The White House on Tuesday promised that President Obama would veto legislation approving the construction of the Keystone XL pipeline, but the new Republican majority in Congress remains intent on making it one of the first bills it sends to Mr. Obama’s desk.
“President Obama’s veto threat comes as no surprise,” Sen. John Hoeven, R-North Dakota, a sponsor of the Keystone legislation, said in a statement Tuesday. “He has held the Keystone XL pipeline project up for six years with endless bureaucratic delays – his strategy has been defeat through delay. That’s unfortunate, because the Keystone XL pipeline should be approved on its merits.”
The 1,700-mile underground oil pipeline would link the tar sands fields of northern Alberta to oil refineries on the Texas Gulf Coast. TransCanada Corporation first submitted an application for the project in 2008, leaving the decision looming over Mr. Obama’s entire presidency.
Over the past six years, as Mr. Obama touted investments in alternative energy and the GOP lambasted the administration’s new regulations over fossil fuels, Keystone became a symbol of the conflict between liberals and conservatives over energy policy.
Right now, “you’re on one side or the other,” when it comes to energy and the environment, Sen. Joe Manchin, D-West Virginia, the lead Democratic sponsor of the bill, lamented to reporters on Tuesday.
While acknowledging that he hails from a fossil fuel state, Manchin said he’s tried to look past politics and focus on the facts. Keystone, he said, “continues to make more sense every day.”
While the project has remained a partisan flashpoint over the past six years, the circumstances surrounding the debate have changed. For one thing, oil prices have tumbled down in the past three months, reaching lows last seen in 2009. While the drop in prices may be temporary, the U.S. has also reduced its dependence on foreign oil in the last few years thanks to a boom in shale-oil extraction in places like North Dakota, Pennsylvania and elsewhere. Meanwhile, Mr. Obama has grown increasingly blunt in his opposition to the project.
Even so, lawmakers backing the project say it’s still worth making a priority — for both practical and political reasons.
“There’s two reasons that this is the first bill up in the Senate,” Hoeven told reporters Tuesday. “First, because it’s important energy legislation. This is about building the infrastructure that we need to build a comprehensive energy plan for this country. But there’s another reason as well. It’s about getting back to regular order in the Senate.”
When it comes to building a “comprehensive energy plan,” Republicans and some Democrats argue the pipeline will help for a variety of reasons. Energy analysts say they hold up to a certain degree. Those opposed to the pipeline argue the benefits of the pipeline are marginal at best and overshadowed by significant drawbacks.
Gas and oil prices
“Think about what’s going on right now,” Hoeven said Tuesday. “Gas prices aren’t lower at the pump because OPEC decided to give us a Christmas present or because Russia decided they wanted to help out and lower the price at the pump… We’re producing more gas and oil in this country through the shale plates, through the new technologies, and working with Canada as well… That benefits consumers at the pump.”
Amrita Sen, chief oil analyst at the research firm Energy Aspects, pointed out to CBS News that oil prices have only fallen in the last few months, even though the shale boom started a few years ago.
Kevin Book, head of research at the firm ClearView Energy Partners, added that it’s hard to pinpoint what impact any single piece of infrastructure may have on gas prices. That said, he noted that Keystone could make it easier for U.S. refineries in the Gulf of Mexico to access sour heavy crude oil, lessening their reliance on heavy crude from Mexico and Venezuela.
“If you could democratize that market, you could break the stranglehold on price,” he said to CBS.
Even though the U.S. oil-shale boom is producing large amounts of light sweet crude, those Gulf Coast refineries are built to process heavy crude. Compared to six years ago, when the Keystone debate started, “the world is different now in the sense that U.S. domestic production has displaced a lot of light sweet oil,” Book said. “But this is heavy sour oil.”
On CBS’ “Face the Nation,” on Sunday, Sen. Chuck Schumer, D-New York, downplayed the impact of the pipeline.
“You know, our Republican colleagues are doing what they always do: They’re appeasing a few special interests, in this case oil companies and pipeline companies, and not really doing what’s good for the average middle class family in terms of creating jobs,” Schumer said.
Hoeven insisted on Tuesday, “It’s about jobs. It’s about growing our economy.”
Last year, the State Department issued a report on Keystone, projecting the pipeline’s construction would support about 42,100 jobs (directly and indirectly). Opponents of the pipeline point out those jobs would be temporary. After its construction, the operations of the pipeline would create about 50 jobs.
Environmentalists like Rhea Suh, president of the Natural Resources Defense Council, argue there are better ways to create jobs.
“Nearly 10 times more construction and manufacturing jobs can be created with less risk by building the kind of wind and solar power systems, hybrid cars, and other clean energy and clean transportation projects that created more than 18,000 good-paying jobs nationwide in the third quarter of 2014 alone,” Suh wrote in an op-ed this week.
Environmentalists also argue the jobs created by Keystone are worth the environmental risks. “Pipeline blowouts are not rare events,” Suh wrote.
On top of that, Suh argued that building the pipeline would only “extend the reliance on fossil fuels that keeps us hostage to global forces we can’t control or predict. Real energy security means reducing our reliance on oil.”
Manchin on Tuesday argued that “having some control of this product” as it travels from Canada to the Gulf of Mexico “makes all the difference in the world in [terms of] making us stronger as a nation, less dependent on energy as far as oil.”
Certainly, the pipeline would give Gulf Coast refineries better access to oil coming from Canada, a secure trading partner. However, Energy Aspects’ Sen noted that the oil industry is finding alternative — albeit, less efficient — ways to move Canada’s tar sands oil, such as rail lines.
“Even if Keystone starts up — which may not be until the end of the decade, anyway — you may not get an increase in the volume” of heavy crude moving South, Sen said. “You might just get a transfer back from rail.”
Lawmakers who support Keystone have also touted its potential geopolitical benefits, given that more U.S. influence in the oil market could help put pressure on places like Russia or Iran.
CBS News Senior National Security Analyst Juan Zarate said we’ve only just “begun to see a policy debate in Washington… thinking about oil as a strategic tool.”
While low oil prices have put stress on hot spots like Russia, Zarate noted that the U.S. also has allies that depend on oil, like Mexico. “This isn’t just about the bad states and enemies… it’s’ also about our friends and allies,” he said. “I think we haven’t’ fully come to grips with what is the implication of all of this.”
If Mr. Obama does ultimately veto the Keystone bill, Hoeven said Congress could respond by attaching it to other legislation, such as another energy bill or even an appropriations bill.
Hoeven and other Republicans have suggested that reasonable Democrats will work with them to pass the measure.
“I think it really raises the question: is getting regular order and open amendment process in the Congress and the Senate working, and will the president engage with us to get the important work of this country done?” he said.
Sen. John Thune, R-South Dakota, said on “Fox News Sunday” that “we’re going to find out whether or not there are moderate Democrats in the Senate. The question is, can we get to 67 if the president decides to veto it? And I think that’s a good question.”