Movie for Some Reason
  Health & Science
Bad Astronomy
Oct. 1 2014 7:30 AM Say Hello to Our Quasi-Moon, 2014 OL339
  Sports
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.