Keystone Pipeline Vote Is Just a Bump in the Road to Approval

A narrow defeat of the Keystone XL pipeline in the Senate yesterday (Tuesday) is a setback for the project, but a minor one.

The tally was 59-41, just one vote shy of the 60 needed to pass. The vote followed an hours-long debate on the Keystone pipeline pros and cons.

For years the Democrat-controlled Senate has refused to hold a Keystone pipeline vote - yesterday's bill was the ninth that Republican-controlled House sent to the Senate.

keystone pipelineThe change of heart appeared to be a bid to bail out Sen. Mary Landrieu, D-La, in a Dec. 6 runoff race in which she is running well behind her GOP challenger, Rep. Bill Cassidy, R-La.

But her inability to win the day will only hurt her re-election chances now.

In the end though, yesterday's Senate vote was just a sideshow in the larger Keystone pipeline story.

Minutes after the Keystone pipeline vote, incoming Senate Majority Leader Mitch McConnell, R-Ky., vowed to try again early next year. The $8 billion TransCanada Corp. (NYSE: TRP) project would bring tar sands oil from Canada to U.S. refineries on the Gulf Coast.

Sen. John Hoeven, R-N.D., who cosponsored yesterday's bill with Landrieu, told Reuters he thinks he can get at least 63 Keystone pipeline votes next year. Hoeven also suggested the number could rise to the 67 required to override a presidential veto.

"Getting to that magic number is a possibility," Hoeven said. In any case, the Republicans at minimum have the numbers to pass the bill in 2015.

Don't Assume a Veto of the Keystone XL Pipeline

But the $8 billion question is whether President Barack Obama will veto the bill.

While environmental opponents are sure of a veto, the president has been coy about where he stands.

He has never said he's flat-out against the Keystone pipeline. Instead, President Obama usually says he wants to "let the process play out." The "process" refers to studies of the environmental impact of the project as well as a legal dispute over the pipeline's route through Nebraska.

The president has put off a decision for years. The Democratic Senate has helped by blocking votes on the project. Democratic sources told the Chicago Sun-Times that the Obama administration was "scared to death" yesterday's bill would pass.

The White House may have even leaned on any Democrats that could have become the 60th vote.

But next year the Republicans finally will be in a position to force President Obama to make a call...

Now a Deal on the Keystone Pipeline Makes Sense

Instead of vetoing the Keystone pipeline and risking an embarrassing override, however, the president might seek to make a deal with the GOP.

The Keystone pipeline could prove an effective bargaining chip for the president to get something else he wants.

So what might a deal on the Keystone XL pipeline look like?

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The easiest angle for the president to take would be to try for a job-creating infrastructure bill to repair America's crumbling roads and bridges.

That would be an offer that would be tough for the GOP to refuse. The nation's infrastructure badly needs fixing, and Republicans have long complained about the lack of job creation by the Obama administration.

But President Obama also could go for a deal that would placate his environmental supporters. Such a deal would offer approval of the Keystone pipeline in exchange for Republican support of some key aspect of the president's climate change policies.

That would be a much harder sell to GOP lawmakers, many of whom are climate change skeptics who believe such policies kill jobs and hurt the economy.

Still, both sides will have an incentive to make a deal. The Republicans need to prove they're willing to govern and not simply block everything President Obama wants to do. Otherwise, they could lose in 2016 the big gains they just made in the midterm elections.

And with just two years left in his term, President Obama will be looking for ways to beef up his legacy.

The Bottom Line: The midterm elections have changed the political landscape in Washington in favor of the Keystone pipeline. A deal between President Obama and the GOP is likely now. But one way or another, the Keystone pipeline will get approved and built.


Winners of the Keystone XL Pipeline: For investors, next year's political scenario means that the Keystone pipeline should finally get approved. And when that happens at least a dozen energy stocks will benefit. These companies will benefit most from the Keystone XL pipeline...

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About the Author

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

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