Reading the Tea Leaves on President Obama's Keystone XL Pipeline Decision

President Obama issued a solid "no" on the Keystone XL Pipeline application in a brief statement yesterday, an announcement that regular followers of TriplePundit probably anticipated. We've previously noted that the Keystone project is a textbook case of stakeholder fail, that alternative job-creating initiatives in the energy sector are already providing far more benefits to local communities than a pipeline could, and that the domestic energy market is already developing locally sourced crude oil alternatives such as algae biofuel and other sustainable biomass products. What's not so easy to predict is the future of the Keystone XL Pipeline. After all, President Obama didn't bury the project forever. He only put the kibosh on the application to construct the project, under the terms of a deadline imposed by Congress. If and when a new application is developed and submitted, all bets are off - or are they? A Matter of Process for the Keystone XL Pipeline In his statement, President Obama was careful to emphasize that his thumbs-down could not be construed as a judgement on the pipeline's merits. He noted that the "rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline’s impact," and he emphasized that the deadline "prevented the State Department from gathering the information necessary to approve the project." As if that wasn't enough to underscore his point, he flat out stated that "this announcement is not a judgment on the merits of the pipeline." In short, the problem wasn't the project, it was the process. Process and Politics In the context of election year politics, this focus on process appears to lead the President, who is seeking re-election, into a classic trap. For many years the Republican Party has made antipathy to government regulation a hallmark of its platform, and that will naturally reach a fever pitch as November draws closer. Regardless of whether or not House Republicans intentionally sabotaged the pipeline approval process by imposing an unrealistic deadline, the fact remains that the decision was all about process, as President Obama himself admitted. In advance of the election, this makes it look like another worthy (or not, as the case may be) project has fallen victim to government red tape. Reading Between the Keystone Lines On the other hand, President Obama's statement contains some clear indications that as the debate over the pipeline spins out to November, he will force the battle lines away from process and into real meat-and-potatoes issues, namely, whether or not the project really is a worthy one. For starters, he hinted at the potential risk to communities, lands and water supplies along the pipeline's path, noting that a full assessment was needed to determine its impact on "the health and safety of the American people, as well as our environment." Later in the statement he re-emphasized his administration's responsibility to "protect the American people." Keystone and U.S. Energy Jobs The President also indicated his willingness to draw labor issues into the fray. He noted his administration's commitment to "American-made energy," implicitly referencing the fact that the Keystone XL Pipeline does not create all that many permanent energy sector jobs in the US. Its primary function is to transport oil from Canada's notorious Alberta tar sands down to Texas refineries for the export market. He underscored the point by drawing attention to a proposed pipeline that would carry crude from Oklahoma to the Gulf of Mexico, and he summed up his energy policy as one that "benefits American workers and businesses" - a subtle reminder that the primary financial beneficiary of the Keystone pipeline would not be a US company (the project is is owned by the Canadian firm, TransCanada). A Sustainable Energy Policy for the U.S. Finally, President Obama made it clear that he will focus the Keystone debate on the long term energy strategy of the US. He paints a picture in which fossil fuels are just one part of an overall energy landscape that is transitioning away from dependence on oil - not just foreign oil, but any oil -  and into a broader range of fuels, helped along by efficiency improvements. The US oil and gas industries still have a significant role to play, but only in the context of a policy that "benefits American workers and businesses without risking the health and safety of the American people and the environment." Given the Keystone pipeline's route through America's agricultural heartland, that doesn't sound very encouraging. If Keystone's advocates are looking forward to an election year fight, they may be getting a lot more than they bargained for. Image: Tea leaves (reading Keystone's future). License Some rights reserved by Cyron. Follow Tina Casey on Twitter: @TinaMCasey.