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Obama Denies Keystone XL Pipeline Permit

posted on January 20, 2012

Lower gasoline prices offset rising costs for food, medical care and housing last month offering the latest evidence that the threat of inflation is benign.    

The Labor Department's Consumer Price Index was unchanged in December. Excluding volatile food and energy costs, so-called "core" prices rose 0.1 percent.

 Prices at the wholesale level, meanwhile, also dipped 0.1 percent last month.  Excluding food and energy, core producer prices rose 0.3 percent, as the cost of pickups, cars and pharmaceuticals increased.

The impact of cheaper energy was readily apparent this week as natural gas prices fell to a 10-year low on weak demand and record supplies.

Energy prices, of course, are inherently volatile.  And proponents of the Keystone XL pipeline say it would help stabilize oil prices and create tens of thousands of U.S. jobs.  The 1,700-mile project would transport oil from Canada -- America's largest supplier of crude -- across a handful of Midwestern states to refineries in Texas.  Critics of Keystone XL, however, adamantly object to the proposed route of the pipeline, which at some points crosses environmentally sensitive land.  

Stuck between the "rock" of environmentalists and the "hard place" of organized labor, President Obama said "no" to the controversial project this week -- at least in its current route.

Obama Denies Keystone XL Pipeline Permit

Saying he was under pressure to make a decision on an arbitrary deadline, the President rejected a Canadian oil companies request to build the Keystone XL pipeline through six U.S. states.

White House officials did suggest the Calgary-based TransCanada Corporation COULD build the pipeline in sections which would avoid federal government intervention. The oil-giant is taking the suggestion under advisement and is looking at building a section from Oklahoma to refineries in Texas.

Alberta Premier Alison Redford, leader of the Canadian province that holds the world's third-largest reserves of oil, said Canada was disappointed about the decision, but believes the President made it clear an application with a new routing would be considered.

President Obama said a February 21 deadline set by Republican legislators as part of a recently signed tax measure put undo pressure on decision makers.  He went on to say the random date prevented a full-assessment of the proposed pathway.

The plan has raised eyebrows in some regions. In Nebraska, concerned citizens and environmental groups have railed against the pumping of Canadian tar sands oil across the Heartland.

Hundreds of Cornhusker State residents flooded a town hall meeting in Lincoln last September.  Pipeline protestors, including those from the agricultural sector, were strongly represented.

Ken Haar, Nebraska State Senator District 21: "Always remember, 'whiskey is for drinking and water is for fighting.' And we are in a fight for our water. With all due respect to this committee, I would say today the majority of Nebraskans feel like national interests is being defined by the federal government and TransCanada and that you don't give a damn about Nebraska.

What I'm asking is that you move the pipeline away from the Sand Hills and the aquifer . Despite the slick feel-good commercials from TransCanada, the majority of Nebraskans clearly agree with those who booed the commercial at the first two Cornhusker football games.

Della Wilson, Bellevue, Nebraska: President Obama, please vote 'no' for the pipeline and 'yes' for clean water for Nebraska and our neighboring states. Please, save your children and grandchildren because they will remember your choice. Thank you for your time.

Much of the concern from agricultural circles and environmental groups involves the massive Ogallala aquifer which stretches for hundreds of miles underground in Nebraska and surrounding states.  The rich water resource is the lifeblood for rural communities and the region’s center pivot irrigation systems. Critics argue a Keystone pipe leak or spill would devastate the aquifer. 

On the other hand, proponents contend it will create thousands of jobs.

Senator Charles Grassley, R-Iowa: Why doesn't the President of the United States, who says we outta create jobs, have guts enough to make that decision between the labor unions and the environmentalists? Go with the labor unions, create the jobs and fulfill your goal and your own political rhetoric and move on.

TransCanada estimates the pipeline could create as many as 20,000 positions, a figure opponents say is inflated. A State Department report last summer indicated the pipeline would create up to 6,000 jobs during construction.

While the Administration staves off any decision on the line that would transport nearly 800,000 barrels of oil per day to Gulf Coast refineries, the nation’s number one trading partner is considering a route directly to the Pacific Ocean. The new passage, not without controversy of its own, would open a route to China. Currently, 97 percent of Canada’s energy exports go to the United States.

Republican foes are using the denial to gain a political foothold. House Speaker John Boehner accused the President of “selling out American jobs for politics" and destroying tens of thousands of American jobs while shipping American energy security to the Chinese.

TransCanada shares fell more than 5 percent on the news but recovered most of the losses later in the session Wednesday.

Tags: agriculture Boehner news oil politics tar sands TransCanada Corp.