GOP Dance Kills Pet Pipeline Project

Republican critics of the U.S. president continued to lob accusations at the White House by saying it wasn't doing enough to promote anything from jobs to energy security or was somehow misleading the American public by playing political games with the planned Keystone XL oil pipeline from Canada. Yet the irony is that by playing their own political games, the Grand Old Party may have effectively killed off the project by forcing the administration's hands – at least for now.

Way back in 2008, Canadian pipeline company TransCanada proposed an extension to the Keystone oil pipeline to feed refineries along the southern U.S. coast. The pipeline would supplement the existing Keystone artery that's been pumping oil from Alberta tar sands projects since 2010 with barely a mention from Republican lawmakers, accused by environmental groups like Greenpeace of being in bed with the oil industry.

U.S. Secretary of State Hillary Clinton sparked criticism early in the debate when she suggested that the United States can either get oil from unsavory regimes in the Middle East, or import "dirty" oil from Canada. TransCanada says the extension of the original Keystone "bullet line" would uncork the bottleneck at the main oil terminal in Cushing, Okla., a terminal stopped up because of a shortage of pipeline capacity.

Nebraskans, from the Republican governor to environmental advocacy groups, managed to convince TransCanada to consider re-rerouting Keystone XL around a key groundwater aquifer.  That prompted the State Department, which needs to approve the pipeline because it would cross national borders, to say it had to conduct another review, meaning a permit probably would have to wait until after the presidential elections in November.

But not so fast, said the free-market oil hawks in the Republican Party suddenly concerned about jobs in a depressed U.S. economy during an election cycle.  What about the jobs tied to this "shovel-ready" project that won't go online until at least 2014?  Obama's critics clogged the inboxes of journalists Wednesday calling him a "job-killer" even before the official announcement went out that the administration wasn't backing the project.

All along, the numbers tied to Keystone XL were sketchy. Sure, it would free up bottlenecks in the Cushing hub, which in theory could mean good things for a U.S. economy that already gets most of its "dirty" oil from Canada. Of course it would provide jobs, but not many permanent ones.  And the politicking?

“In the face of Iranian threats against oil affordability, the Obama administration once again is trying to blame Congress and the State of Nebraska instead of taking responsibility for American jobs and security," claimed Richard Lugar, the Republican senator from Indiana, in a statement delivered hours before White House spokesman Jay Carney stepped up to the podium to announce the decision.

Lugar sponsored the bill that gave Obama until Feb. 21 to sign off on Keystone XL, a deadline the State Department maintained all along was unrealistic. And Fred Upton, the House republican from Michigan who touts the employment benefits of the pipeline that won't run through his state, wrote an op-ed in The Kalamazoo Gazette saying Keystone XL made good business sense. Residents near Kalamazoo, however, are still cleaning up a mess left by Enbridge when its Alberta crude oil pipeline burst open two years ago.

Nebraskans were the ones who objected to the original plans, by the way. TransCanada said it supported Nebraska's decisions.  It was quietly noted, meanwhile, that TransCanada simply needs to re-apply after it settles on an acceptable route through Nebraska.

So who's playing politics?

By. Daniel J. Graeber of Oilprice.com