The rationale for high oil prices varies. Those who find fault with President Biden will be quick to blame the cancellation of the Keystone XL project, while those who support the President will attribute the cause to economies worldwide opening up (post pandemic) and creating a strong demand for goods and services, including oil and gas.
Since the Keystone XL was far from being completed, surrounded by litigation, cost overruns, and an unpredictable U.S. political environment, its completion was never a certainty.
If the pipeline wasn't contributing to the supply of oil, how could its cancellation cause prices to spike? One Sound Off ("Pipeline shutdown hindered oil supply", Feb 27th) ventured that speculators and hedge fund managers (in oil futures) "determined that the supply of oil would be limited." " "When they think that the supply is going to be limited or restricted…the price of oil goes up because they believe that the demand will be up and the supply will be low. The oil companies do not determine the price of oil, period."
There are two assumptions implied here. First, that speculators can affect the price of oil futures when trading on expectations. And second, that the future supply of oil would be diminished without the completion of the Keystone XL pipeline.
Oil price manipulation by speculators has been studied extensively decades ago. The conclusion: "... empirical analysis shows that changes in financial firms’ positions do not predict oil-price changes, but that oil-price changes predict changes in positions." (see "The Role of Financial Speculation in Driving the Price of Crude Oil" July 2013).
Will the future supply of oil be affected by the cancellation? NO. There are alternate sources for shipping TransCanada's sludge to refineries (oil tankers, rail, and other pipeline projects). And, in the last decade there has been a big surge in domestic production due to improvements in 'fracking' that allows more efficient extraction of shale oil. Two decades ago, the U.S. did not export any oil; today we export one barrel for every two we import.
Gas prices? America's big oil companies sit on huge stockpiles of oil reserves, so fluctuations in the price of oil have little impact on them. They manipulate gas prices by adjusting the capacity of their refineries. This avoids antitrust issues.
Want to be energy independent and save the planet? Transition away from oil to renewable energy sources.