March 20 (Bloomberg) -- President Barack Obama’s advisers are lining up against the proposed Keystone XL oil pipeline. Top Democratic donors oppose the project. And Obama himself dismisses claims that it will create many jobs.
Yet there’s still one big obstacle to the president saying no to Keystone: election-year politics.
If Obama rejects the pipeline, it might sink Democratic candidates in states with big energy industries, such as Louisiana and Alaska. That could cost Democrats control of the Senate -- a risk that’s likely to weigh heavily on any decision the president makes, to approve the pipeline, reject it or wait until after November to announce a decision.
“If Obama approves the pipeline, he alienates environmentalists and the left; if he rejects it, he really hurts a number of endangered Democratic senators,” said Charlie Cook, publisher of the nonpartisan Cook Political Report. “The path of least resistance would be to continue to punt the decision until after the midterm election.”
Senior Obama advisers Valerie Jarrett and Dan Pfeiffer have indicated privately they oppose the pipeline, according to several people who asked for anonymity to discuss the matter. John Podesta, Obama’s counselor on climate and energy policy, says he won’t be involved in the decision, although he was publicly against the project before joining the administration in January.
“The president knows my views on Keystone,” Podesta told reporters at a briefing yesterday. “But I said I wouldn’t work on it, and I’m not working on it.”
The White House declined to discuss individuals’ views.
Obama hasn’t said publicly where he stands. Yet he has come to believe the fight has transcended the pipeline’s actual importance, according to people familiar with his thinking. He considers the rhetoric coming from both sides -- the environmental activists who oppose the project and the labor and business groups in favor of it -- overstated, they say.
That increases the weight of the political calculation.
The president told a meeting of governors on Feb. 24 that he’d decide on Keystone within “a couple” of months. That surprised some Democratic consultants, pollsters and political strategists, who said they didn’t expect a decision so soon. When asked about it later, administration officials said the timing was still fluid.
During the last several weeks, the president has grown more aware of the possibility of his party’s losing control of the Senate, people close to the White House said.
A decision against the pipeline might mean defeat for Senate Democrats seeking re-election in Arkansas, Alaska, North Carolina and especially Louisiana, where Mary Landrieu, chairman of the energy committee, is fighting for political survival.
“It would cement the image of this president having an anti-business agenda and hurt these senators with swing voters and rally business against them,” said Cook.
A Pew Research Center poll released yesterday shows Democrats nationwide are split, with 49 percent in support of building the pipeline and 38 percent against. State-by-state polling shows the risk to Democratic senators.
Polling last month showed Senators Landrieu, North Carolina’s Kay Hagan and Arkansas’s Mark Pryor locked in tight races against Republican opponents, with Keystone swaying voter decision-making. The lawmakers have all urged Obama to approve the pipeline.
Forty-five percent of likely voters in Louisiana said they’d be less inclined to support Landrieu if Obama denied the permit to construct the pipeline, according to surveys conducted by Democratic pollster Hickman Analytics Inc. and sponsored by the Consumer Energy Alliance, a group that’s pushing for the pipeline to be built. Twenty-three percent said they’d be more likely, and 78 percent said energy issues, including Keystone, would help determine how they’d vote.
In Arkansas, 46 percent of likely voters said they’d be less inclined to vote for Pryor if Obama rejected Keystone; in North Carolina, 49 percent said they’d be less likely to vote for Hagan. Republicans need to gain six seats to win control of the Senate.
TransCanada Corp. of Calgary applied more than five years ago for a permit to build the $5.4 billion pipeline through the U.S. heartland, connecting oil sands in Alberta with refineries along the coast of Texas and Louisiana. The 875-mile pipeline would run from the U.S.-Canada border to Steele City, Nebraska. From there it would connect to an existing pipeline network.
The State Department is overseeing a review to determine whether the project is in the U.S. national interest, weighing its impact on energy security, local economies and foreign relations. That process, which gives agencies up to 90 days to weigh in, began last month after the department published its Jan. 31 environmental review that found limited impact on climate-changing carbon emissions.
The 90-day period ends in mid-May to early June, according to a State Department official, though the Department isn’t under any deadline to make its recommendation to Obama.
One element that may complicate that timing is a Nebraska judge’s Feb. 19 decision to invalidate the pipeline’s route through the state. TransCanada now needs the approval of the state Public Service Commission, a process that can take seven months.
The State Department official, who requested anonymity to discuss the case, said the two processes aren’t linked. The department is monitoring the litigation in Nebraska while moving ahead with its review.
The State Department’s environmental report released Jan. 31 found limited impact on climate-changing carbon emissions, saying the oil sands in Alberta will be developed anyway. Building the pipeline would directly and indirectly support about 42,100 jobs for a year or two. Afterward, about 35 permanent jobs would remain, the report said.
During an interview with the New York Times last July, Obama dismissed the employment benefits. “Republicans have said this would be a big jobs generator,” he said. “There is no evidence that that’s true.”
The president has said he will let the formal process play out.
Matt Lehrich, a White House spokesman, said the process for evaluating the project is at the State Department.
“President Obama clearly stated that the project will be in the national interest only if it does not significantly exacerbate the problem of carbon pollution,” Lehrich said. No decision will be made until the environmental impact statement is reviewed, and the public and other agency heads weigh in, he said.
If Obama approves the pipeline before November, he potentially helps his party retain control of the Senate. At the same time, he risks turning off supporters such as billionaire Tom Steyer, the Democrats’ primary financing weapon against Republican groups, including the billionaire Koch Brothers.
“If we’re collectively going to put $100 million into this cycle, how much will go into key races depends on Keystone,” said Chris Lehane, a Democratic strategist who’s advising Steyer.
Should he approve the pipeline, Obama also risks undercutting his climate-change agenda domestically and internationally by sending a signal to the world that the U.S. is helping Canada export dirty energy.
It potentially threatens his legacy on the issue. As the White House looks toward the next round of climate talks in 2015, Obama’s decision on Keystone could also affect his ability to rally other nations around committing to further emissions cuts.
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