Canadian pipeline company TransCanada announced it was building a stand-alone section of the controversial Keystone XL oil pipeline to the southern coast of Texas. This in part addresses one of the primary aims of the project, which is to add pipeline capacity to the refining market along the southern U.S. coast. The White House welcomed the measure, but President Obama's critics continued to complain. With TransCanada acknowledging Obama isn't opposing the overall merits of the project, however, it's odd that White House critics aren't taking a victory lap on Keystone XL.
TransCanada announced this week it was moving ahead with its so-called Gulf Coast Project, a domestic stand-alone section of Keystone XL. The White House expressed support for the project by saying the pipeline would uncork bottlenecks at the Cushing, Okla., hub and get much-needed crude oil to the market. This, in turn, would get more oil to the global market and, in theory, lower crude oil prices.
Critics complain the Obama administration is standing in the way of a vibrant domestic energy market. White House spokesman Jay Carney, however, said TransCanada needed to move ahead with the U.S. section because crude oil production in the United States had increased. Republicans counter his argument by saying that's a result of the policies enacted by the Bush administration, something Carney didn't necessarily deny.
Republican leaders have tried to get around Obama on the broader Keystone XL pipeline through various legislative maneuvers. Obama rejected the latest effort when Republicans inserted a 60-day deadline for Keystone XL into a payroll tax bill. Carney, for his part, said domestic pipelines are approved by the Obama administration "all the time" and TransCanada's project "is important." GOP leaders, however, bemoan the fact that it took three years to get this far and continued to lob insults at Obama.
TransCanada said the Gulf Coast Project would help reduce U.S. dependence on foreign crude. Isn't that what the Republicans wanted the whole time? How is this not a victory for the GOP? Part of the pipeline they've lobbied so hard for is moving ahead with absolutely no objection from the White House. Yet Sen. Dick Lugar, D-Ind., complained to Secretary of State Hillary Clinton that Keystone XL was now somehow a national security issue in light of recent market tensions over Iran.
"The decision to delay sends a signal to markets and our overseas enemies that we are not serious about ending U.S. energy dependence," said Lugar in a statement.
This is starting to sound like the various justifications the Bush administration gave for the Iraq war. Did Lugar not read Carney's statements? Critics will note the White House spokesman is, obviously, biased in favor of the White House. But it only takes a brief glance at TransCanada's statement regarding plans to re-apply for a permit for the entire project to find that most, if not all, of the wind is now taken out of the Republican's sails on Keystone XL.
"Reapplying for the Keystone XL permit is supported by words used in President Obama's statement Jan. 18, 2012 when he said the denial of the permit was not based on the merits of the pipeline but rather on an imposed 60-day legislative timeline to make a decision on the project," the company said in a statement.
The U.S. section of TransCanada's section should go into service by next year. When you're handed a political victory, take it regardless of how it developed.
By. Daniel J. Graeber of Oilprice.com