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Lesley Clark and Renee Schoof, McClatchy Newspapers, Published February 27 2012

Obama backs decision to build part of pipeline

WASHINGTON – With President Barack Obama under fire from Republicans over the rising cost of gasoline, the White House moved quickly Monday to trumpet a Canadian company’s decision to build a section of the Keystone XL pipeline from Cushing, Okla., to Houston after Obama blocked a longer path last month.

Press Secretary Jay Carney hailed TransCanada’s announcement and used it to counter Republican criticism that the administration has stifled oil and gas production.

He said that the Oklahoma-to-Texas section of the pipeline would “help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight-year high.”

The company’s decision, Carney said, “highlights a little-known fact – certainly, you wouldn’t hear it from some of our critics – that we approve, pipelines are approved and built in this country all the time.”

Obama’s decision last month to reject the full 1,661-mile Keystone XL pipeline from Canada’s tar sands has become a focal point of Republican efforts to portray him as responsible for the recent spike in gasoline prices, and they fault him for blocking a project they say would create jobs and reduce America’s dependence on oil imports from unstable foreign sources.

House Speaker John Boehner, R-Ohio, poked fun at the White House salute of TransCanada’s decision.

“The president is so far on the wrong side of the American people that he’s now praising the company’s decision to start going around him,” Boehner said in a statement to ABC News.

A recent national survey by the Pew Research Center for the People and the Press suggests that Obama’s Keystone decision could become a political liability. Though 37 percent of those surveyed said they had not heard of the pipeline, 66 percent of those who had heard of it said the government should approve it, while 23 percent opposed it.

Energy experts say that the Keystone XL pipeline wouldn’t do much to lower gasoline prices.

The recent price increases stem largely from speculators bidding up prices at a time of growing fear of future oil-supply disruptions in the event of a war with Iran over its nuclear program.

TransCanada will be the second pipeline moving oil from Cushing to the Gulf Coast.

The other is already built and owned by Enbridge Inc. The two pipelines will reduce the glut of oil in the Midwest “and in doing so will raise the price of oil in Cushing and the Midwest and will lower the price very slightly in the rest of the world,” said Severin Borenstein, a professor at the Haas School of Business at the University of California, Berkeley.

Prices in the Midwest could go up 10 to 30 cents a gallon, ending the region’s cheaper gasoline compared to other areas, he said. If the full pipeline is constructed, the effect on prices would “never really be noticed” because it would be so small, a few cents or less per gallon, that it would be “lost in the noise of other changes.”

TransCanada also told the State Department on Monday that it plans to submit a new application for the rejected segment of the pipeline, and Carney said the president’s rejection last month “in no way prejudged future applications.”

The White House contends that House Republicans forced Obama to reject the earlier cross-border application by not giving it enough time to review the project.

Republicans accuse Obama of putting off the decision until after the 2012 election to avoid upsetting environmentalists.

Environmental groups made the pipeline a test of Obama’s will to move the country off fossil fuels and to slow climate change. They also say the pipeline would put the Ogalalla Aquifer under the Great Plains, streams, farms and wildlife habitat at more of a risk of oil spills.

Kim Huynh of Friends of the Earth said in a statement Monday that the pipeline would be an “environmental disaster” and called the administration’s welcome of TransCanada’s plan “an alarming about-face.”

“The administration must stop trying to have it both ways,” Huynh said. “President Obama cannot expect to protect the climate and to put the country on a path toward 21st century clean energy while simultaneously shilling for one of the dirtiest industries on Earth.”