What 2013 and Sec. Kerry Hold for Keystone XL

When the Obama administration formally enters its second term in a few short weeks, U.S. lawmakers will have presumably averted sending the national economy into a tailspin and will be looking ahead to more pressing foreign policy issues like the pending Afghan drawdown and the so-called pivot to Asia. At the helm of that drive will be John Kerry, tasked last week with taking over for retiring Hillary Clinton as secretary of state. Kerry has been a staunch ally of the green movement, saying climate issues are as important as many national security matters. At the top of the 2013 agenda will be the status of the Keystone XL pipeline, though by the time Kerry starts his new job, his voice might not matter.

Kerry has been the presumptive Plan B for the Obama administration's pick for secretary of state after U.S. Ambassador to the United Nations Susan Rice. Rice was an early target of environmentalists, who derailed an otherwise-qualified secretary of state because of her "significant investments" in Canadian oil companies, including Keystone XL overseer TransCanada. Kerry, for his part, has rallied against the "insidious conspiracy" launched by those who deny the very real effects that industrial activity has on the climate. Some of those same environmental groups are already calling on Kerry, who's expected to sail through the nomination process, to block the Keystone XL pipeline.

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Despite a steady hum of protests from Texas landowners and protest groups, TransCanada is moving ahead with construction of the Gulf Coast project, which represents the domestic leg of Keystone XL. The company needs the State Department's approval for the entire project because it would cross the U.S.-Canadian border. Before Kerry was picked, TransCanada's CEO Russ Girling said the next U.S. secretary of state should review the project with the national interest in mind.

U.S. Secretary of State Hillary Clinton tarnished her stance on the project when, in 2010, she said the State Department would likely accept "dirty oil from Canada" rather than "dirty oil" from the Middle East. With Clinton stepping aside, signing off on the project is presumably a matter for Kerry, who's been keeping tabs on the project while leading the Senate Foreign Relations Committee.

"We've hosted several briefings with the State Department to discuss the environmental impact assessments as well as the process for determining the national interest," he said in a statement.

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But Girling, TransCanada's boss, said a new secretary of state doesn't mean much for his company, which scored victories for the project in Texas, Nebraska and Montana. U.S. Rep. Fred Upton, a Michigan lawmaker who heads the Energy and Commerce Committee, said there was an "imposing wall" that divides Republicans and the Obama administration on energy policies. On one side stands renewable energy projects like the controversial loan program that ensnared solar panel company Solyndra. On the other side stands Keystone XL. With the Obama administration looking to sign off on the pipeline soon, however, it likely won't matter how quickly Kerry sails through the nomination process as his first day in office will be filled with key foreign policy issues that likely matter more than an oil pipeline.

By. Daniel J. Graeber of Oilprice.com