The volatile politics of high gas prices yesterday added new twists to the drama surrounding a multibillion-dollar U.S.-Canada oil pipeline championed by the GOP but still under Obama administration review.
A House Energy and Commerce Committee subpanel hearing on the Keystone XL pipeline, a $7 billion project that would ship Canadian oil-sands crude to the United States, quickly became a stage for partisan wrangling as Democrats prodded the project's proponents to explain how it could drive up oil prices in the Midwest, as its sponsors state -- but not raise gasoline prices.
That gas prices are set by a global market and influenced by a panoply of factors, including crude costs, is accepted by many in both parties. But Energy and Commerce's top Democrat, Rep. Henry Waxman of California, and subpanel ranking member Bobby Rush (D-Ill.) did not hesitate to remind Republicans that Keystone XL's sponsor envisions the pipeline shipping product beyond the Midwest to the Gulf Coast, ending what it deems an artificial "discount" that presently keeps Canadian oil prices low for the Midwest.
Approving the 1,700-plus-mile pipeline would amount to "sacrificing our air quality for higher gas prices," Waxman said yesterday. "And you don't have to take my word for it. That is what [Keystone XL sponsor] TransCanada [Corp.] told the Canadian government."
After citing estimates of a windfall for Canadian oil producers from increased U.S. imports of oil-sands crude, Rush quipped: "As fond as I am of our friends to the north, I would much rather keep that $2 [billion] to $3.9 billion in the pockets of our constituents in the Midwest than giving it to our friends in Canada."
Panel Republicans parried the potshots of Waxman and Rush with a hefty number of arguments in favor of the pipeline, from its job-creation potential to the inevitability of China and other nations benefiting from western Canada's ample oil-sands reserves if the United States does not.
"These oil sands are going to be produced -- as I have noted, that will happen without U.S. participation -- in a province that has a greenhouse gas reduction policy," Energy and Commerce Chairman Fred Upton (R-Mich.) said in a statement. "Simply put ... alleged concerns about greenhouse gas emissions associated with oil sands production and consumption are a red herring."
TransCanada's president for energy and oil pipelines, Alex Pourbaix, fired back at critics of the project for "failing to make a distinction between the price of crude and price of gasoline" in suggesting that Keystone XL could result in higher pump prices for Midwesterners.
Yet after Pourbaix avowed that increased supply of Canadian crude via the pipeline would ultimately put "downward pressure on refined product prices throughout U.S. markets," Rush pressed him to state plainly that Keystone XL would not result in higher gas costs in the Midwest.
The TransCanada executive replied that "I wish I could," adding that the price of gas depends "on future expectation of supply and demand" as well as other more complicated factors.
Bill becoming official
The hearing was called to examine a discussion draft of legislation set for formal introduction this week by Energy and Commerce member Lee Terry (R-Neb.). The bill would direct the Energy secretary to lead interagency discussions on the pipeline with a goal of making a final decision on it by Nov. 1 or within 30 days after the completion of a final environmental impact statement.
"We think all of the appropriate information has already been provided to the appropriate parties, and it's time that we had a decision," Terry said yesterday, adding that a ruling on Keystone XL could be issued via executive order.
Some Democrats do not share Waxman and Rush's negative take on the six-state pipeline, which is poised to nearly double U.S. imports of oil-sands crude if slated operations begin in 2013. Rep. Gene Green (D-Texas) hailed the project during yesterday's hearing, and Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) said yesterday that "I don't have a strong view on it."
"I think the State Department must be considering it, and I'm waiting to see what they decide," Bingaman added.
In fact, State currently expects to make a final decision on the pipeline's permit in the last quarter of this year, a time frame that could yet slip and is partly behind Republicans' push for legislation to speed the process.
Waxman questioned the need for legislation to achieve that expedited decision, even pressing Pourbaix to state that his company "had no involvement" in crafting the Energy and Commerce bill.
But Rep. Greg Walden (R-Ore.) took the opposite view, likening the value of lawmakers' endorsement of Keystone XL to the act of Congress that helped pave the way for the Trans-Alaska Pipeline.
One of the project's strongest backers took something of a third view on the new bill. Consumer Energy Alliance (CEA) Vice President Michael Whatley, whose group represents sectors from oil to chemicals to fuel users such as grocers, said via email that "we appreciate the message" the committee sought to send through its hearing.
"However, we really hope that the administration will move quickly to grant the presidential permit and render the legislation moot," added Whatley, a DOE veteran and former GOP congressional chief of staff who will take to radio airwaves in Nebraska today to tout the pipeline.
In addition to the heated debate over Keystone XL's impact on gas prices, its friends and foes faced off over environmentalists' contentions that oil-sands crude represents a greater safety risk than conventional fuel (Greenwire, Feb. 16).
Pourbaix dismissed those claims, telling lawmakers that "it is completely false to say this oil is heated, or that it is more toxic, corrosive or shipped at a higher pressure than any crude oil shipped or consumed in the United States." He also touted the advanced leak detection system that TransCanada plans to install along the pipeline, including 16,000 data points that can provide fresh monitoring every 10 seconds.
National Wildlife Foundation Senior Vice President Jeremy Symons did not back down from his skepticism on that front, telling lawmakers that current pipeline safety rules are "outdated and not prepared" for the new challenges that Keystone XL would pose.
Yet Upton yesterday affirmed his commitment to working on pipeline safety reform in Energy and Commerce, a move that could deflate green groups' attempts to beat back the pipeline by warning of spill risks.
"Projects like the Keystone XL pipeline should be completed with the benefit of the technological advancements that make them safer," Upton said yesterday.
Meanwhile, the House may not be the only forum for movement on Keystone XL. Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) said yesterday that while she has not "studied it in detail," the pipeline project is "very controversial" and the upper chamber would benefit from a hearing on it.
Reporter John McArdle contributed.