President Obama Rejects Keystone XL

On Friday, the U.S. State Department issued a rejection in its permit review for TransCanada's proposed Keystone XL oil pipeline. The Obama Administration had been widely expected to decline permission to build.

In issuing the decision, Secretary of State John Kerry said in a statement that the project would have had a “negligible impact on our energy security . . . would not lead to lower gas prices for American consumers . . . [and] would facilitate transportation into our country of a particularly dirty source of fuel.”

He continued to add that “the critical factor in my determination was this: moving forward with this project would significantly undermine our ability to continue leading the world in combating climate change.”

In a press conference Friday, President Obama echoed this statement, adding that "the pipeline would not make a meaningful long-term contribution to our economy."

Environmental groups had called for President Obama to decline TransCanada’s permit request, as had many members of his own party. The pipeline's cancellation could potentially give the United States an edge in negotiations during the upcoming COP21 climate talks in Paris.

TransCanada had attempted to delay the State Department's finding by requesting its postponement until after a review by authorities in Nebraska. The procedural request would have pushed any decision back until after the 2016 elections, potentially increasing the odds of green-lighting the project by handing the choice to a future administration.

Keystone XL would have linked existing pipeline networks in Canada and the United States to bring crude from Alberta and also some from North Dakota to refineries in Illinois and, eventually, the Gulf of Mexico coast.

TransCanada and other oil companies said the pipeline would have strengthened North American energy security, created thousands of construction jobs and helped to relieve a glut of oil in the country's heartland.

The newly elected government of Canada sounded a note of reserved disagreement following the announcement. “We are disappointed by the decision but respect the right of the United States to make the decision,” Prime Minister Justin Trudeau said in a statement following Obama’s address.

American Petroleum Institute President and CEO Jack Gerard said the president’s rejection of the Keystone XL pipeline is a clear example of politics coming before the interests of U.S. workers and consumers.

“It’s ironic that the administration would strike a deal to allow Iranian crude onto the global market while refusing to give our closest ally, Canada, access to U.S. refineries,” said Gerard.

“This decision will cost thousands of jobs and is an assault to American workers. . . . Seven years of review have determined the project is safe and environmentally sound, yet the administration has turned its back on Canada with this decision, and on U.S. energy security as well.”

The National Ocean Industries Association (NOIA) also issued a statement condemning the decision, saying that as it comes “just weeks after the Administration cancelled two previously scheduled Arctic lease sales and denied Arctic lease extensions, [the] decision is both ill-timed and illogical."

Since 2008 the United States has experienced a drilling boom boosting oil production 80 percent and contributing to a slump in domestic oil prices from above $100 a barrel to about $44. Combined with the possibility that much Keystone XL oil would have been exported as refined products, plus the relatively costly extraction methods used for the oil to be transported, this has led some analysts to conclude that the project would not significantly affect American energy security or pricing.