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TransCanada to continue with Keystone pipeline in south

A buried section of the Trans-Alaska Pipeline emerges a few miles north of the Yukon River on July 21, 2002 in Fairbanks, Alaska. TransCanada will be building a pipeline from Oklahoma to Texas.

Adriene Hill: The Canadian company that pipes oil around North America has come up with a new plan to get more oil from Canada to the Gulf Coast of the U.S. TransCanada had wanted to run oil all the way from Canada to the Gulf, but President Obama rejected that earlier this year.

Now, the company is settling for a pipeline from Oklahoma to Texas. Marketplace's Nancy Marshall-Genzer is live with us now. Good morning, Nancy.

Nancy Marshall-Genzer: Good morning, Adriene.

Hill: So why does TransCanada want this southern U.S. pipeline?

Marshall-Genzer: Well, this is sort of an add-on to the debate over the proposed Keystone XL pipeline you were talking about. This southern part of the pipeline would help ease a bottleneck of oil in Cushing, Okla. Now Canada isn't the only one pumping more oil, Adriene -- North Dakota is producing a lot right now. TransCanada wants to get all this oil down to the Gulf coast refineries.

Severin Borenstein co-directs the Energy Institute at the University of California Haas School of Business, and he says Cushing is a major storage site for Canadian and Midwest oil.

Borenstein: Cushing to the Gulf Coast is where the bottleneck is right now. The rest of Keystone XL further north actually is not full yet, but we're seeing a great deal of congestion moving oil from Cushing to the Gulf Coast.

And of course, Adriene, the northern part of the Keystone pipeline still needs approval from the Obama administration because it would cross the border from Canada to the U.S.

Hill: And I understand that the new pipeline might raise gas prices in the middle part of the country?

Marshall-Genzer: Yeah, that glut of oil in Oklahoma was really good news for drivers in the Midwest. Drivers in the Rocky Mountains region are paying about 40 cents less a gallon than the average price of gas in the U.S.

Hill: Marketplace's Nancy Marshall-Genzer. Thanks.

Marshall-Genzer: You're welcome.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.
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