Senators grill refiners over high pump prices amid oil boom

Keystone XL

The argument failed to sway Wyden, who said the prospect of greater exports is a reason he is skeptical of the proposed Keystone XL pipeline, which would carry oil sands from Alberta, Canada, to refineries along the U.S. Gulf of Mexico.

“There are a host of questions with regards to Keystone, foremost of which is that most of the production is going to be exported,” Wyden said after the hearing. The State Department is reviewing the application of TransCanada Corp. to build the pipeline.

While lawmakers questioned the functioning of the U.S. gasoline market, industry representatives said those prices reflect movements in international crude-oil markets.

“These are commodities and they work in a global market,” Valero Chief Executive Officer William Klesse said in an interview after he testified. While refinery outages can cause prices to rise, the gain doesn’t last long, as refiners are quick to ship in fuel to take advantage of that premium, he said: “It’s all about supply and demand, and free markets.”

Instead of focusing on refiners’ margins, Congress should rework the Renewable Fuel Standard, mandating the use of ethanol, because a drop in fuel use will cause the share of ethanol to exceed the 10% that can be used safely by all vehicles, he said.

“The oil supply picture has changed, the basis of the original legislation has changed, the RFS should be repealed and new legislation developed,” Klesse testified today. Wyden pledged to have a separate hearing to examine issues with the RFS.

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