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Senators Propose Tying Strategic Oil Reserve, Keystone XL

Senate Republicans introduced legislation that would bar the Obama administration from using the U.S. Strategic Petroleum Reserve unless TransCanada Corp.’s Keystone XL pipeline is approved.

The bill, preventing President Barack Obama from releasing oil from the reserve when oil supplies are disrupted, is aimed at advancing Calgary-based TransCanada’s plan to build the $7 billion project to carry oil from filed in Alberta, Canada, to U.S. Gulf Coast refineries.

The State Department, which must approve the project because it crosses an international border, said in November it would delay a decision until 2013 to evaluate a route avoiding a sensitive aquifer in Nebraska. Republicans offered bills to advance the pipeline, saying construction will add jobs and diversify fuel sources. Obama last month denied a permit for the project after Congress set a Feb. 21 deadline.

“The Keystone XL pipeline is yet another example of the president putting a political agenda in front of common-sense energy policy,” Senator David Vitter of Louisiana, a sponsor of the legislation, said today in a statement. “It’s as if this administration had never heard of the economics of supply and demand, unless it becomes politically expedient to release from our strategic reserves to influence gas prices when there is a looming election.”

Asked whether the U.S. might release oil from the reserve to limit a recent jump in oil prices, White House press secretary Jay Carney said yesterday the administration never takes “options off the table,” although he had nothing to announce.

The bill is S. 2100, sponsored by Vitter and Senators Richard Lugar of Indiana and John Hoeven of North Dakota.

The House of Representatives separately debated a bill today that would strip Obama’s power to approve Keystone XL and require the Federal Energy Regulatory Commission to approve the project within 30 days, provided it’s deemed safe. Vote on that bill is scheduled for tomorrow.

The House bill is H.R. 3408.

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