U.S. President Barack Obama announced today (Thursday) approval for part of the Keystone XL oil pipeline project - but his move was more about election votes than the country's energy needs.
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."
The Real Deal with the Keystone XL Oil Pipeline Project
Democrats' main objection to the Keystone XL oil pipeline project is not this southern section, but instead the northern route that has led to environmentalists' protests.
President Obama said the northern segment of the Keystone pipeline project remains a threat to Nebraska water supplies, and needs reworking before approval.
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.
The pipeline's proposed route cuts into Canada in Montana, and the border crossing requires presidential approval.
President Obama rejected the pipeline project in January - but the move, like today's, was considered more political maneuvering than policy adherence.
"This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people," the president said.
Democratic opponents have made the Nebraska water threat a major argument against the pipeline, saying the structure would cross the environmentally sensitive Sand Hills area in Nebraska, which sits atop the Ogallala Aquifer.
TransCanada in November started working with Nebraska officials on an adjustment to the pipeline route that would detour around the Sand Hills region.
Meanwhile, Republicans have argued that the Keystone XL oil pipeline project could create tens of thousands of jobs, and stalling Democrats are damaging the U.S. employment recovery.
But the jobs estimate is highly inflated.
TransCanada commissioned a study that said construction of the pipeline would create 20,000 construction jobs, and more than 100,000 spin-off jobs. 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.
The company plans to submit a new presidential permit application for the pipeline project in the first quarter of 2013, and for the pipeline to be completed and in service by 2015.
Meanwhile, Republicans and Democrats continue to use the Keystone XL oil pipeline project on the campaign trail.
After President Obama's pipeline project endorsement today, GOP candidate Mitt Romney wasted no time attacking the president's motives.
"Apparently the slipping poll numbers have convinced him to announce the lower half of that pipeline," said Romney. "If we can get his poll numbers just a little lower we may be able to get the other side too. So let's get that job done."
News and Related Story Links:
- Money Morning:
Finally, TransCanada Corp. (NYSE: TRP) Will Build the Keystone Oil Pipeline - Sort of
- Money Morning:
Five Fallacies of the Keystone Oil Pipeline