Obama faces political heat if Keystone rejected: API

WASHINGTON Wed Jan 4, 2012 4:26pm EST

Demonstrators call for the cancellation of the Keystone XL pipeline during a rally in front of the White House in Washington November 6, 2011. REUTERS/Joshua Roberts

Demonstrators call for the cancellation of the Keystone XL pipeline during a rally in front of the White House in Washington November 6, 2011.

Credit: Reuters/Joshua Roberts

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WASHINGTON (Reuters) - The head of the top oil and gas lobbying group said on Wednesday that the Obama administration will face serious political consequences if it rejects a Canada-to-Texas oil sands pipeline that has been opposed by environmental groups.

Jack Gerard, president of the American Petroleum Institute, said TransCanada's Keystone XL pipeline would definitely play a role in this year's national elections.

"This issue is very simple and straightforward, it's about jobs and national security," Gerard told reporters after giving a speech on the state of U.S. energy.

"Anything less than approval or acquiescence in allowing the pipeline to go forward would be inconsistent with the vast majority of Americans," Gerard said.

The oil and gas industry says the country needs the 1,700-mile Keystone XL pipeline, which would transport 700,000 barrels per day or more of Canadian oil sands crude to U.S. Gulf coast refineries.

But the decision on the pipeline is a difficult one for President Barack Obama. Approval would upset environmentalists, an important part of his voter base, while axing the project would upset some labor unions, another part of his base.

With environmental groups concerned about carbon emissions from oil sands production, the administration had delayed a decision on a presidential permit for the project until 2013.

The administration says it needs more time to consider alternative routes for the pipeline, which originally was planned to traverse sensitive habitats and a crucial water source in Nebraska.

Lawmakers that support the project were able to attach a measure to a tax-cut law passed at the end of last year that requires the president to decide whether the project is in the national interest by late February.

API is launching an advertising campaign aimed at getting Americans to consider candidates' stances on energy issues, including the Keystone project, before they cast their ballots in November.

While Gerard stressed that the advertising campaign is non-partisan, API has been a vocal critic of the Obama administration's energy policies.

In addition to the Keystone delays, the group has blasted the administration for not opening up more areas to offshore drilling and for its push to eliminate certain tax breaks for the oil and gas industry.

Republicans in Congress have also forcefully objected to the administration's delay of the Keystone pipeline, accusing the White House of placing politics over job creation.

Republicans on the House Energy and Commerce committee have placed a clock on their website counting the days until the administration must weigh in on the project.

"After waiting more than three years for this pipeline while the country faces prolonged unemployment, the American people are fed up with the president's inaction on a project that can quickly create jobs," Fred Upton, chairman of the Energy and Commerce committee, said in a statement.

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