Obama Nixes Job-Creating Pipeline 11 Months After Launching Plan With Canada to Boost Growth on Both Sides of Border

January 18, 2012 - 6:08 PM
Obama and Harper

President Obama and Canadian Prime Minister Stephen Harper meet at the White House last month. (AP Photo)

(Update: Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, said he will call Secretary of State Hillary Clinton to testify as early as next Wednesday about the denial of a permit for the Keystone XL pipeline.)

(CNSNews.com) – After three years of environmental review and a 60-day congressional deadline for a decision, the Obama administration on Wednesday nixed the Keystone XL pipeline project that would bring tar sand oil from Canada to the U.S. Gulf Coast.

The decision drew strong reaction from business and energy groups. Environmental groups oppose the pipeline, fearing the possibility of an oil spill.

In a statement, the State Department said it had recommended to President Obama that the permit be denied and that, “at this time,” the pipeline project “be determined not to serve the national interest.”

“The President concurred with the Department’s recommendation, which was predicated on the fact that the Department does not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest,” it added.

The payroll tax legislation passed by the U.S. Congress last month imposed a 60-day deadline for the president to determine whether the pipeline project was in the national interest. The State Department is centrally involved in the process because the project crosses an international boundary.

The decision came despite a joint announcement last year by Obama and Canadian Prime Minister Stephen Harper of a plan aimed at increasing security along the U.S.-Canada border, in part to ensure continued economic cooperation and prosperity.

A Department of Homeland Security fact sheet on the plan, issued last month, explained the national security and economic benefits of the agreement.

“As each other’s largest trading partners, we also recognize the importance of expedited and secure cross-border travel and trade to creating jobs and supporting economic competitiveness,” it states.

In its announcement of the plan, the White House highlighted among its principles “job creation and economic growth.

“We intend to work together in cooperation and partnership to develop, implement, manage, and monitor security initiatives, standards, and practices to fulfill our vision,” the joint declaration states.

“We recognize that our efforts should accelerate job creation and economic growth through trade facilitation at our borders and contribute directly to the economic security and well-being of both the United States and Canada.”

Elsewhere the declaration states, “We intend to pursue creative and effective solutions to manage the flow of traffic between the United States and Canada.  We will focus investment in modern infrastructure and technology at our busiest land ports of entry, which are essential to our economic well-being.”

American and Canadian oil and gas experts estimate that the 1,700-mile Keystone XL project, which would route the pipeline to several hubs on the U.S. mainland on its way to the Texas coast, could create more than 20,000 “shovel-ready” American jobs, just on the construction portion of the project. As many as 250,000 jobs could be created in ongoing maintenance and operation of the pipeline, according to analysts.

Although the unemployment rate dropped to 8.5 percent last month, 13.1 million Americans remain unemployed, according to the Bureau of Labor Statistics, and 5.6 million Americans have been unemployed for 27 weeks or longer.

Among the jobs lost since Obama took office, 1.1 million were in the private sector, of which one million were construction jobs and another 769,000 were manufacturing jobs.

American Petroleum Institute president Jack Gerard Wednesday slammed the administration’s decision.

“This is not leadership,” he said in a teleconference. “It’s a genuflection to extreme elements who somehow believe America will be stronger turning its back on secure supplies of oil the president’s own energy department says will be needed for decades to come.”

“The president may dismiss these energy realities and may even believe keeping his job is worth the cost of the thousands of jobs that won’t be created,” Gerard said. “But we don’t think most Americans will agree. They know America will need more oil. They see the benefits of importing more from Canada while also producing more at home. And they believe this energy can be developed and consumed responsibly.”

“This political decision offers hard evidence that creating jobs is not a high priority for this administration,” U.S. Chamber of Commerce president and CEO Thomas Donohue said in a statement.

“The president’s decision sends a strong message to the business community and to investors: keep your money on the sidelines, America is not open for business. By placing politics over policy, the Obama administration is sacrificing tens of thousands of good-paying American jobs in the short term, and many more than that in the long term.”