Obama fast-tracks part of Keystone XL pipeline (+video)
After rejecting the Keystone XL pipeline proposal in January, President Obama gives a green light to its southern leg – a bid to ease a key bottleneck to new oil supplies and defuse critics on gas prices.
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In backing the pipeline's southern leg, Obama is walking a fine political line – seeking to defuse GOP critics who say his energy policy is skewed toward renewables like solar, while also trying to appease environmentalists who say the pipeline is unnecessary and presents a major environmental threat, political analysts say.Skip to next paragraph
"The GOP has tried hard to tie high gas prices and a sluggish economy to the president's decision to delay Keystone XL pipeline," says Mike Wagner, political scientist at the University of Nebraska at Lincoln. "He's following a textbook campaign strategy. If the president endorses the southern section, it could blunt Republican criticism of him on that issue, at least among independent voters."
Ironically, however, one equation that may be lost in the political calculus is TransCanada's expectation that connecting Cushing to Gulf refineries will raise crude oil and gasoline prices in the Midwest. That's because much of that large pool of oil bottled up in Cushing, which has tamped down prices across the region, would flow through the new pipeline to Gulf refineries – and on to international markets. Less supply and a better connection to high-priced international markets would boost prices.
“The firms involved have asked the US State Department to approve this project, even as they’ve told Canadian government officials how the pipeline can be used to add at least $4 billion to the US fuel bill,” Philip Verleger, president of PKVerleger LLC, a Colorado consulting firm that specializes in research on oil market economics, wrote in a Minneapolis Star-Tribune commentary last March.
No matter what he does, Obama is unlikely to escape criticism. Republican critics maintain that the southern leg of the pipeline isn't enough to matter to US energy security, while environmentalists say it makes building the northern portion of the pipeline far more likely and creates a huge new environmental threat.
"Simply put, the southern portion of Keystone – from Cushing, OK to the Gulf Coast – is being built in spite of the Obama administration, not because of them," Rep. John Sullivan (R) Oklahoma said in a statement Tuesday.
Environmentalists cite a new study by Cornell University that found Keystone XL would be an economic liability that could produce up to 91 significant spills over a 50-year period. Tar-sands oil is not only more likely to spill, but it is also harder to clean up, they add, citing the 2010 Kalamazoo, Mich., pipeline spill that is still being mopped up.
"It is downright foolhardy to cut corners on safety reviews for permitting the southern segment of the Keystone XL tar sands pipeline, especially when the industry has a history of oil spills," Susan Casey-Lefkowitz, international program director at the Natural Resources Defense Council, a Washington environmental group, said in a statement. "The people of Oklahoma, Texas, and the rest of the country deserve better.”
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