Keystone XL pipeline: a jobs coup for Republicans in tax deal?

A congressional deal to preserve a payroll tax cut for working Americans, approved by the US Senate Saturday, also contains a provision designed to force President Obama‘s hand on the controversial Keystone XL oil pipeline.

Republicans who pushed for the provision say the pipeline would be a slam-dunk win for a US economy that desperately needs jobs.

It now appears that when a bill lands on Mr. Obama’s desk, with tax cuts that the president endorses as his own way to boost the economy, it will also include a call for him to decide within 60 days whether the Keystone pipeline for Canadian oil should be built.

Senate Republicans insisted the pipeline provision be included in the tax bill. The measure still needs a vote of approval in the Republican-controlled House of Representatives.

The pipeline, which would create jobs but angers environmentalists, has become a political flashpoint in recent months.

In November, Obama announced his intent to delay a decision until after the 2012 election, thus averting a difficult political dilemma.

Approving the plans of the Canadian firm TransCanada would have run afoul of environmentalists worried about threats to the massive Ogallala aquifer, which the pipeline would run past. Even Republicans in Nebraska have voiced opposition to the planned path of the project for that reason.

But denying support would have opened Obama to new jabs from critics who say he’s not doing enough about the nation’s most urgent priority, job creation. Even his delay, however, prompted that reaction.

Where Obama framed his choice as taking time “to ensure that all questions are properly addressed and all the potential impacts are properly understood,” Republican presidential candidate Newt Gingrich called any reluctance about the project “utterly irrational.”

Rep. Michele Bachmann of Minnesota, another candidate at the Republican debate in Iowa on Thursday, accused the president of making a decision for reasons of politics rather than national interest.

“This pipeline is one that would have brought at least 20,000 jobs, at least $6.5 billion worth of economic activity,” she said. “His entire calculus was based upon his reelection effort. Because quite frankly, the radical environmentalists said to President Obama, you pass Keystone, we’re not going to do your volunteer door-to-door work.”

Former House Speaker Gingrich said a delay could mean that jobs and economic activity permanently flow elsewhere.

“The Canadian prime minister has already said to the American president, if you don’t want to build this pipeline to bring — create 20,000 American jobs and bring oil through the United States to the largest refinery complex in the world, Houston, I want to put it straight west in Canada to Vancouver and ship the oil direct to China,” Gingrich said at the debate. “You’ll lose the jobs, you’ll lose the throughput, you’ll lose 30 or 40 years of work in Houston.”

The Keystone XL project would be a roughly 1,900-mile extension of an existing Canadian-operated pipeline that ends in Illinois. It could bring Alberta oil to refineries in the Southern US.

Positions taken in the Senate this week echoed the long-running arguments on both sides.

Sen. Patrick Leahy (D) of Vermont said Republicans are using “scare tactics” about jobs.

“Unable to sell the pipeline as necessary to meet the country’s energy needs, which it is not, or to refute charges that tar sands strip mining and the refining and burning of high carbon oil cause egregious harm to the environment and health, which it does,” TransCanada is making dire warnings about the jobs at stake, Mr. Leahy said in a Senate floor statement. Republicans “have echoed these scare tactics.”

Sen. Dan Coats (R) of Indiana, by contrast, said “If job creation is the president’s top priority, then [Obama] should allow construction of the Keystone pipeline immediately.” He said thousands of jobs would be matched by reduced reliance on Middle East oil.

A State Department analysis of the Keystone plan pegged the job gains as far fewer than 20,000. The report estimated that “The construction work force would consist of approximately 5,000 to 6,000 workers, including Keystone employees, contractor employees, and construction and environmental inspection staff.”

One reason for the different job estimates is the temporary nature of the jobs. The 20,000 figure, promoted by backers of the project, is based on “person-year” estimates. In that framework, employing 6,000 people for three years would equal 18,000 jobs, for example.

Critics of the project also argue that much of the oil processed in refineries near the Gulf of Mexico would be destined for export.

Beyond the specifics of the pipeline project, Keystone has become a symbol of a larger battle over energy policy under Obama. The president argues that he is taking a balanced approach, open to new fossil-fuel development with appropriate safeguarding of the environment.

The Republican candidates for president have blasted him for regulatory overreach that is preventing a potential boom in jobs and domestic energy production.

Interest groups, meanwhile, are lobbying hard to influence Obama’s ultimate decision on Keystone.

“The Republican stampede to build the Keystone XL tar sands pipeline is going to backfire,” predicted Susan Casey-Lefkowitz of the Natural Resources Defense Council in a statement Saturday. “In forcing President Obama to reach a hasty decision — which he has said he would not do — the president will have no choice but to reject the pipeline as not in the national interest.”