* Senator says Canadian firms to raise Midwest fuel prices
* Claim focuses on proposed Keystone XL oil pipeline
WASHINGTON, April 6 (Reuters) - A U.S. senator on Wednesday urged federal antitrust regulators to investigate whether Canadian oil companies are seeking to drive up crude prices in the U.S. Midwest through the construction of a proposed pipeline from Canada to Texas.
Democratic Senator Ron Wyden’s claim focuses on TransCanada Corp’s (TRP.TO) proposed Keystone XL pipeline, which would carry oil produced in the tar sands of northern Alberta to Nederland, Texas and link to TransCanada’s existing Keystone system, which now carries crude as far as Cushing, Oklahoma.
TransCanada could not immediately be reached for comment.
Wyden says that by sending crude to Texas, prices for crude in the Midwest will rise, and be passed on to consumers through higher fuel costs.
“While the full nature of the arrangements agreed upon by the Canadian shippers is unclear, there is clear indication that there is a coordinated ‘strategy’ among Canadian suppliers to gain higher prices,” Wyden said in a letter to the Federal Trade Commission, which he asked to probe the matter.
“According to TransCanada, the proposed Keystone XL pipeline can be used by Canadian oil shippers to add up to $4 billion to U.S. fuel costs.”
Crude supplies at Cushing, the delivery point of the New York Mercantile Exchange’s crude contract, have swelled in recent months due to rising supplies of Canadian crude, driving down the price for the U.S. oil futures.
But prices elsewhere in the United States where supplies are tighter have continued to rise.
Analysts expect that with the completion of Keystone, the glut of crude in Cushing and the Midwest would ease, allowing U.S. crude prices to reflect more closely the supply situation of the entire country. The line could be completed by 2013.
The U.S. State Department is reviewing the environmental impact of the proposed pipeline, which some green groups and U.S. lawmakers oppose due to pollution concerns.
President Barack Obama said on Wednesday there are some questions about “how destructive” extracting oil from tar sands is to the environment and his administration will examine those issues as it considers the Keystone permit. (Reporting by Tom Doggett; Editing by Alden Bentley and Dale Hudson)