Keystone oil pipeline
If approved, the pipeline - to be built by TransCanada (NYSE: TRP) - would transport about 1.3 million barrels of oil a day from Canada's oil sands to refineries along the Gulf coast.
The Keystone oil pipeline, if approved, would benefit U.S. energy security. Not to mention TransCanada and players in the Canadian oil sands industry such as Suncor Energy (NYSE: SU).
This decision is one investors in the energy sector need to pay attention to as it will set the tone for energy policy in President Obama's second term.
Investors cheered the deal, sending shares of both companies higher. Following the announcement, Sunoco stock gushed higher by more than 20%, its biggest gain in more than three years. Energy Transfer Partners rose almost 6%.
The acquisition is just the latest in big-time energy deals fueled by the need for expanding pipeline networks.
The deal gives Energy Partners 7,900 miles of oil pipelines, as well as 4,900 Sunoco branded retail fueling stations in the United States.
Darren Horowitz, an analyst with Raymond James & Associates says the transaction will help Energy Transfer attain its objective of expanding both the geography of the company's pipeline network and the products it ships, adding, "It opens the door for greater growth."
Mass. Rep. Barney Frank last week stated that the Affordable Healthcare Act (Obamacare) had political consequences and shouldn't have been the focus of the party when it held both arms of Congress in 2009 and 2010.
Now, Democrats are distancing themselves from President Obama on another important election issue: Energy policy.
Wrote Byron York at the Washington Examiner:
"The president has put his feet in cement in opposition to the Keystone oil pipeline. But on Capitol Hill, more and more Democrats are joining Republicans to force approval of the pipeline, whether Obama wants it or not.
The latest action happened Wednesday, when the House passed a measure to move the pipeline forward. Before the vote, Obama issued a veto threat. The House approved the pipeline anyway -- by a veto-proof majority, 293 to 127. Sixty-nine Democrats abandoned the president to vote with Republicans."
With a cynical eye cast toward the November election, members of Congress forced votes on the "Buffett Rule" and the Keystone pipeline knowing both would ultimately fail.
The real purpose for voting on the Buffett Rule and the Keystone pipeline was to embarrass the opposition and produce material for campaign attack ads.
These politically motivated votes are becoming increasingly common.
You can forget about energy independence for now.
Without Canadian oil it is nothing but the latest American pipe dream.
In the wake of the Keystone Pipeline decision, Canada has decided to play ball with China instead.
President Obama said he is expediting approval for the southern portion of the Keystone oil pipeline. That section runs from Oklahoma to the Texas Gulf Coast.
The president told workers in Cushing, OK today that he was making that part of the Keystone XL project a "priority." The president said he remains committed to the project and defended his earlier rejection of the pipeline.
He blamed Republicans for insisting upon an application approval deadline that caused a rushed decision.
"Unfortunately, Congress decided they wanted their own timeline," President Obama said. "Not the company, not the experts, but members of Congress who decided this might be a fun political issue decided to try to intervene and make it impossible for us to make an informed decision."
The southern segment of the pipeline, however, is already planned to start construction in June, and is not the focus of the project's controversy. In fact, more than 99% of property owners in the southern route where the pipeline will run agree to it.
Instead, the president's announcement was more politics than progress - and triggered ample criticism from Republicans.
Many GOP members bashed the president's announcement as "meaningless."
A spokesman for Rep. John Boehner, R-OH, compared the news to "the governor holding a press conference to renew my driver's license -- except this announcement still leaves American energy and jobs behind."
TransCanada Corp. (NYSE: TRP), the Calgary-based energy company trying to get the project approved, said yesterday (Monday) it would seek immediate approval to start building the southern half of the pipeline that runs from Oklahoma to Texas. That segment doesn't need a presidential permit because it doesn't cross a U.S. border.
TransCanada said the southern portion of the Keystone oil pipeline will allow Midwest oil to reach Gulf Coast refineries. There is currently a glut of oil produced in that region.
"Gulf Coast refineries can then access lower-cost domestic production and avoid paying a premium to foreign oil producers," TransCanada CEO Russ Girling said Monday.
The pipeline will carry light crude oil produced in North Dakota, Montana, Kansas, Oklahoma, and Texas. It will cost $2.3 billion and be completed in 2013. It will also create about 4,000 construction and support jobs.
TransCanada also said it would reapply for the full Keystone oil pipeline construction - a hot button issue in this election year.
Why President Obama Rejected the Keystone Oil Pipeline
This has introduced another political firestorm into an already uncertain market.
If there is one subject that is likely to stimulate more angst over economic recovery prospects, it is the availability of energy.
That's not good for the investors who have money at stake. So here's what you really need to know about the Keystone oil pipeline - and more importantly, the five biggest fallacies being espoused by unscrupulous politicians and the debate-warping mainstream media.
First proposed by TransCanada Corp. (NYSE:TRP) in 2008, the 1,700-mile Keystone oil pipeline would carry 700,000 barrels of crude per day from the Canadian oil sands in Alberta to refineries in Port Arthur, TX.
As far as facts go, that's about all the politicians in Washington agree on. Now here's where the truth ends and the spin begins:
Fallacy No. 1: The Keystone pipeline will create 20,000 jobs ... or 100,000 jobs.TransCanada commissioned a study that said construction of the pipeline would create 20,000 construction jobs, and more than 100,000 spin-off jobs. Republican (and a few Democratic) supporters have been only too happy to repeat these numbers in speeches in support of the pipeline.
The State Department, in its study, came up with a more modest figure of 5,000 to 6,000 construction jobs.
The discrepancy comes from how the TransCanada study calculated the jobs. That study used a "one person, one year model." So if it takes 6,500 workers two years to build the pipeline, that's 13,000 jobs, with the other 7,000 coming from supply manufacturers.
And if that math isn't fuzzy enough for you, take a look at the calculations for the 118,000 spin-off jobs.
That number is based on the one person, one-year model in addition to something called the multiplier effect, which takes the capital costs of the project and feeds it into a formula. In short, these job numbers are about as reliable as a politician's campaign promise.
And yet one more delicious irony: Back in 2009, Republicans complained that the $787 billion stimulus package failed to create long-term stability given that many of the jobs created only lasted as long as the public works projects that were proposed.
Democrats defended the temporary nature of the employment, arguing that it was a necessary step in order to boost economic demand around the country. Now it's the Democrats arguing that the Keystone project fails to create permanent jobs, while Republicans argue the project is needed to combat unemployment.
Fallacy No. 2: Keystone pipeline will increase greenhouse gases, worsening climate change.Well, yes and no.
The argument from Democrats is that the process of extracting the oil from the Athabasca fields will generate greenhouse gases. Sure enough, it does. But stopping the Keystone pipeline won't change that unless it prevents production, a long shot at best.
You see, the Keystone pipeline isn't the only game in town. At least one other proposed pipeline would run across British Columbia to Canada's west coast, where it would be exported to Asian markets.
The greenhouse gas impact studies assume no Keystone pipeline means no production from the Athabasca oil sands, and assume as well that the Keystone pipeline would pump nothing but oil sands product at 100% capacity 100% of the time - not likely.
The true impact of the Keystone pipeline on global greenhouse gas emissions isn't clear, but would be far lower than its opponents claim.