Pressure mounts on Obama to finalize Keystone XL
Moody’s warns that the president risks missing oil price boom if pipeline decision takes too long.
WASHINGTON—President Barack Obama faces mounting pressure as he embarks on a second term over a decision he had put off during his re-election campaign: whether to approve the $7 billion proposed Keystone XL oil pipeline between the US and Canada.
On its surface, it’s a choice between the promise of jobs and economic growth, and environmental concerns. But it’s also become a proxy for a much broader fight over American energy consumption and climate change, amplified by Superstorm Sandy and the conclusion of an election that was all about the economy.
Environmental activists and oil producers alike are looking to Obama’s decision as a harbinger of what he’ll do on climate and energy in the next four years. Both sides are holding out hope that, freed from the political constraints of re-election, the president will side with them on this and countless related issues down the road.
“The broader climate movement is absolutely looking at this administration’s Keystone XL decision as a really significant decision to signal that dirty fuels are not acceptable in the US,” said Danielle Droitsch, a senior attorney with the Natural Resources Defence Council.
Once content with delays that have so far kept the pipeline from moving forward at full speed, opponents of Keystone XL have launched protests recently at the White House and in Texas, urging Obama to nix the project outright.
Meanwhile, support for the pipeline appears to be picking up steam on Capitol Hill.
But Obama has shown little urgency about the pipeline, which requires State Department approval because it crosses an international boundary.
The pipeline became an issue in the campaign, and Obama put it on hold while a plan was worked out to avoid routing it through Nebraska’s environmentally sensitive Sandhills region.
TransCanada revised the route, but that caused the lengthy environmental review process to start over. In the meantime, the company split the project into two parts, starting construction in August on a southern segment between Oklahoma and Texas as it waits for approval for the northern segment that crosses the Canadian border.
Although the lower leg didn’t require Obama’s sign-off, he gave it his blessing in March anyway, irking environmental activists who see the pipeline as a slap to efforts to reduce oil consumption and fend off climate change.
Still, in an otherwise highly polarized political climate, access to affordable energy has become a rare issue with bipartisan appeal.
Many Democrats from states whose economies depend on oil support the pipeline. So do some trade unions, whose workers stand to gain thousands of new construction jobs. And while environmentalists make up an important part of their base, Democratic lawmakers are under intense pressure to create jobs and reduce American reliance on Mideast oil.
There’s less variation among Republicans, who by and large support the project. But in Texas, a deep red state that normally embraces the oil industry, the project has drawn intense opposition from landowners who argue their property along the pipeline’s route is being unfairly condemned. Their complaints, along with those from Texans who oppose an influx of foreign oil from Canadian tar sands, have fostered an unlikely alliance with local environmentalists, who have taken to chaining themselves to machinery and trucks in an attempt to stall construction.
The messy politics may demonstrate why Obama punted the decision until after the election. Now both sides are applying pressure with renewed vigour.
The ratings agency Moody’s says it expects Obama will eventually approve the pipeline, but it won’t be quick. The agency did, however, warn that if the president takes too long to approve the project, he risks missing the boom in oil prices that instigated the pipeline in the first place.
Estimates for how many jobs the pipeline would create range from a few thousand up to 20,000 or more. At 36 inches in diameter, the pipeline will have an initial capacity of 700,000 barrels a day—significant, because demand for oil and gas pipelines is expected to surge over the next four years, according to a November report by The Freedonia Group, a market research firm.
A TransCanada spokesman said the company expects a decision by the State Department in the first quarter of 2013, and hopes to start construction on the upper portion shortly thereafter. The longer the decision drags on, the less realistic that timeline appears to be.
©The Associated Press