The world’s most debated pipeline could be worse for global warming than previously believed, a new economic analysis says.

Keystone XL could produce four times more greenhouse gases than the U.S. State Department calculated in January — those estimates did not take into account that the added oil from the pipeline is likely to decrease prices and increase consumption — which would probably create more pollution, researchers say.

“There is no indication that the State Department took the market implication into consideration,” said lead author Peter Erickson.

In the study, published in the journal Nature Climate Change, Erickson and Michael Lazarus, of the Stockholm Environment Institute in Seattle, Wash., evaluated how building Keystone XL could affect oil prices: they found that for every barrel of oil obtained from Alberta’s oilsands as a result of the pipeline, global oil consumption would increase by 0.6 barrels because the surplus oil would lower oil prices and encourage people to use more.

“This is our analysis, and we believe that it could have the greatest emissions impact of the pipeline,” said Erickson in an interview.

The beleaguered pipeline project proposed by TransCanada would allow crude oil extracted from Alberta’s oilsands to be refined on the Gulf of Mexico coast. It will cut through at least six U.S. states and carry about 820,000 barrels of crude a day.

In June 2013, President Barack Obama, in a speech about climate change, said the pipeline should be approved only if it “does not significantly exacerbate the problem of carbon pollution.”

The U.S. State Department’s expansive Final Environmental Impact Statement in January concluded, among other things, that no single project will drastically affect the pace of Canada’s oilsands development. It argued that the oilsands would be exploited, their carbon released, whether or not Keystone XL is built.

Erickson said the January report ignored the fundamental economic principle of supply and demand.

“We don’t know why,” he said of that omission.

Keystone XL would increase world greenhouse gas emissions by as much as 121 million tonnes of carbon dioxide a year, the study says. It could potentially nullify reductions from some emissions-cutting policies under consideration in the U.S., Erickson pointed out.

(Some 36 billion tonnes of carbon dioxide were emitted into the air in 2013 from all sources worldwide, of which 121 million tonnes is a tiny percentage.)

The conclusions seem reasonable, said Mark Jaccard, of Simon Fraser University’s School of Resource and Environmental Management.

Expanding oil supply infrastructure is likely to have some effect on prices, he said. “Unless the production cost of that supply exactly matches current prices, its competitive availability will have some downward pressure on oil prices, which in turn increases oil consumption and associated greenhouse gas emissions,” said Jaccard.

There is uncertainty about the magnitude of the effect, he admitted.

“The paper suggests a flaw in the analysis of the U.S. State Department because it did not consider this effect when addressing President Obama’s request to know the incremental effect of the pipeline on emissions.”

The U.S. State Department did not respond to a request for comment.

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Natural Resources Canada said that it agrees with the State Department’s analysis that “Keystone XL will be safer and less emitting than alternative options.”

In an emailed statement, a spokesperson said that the study in Nature Climate Change bases its conclusions on false assumptions that “the prevention of construction of one pipeline will affect Canadian oil production levels.”

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