Obama's Rejection of the Keystone XL Oil Pipeline is Pure Politics

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U.S. President Barack Obama's rejection of the Keystone XL oil pipeline on Wednesday had much more to do with political maneuvering than the construction of the pipeline.

Most experts believe the Keystone oil pipeline will eventually get built, but in the meantime, President Obama's decision gives both Republicans and Democrats raw material for 2012 campaign speeches.

All the clues to what's really going on are right in President Obama's statement.

"This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented theState Departmentfrom gathering the information necessary to approve the project and protect the American people," the president said.

The 1,700-mile, $7 billion pipeline would bring oil from the vast Canadian tar sands in Alberta to refineries in Port Arthur, TX.

The Republicans included a deadline for a decision on the Keystone oil pipeline in the payroll tax cut extension deal made at the end of last year.

Members of the GOP wanted to make President Obama choose between his green supporters and approving a project that TransCanada (NYSE: TRP) says will create 20,000 jobs.

"I'm disappointed that Republicans in Congress forced this decision," President Obama said, "but it does not change my administration's commitment to American-made energy that creates jobs and reduces our dependence on oil."

By pointing out that he had not yet determined the merits of the project, and that the Republicans boxed him in, the President Obama left the door wide open to reconsidering the Keystone oil pipeline later.

Environmentalists Celebrate

Rejecting the project now, however, allows President Obama to satisfy environmentalists – a key constituency he needs to get re-elected in November – who fear exploiting the oil sands will contribute to climate change.

"The knock onBarack Obamafrom many quarters has been that he's too conciliatory," saidBill McKibben, leader of an anti-pipeline group called 350.com. "But here, in the face of a naked political threat fromBig Oilto exact huge political consequences, he's stood up strong."

And while another major Democratic constituency, labor unions, didn't like the decision- the pipeline would create thousands of construction jobs – President Obama placated them earlier this month by making two important recess appointments to the National Labor Relations Board.

Of course, Republicans jumped at the chance to attack the rejection of the Keystone XL oil pipeline.

"He seems to have confused the national interest with his own interest in pleasing the environmentalists in his political base," former Massachusetts governor Mitt Romney said in statement.

Former House Speaker Newt Gingrich simply said the decision was "stunningly stupid."

Other Republican leaders vowed to keep the issue alive as the 2012 campaign heats up.

"This is not the end of the fight," declared House Speaker John Boehner, R-OH.

Keystone XL Pipeline Not Dead

Meanwhile, President Obama's rejection of the Keystone oil pipeline is unlikely to have any lasting impact on whether or not it gets built.

One of the people with the most at stake, TransCanada CEO Russ Girling, sounded completely unfazed by the president's decision.

"TransCanada remains fully committed to the construction of Keystone XL," Girling said in a statement. "Plans are already underway on a number of fronts to largely maintain the construction schedule of the project. We will reapply for a presidential permit and expect a new application would be processed in an expedited manner to allow for an in-service date of late 2014."

Even Canada's elected officials, displeased enough at the project's delays to threaten selling production from the Alberta oil sands to China by building a pipeline to the west, expressed confidence that the Keystone XL oil pipeline project is far from dead.

"This is clearly the biggest infrastructure project on the continent, and once the election is settled, we believe it will be approved," John Stephenson, who helps manage $2.7 billion for First Asset Management Inc., told Bloomberg News. He said he bought 350,000 shares of TransCanada stock Wednesday when it dipped by 2.6%. "All the waffling just gives people an opportunity to trade around it."

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  1. eric taylor | January 22, 2012

    Obama is being a bit grandmotherly, leaving us impatient for quick change investors wait until a
    compromised routing plan can be established. I am sure the keystone pipeline will come in time,
    much to the chagrin of the detractors. The environment is much more damaged at the point
    of mining. The transit route is much easier to control for environmental purpose! I am sure some
    of the detractors are hoping to discourage mining at the source altogether, at least until fairer
    mining rights property issues and new environmental legislation for safety is passed. Fracking
    has become a dirty word in the lake bound northern Midwest, where land owners do not even own
    their own mineral rights.

  2. A.Horila | January 23, 2012

    By the time the Congress makes up their mind about the pipeline, Canada will build a pipeline to the west coast and sell the oil to China!

  3. J & J Larsen | January 24, 2012

    When Obama was campaigning for the presidency; he actually told us what he was going to do to America!! A FACT that the majority of voters never picked up on!
    George Soros' [who pulls Obama--and all liberals] strings; goal is to destroy America!!
    Ergo — what has hoppened since the Jan. 2008 error — was seen by some of us who bothered to study and read. [35 plus years of studying politics have made us a lot suspicious of a Government that is not only big enough to give you what you ask for --- BUT ALSO LARGE ENOUGH TO TAKE AWAY EVERYTHING YOU HAVE --- and will do so at a moments notice if the Liberals continue in power]!!!
    There are NO Conservatives in the current Democratc Party!!
    (Check out Whistleblower Magazine and United States Justice Foundation.)

  4. T.E. Rogers | January 29, 2012

    Why is the obvious so overlooked?
    O's good friend, W. Buffet owns the Burlington Northern railroad.
    Burlington RR hauls all the oil from the Bakken area and north, to the refineries in OK.
    Thousands of barrels per day.
    If a pipeline were built, Warren loses.
    O loses his big contributor. (the many trips to the whitehouse?)
    Doesn't take a rocket surgeon to figure this one out.

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