TRIPLETT: Obama’s argle-bargle on Keystone

The president sends mixed signals about the pipeline’s future

It looks like President Obama has voted “present” on the Keystone XL pipeline project.

In delivering his Georgetown climate speech on Tuesday, Keystone seemed to be an afterthought. It was not in the 21-page climate “plan” the White House distributed or the shorter fact sheet. Reference to it appears in only one paragraph of his prepared text.

What Mr. Obama said on Keystone was this:

“Now, I know there’s been, for example, a lot of controversy surrounding the proposal to build a pipeline, the Keystone pipeline, that would carry oil from Canadian tar sands down to refineries in the Gulf. And the State Department is going through the final stages of evaluating the proposal. That’s how it’s always been done. But I do want to be clear: Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.”

Having this cryptic comment thrown out almost in the exact middle of his speech and leaving it off all the White House handouts, at least as of Tuesday afternoon, had energy and environmental pundits scratching their heads for the next 12 hours. Keystone is a multibillion-dollar project with thousands of jobs on the line. It’s the No. 1 issue in U.S.-Canada relations, and it is the “keystone,” pardon the expression, for environmental activists’ anti-fossil-fuel campaign.

There is something in the president’s statement for everyone. The Canadians were unhappy to notice that he used the term “tar sands,” which is commonly used by Keystone opponents rather than “oil sands,” which is the technically correct term. The Sierra Club and similar groups issued victory statements. Obama major bundler and billionaire Tom Steyer called the president’s one paragraph the “death knell” for Keystone. On the other hand, Forbes magazine headlined “Obama declares Keystone XL will be approved.”

The entire process leading up to the speech was very peculiar. Last week, 150 Obama re-election activists signed a petition to the president opposing Keystone. Likewise, Mr. Steyer was all over the press, including Platts Oil Week. Former Vice President Al Gore issued one of his usual end-of-the-world bombasts on Keystone. There is probably someone in North America who thinks that all this was spontaneous and not orchestrated by the White House, but that person has not made an appearance as yet.

Then on Sunday, The Washington Post reported that Keystone would not be in the Tuesday speech at all, and Politico came back with a long piece suggesting that the White House was going to sell out the environmental activists on Keystone.

Reading the speech, and the Beltway tea leaves, what do we know?

The State Department analysis is ongoing and perhaps won’t be completed until the end of the year. State professionals have always favored Keystone; Secretary of State John F. Kerry is probably a “no” vote.

Mr. Obama raised new standards for approval: Keystone cannot “significantly exacerbate the problem of carbon pollution,” and the “net effects of the pipeline line’s impact” will be “absolutely critical” to approval.

In essence, Mr. Obama is asking Keystone proponents to prove a negative, always the most difficult to argue.

Who benefits if Keystone is blocked? Certainly the Democratic Party money machine will receive a transfusion from big-money environmental activists.

Since the oil will continue to come in on railroad tank cars, some of which are owned by Berkshire Hathaway and partly on a railroad owned by Berkshire Hathaway, major Democratic Party supporter Warren Buffett will do quite well. Assuming a net figure of $1 per barrel from the tank cars and railroad combined and Berkshire Hathaway only moving about 100,000 barrels per day (compared to 800,000 barrels per day if Keystone were built), that works out to $100,000 per day, or $35.6 million per year, net profits for Berkshire Hathaway — all very low assumptions. Throwing, say, a million dollars a year at the Democratic National Committee to make $35 million would be an excellent rate of return.

As a side note, according to published accounts, Mr. Steyer seems to have financial skin in the Keystone game as well. An American pipeline company in which he has a substantial interest is a competitor to Keystone to move Canadian oil. If Keystone is not built, his stock in the U.S. company will be that much more valuable.

In short, the White House is trying to put some public distance between itself and the issue in order to gain favor with its major donors while not offending the Canadians and the U.S. business community (except for Berkshire Hathaway and Mr. Steyer). The president is voting “present” but signaling “no.”

William C. Triplett, II is the former chief Republican counsel to the Senate Foreign Relations Committee.

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