GOP uses Keystone XL as rallying cry in gas price debate

Republicans on Tuesday continued blaming President Barack Obama for rising gasoline prices, seeking to suggest the administration’s rejection of the Keystone XL oil pipeline would worsen the rising prices at the pump.

Gasoline prices have risen for three weeks straight, topping out at $3.73 for the national average, according to AAA gas gauge. In Houston, prices have risen 8 cents to $3.55 since last week, and analysts have warned those prices are likely to rise to the $4 mark by Memorial Day.

Republicans have used those rising prices as an opportunity to attack Obama’s energy policies that the GOP argues have impeded U.S. oil and gas development and caused gasoline prices to rise. Republicans also said the Keystone XL pipeline, which would bring thousands of barrels of oil sand crude to Gulf Coast refineries daily, could help reduce U.S. pump prices.

“How could the president say that won’t lower prices?” said Sen. Kay Bailey Hutchison, R-Texas.

Earlier this year Obama outlined an “all-of-the-above” strategy, involving more oil-and-gas production, clean energy and efficiency measures.

Arguing that simply drilling more and approving Keystone XL as Republicans have proposed wouldn’t provide gas-price relief, the White House insisted today his approach would provide the best long-term solution to helping pad the U.S. against spikes in oil prices — the major determinant of costs at the pump.

“That’s the kind of empty promise that politicians make, when we face hikes in the global price of oil, that is really dishonest,” White House spokesman Jay Carney told reporters.

Interior Secretary Ken Salazar has defended the administration’s energy policies, noting it has leased millions of acres for drilling and the number of offshore rigs has rebounded since the Deepwater Horizon oil spill.

The renewed GOP attacks come after Obama endorsed TransCanada’s decision Monday to move forward with the southern leg of Keystone XL, which doesn’t require U.S. approval, as the company prepares a new application for the northern, border-crossing portion.

Tom Kloza, the chief analyst for Oil Price Information Service, said Keystone XL’s southern segment could in theory lower gasoline prices in the Gulf Coast region. However, Kloza said it could also result in higher prices in the Rockies and the Midwest.

“It’s a question that is impossible to answer,” Kloza said about Keystone XL’s impact on gasoline prices. “Would 400,000 barrels-per-day more stranded North American crude available to Gulf Coast refiners mean that some demand for offshore crude would be displaced? That’s possible, but the world market is a 90-million barrels-per-day market.”

Hutchison said Obama did a “double backflip with a twist” by backing just the southern leg of the 1,700-mile Keystone XL after rejecting the full pipeline after three years of government studies found it wouldn’t pose a major environmental threat.

But in rejecting the permit last month, the administration said the decision was based not on the merits, but on GOP political maneuvering that forced an arbitrary judgment without enough time to study alternative routes — yet to even been identified — avoiding environmentally sensitive areas in Nebraska.

Sen. Richard Lugar, R-Ind., ranking member on the Senate Foreign Relations Committee, urged Secretary of State Hillary Clinton today to ask Obama to reverse the Keystone XL decision, saying: “The prospect that Iran could obstruct oil flowing from the Strait of Hormuz for even a relatively short period underscores the importance of having safe and secure fuel supplies.”

Clinton told the committee it’s not clear when the State Department could make a decision on TransCanada’s new application, though the department could use some “technical information” from reviewing the company’s previous Keystone XL proposal.

“I think it’s probably fair to say that until we get the application, until we actually have a chance to study it, we won’t be able to provide you information as to when a decision could be made,” Clinton said at a committee hearing.

Analysts say presidents have little influence on gasoline prices and have mostly blamed rising global crude-oil prices stemming from tensions with Iran and three Northeast refineries closing. Analysts warn those factors could push gasoline to the $4-a-gallon mark by Memorial Day, and they say no short-term policy fixes exist.

Obama last week said no “short-term silver bullets” exist for gasoline prices but suggested the money from the payroll tax cut’s extension through 2012 would help consumers cope for now.

Sen. John Hoeven, R-N.D., responded today that Obama’s policies, including Keystone XL’s rejection, have wiped out the tax break’s benefits.

“He more than takes away any benefit from that payroll tax cut by blocking our ability to develop oil and gas in this country and our ability to get oil from Canada,” Hoeven said.

Democrats came to Obama’s defense.

Sen. Jeff Bingaman, D-N.M., chairman of the Senate energy committee, sought to use historical figures on U.S. oil production and gasoline prices to suggest no link between the two.

“It’s clear to me there is no relationship,” Bingaman said at a hearing.

Hoeven argued more North American crude in the U.S. could help reduce a “risk premium” from Middle Eastern instability that adds to gasoline prices.

Environmental groups and Democrats who oppose Keystone XL point to government analyses in saying the pipeline wouldn’t alter future growth of U.S. crude imports from Canada, and they argue Gulf Coast refiners could export some of what they receive.

Pipeline supporters say Keystone could help replace declining imports to Gulf Coast refineries from Mexico and South America. They have also argued that the oil-sand crude should be refined in the U.S., where refineries must adhere to stricter environmental regulations, and that most of the Keystone XL oil will be used domestically.

Dan X. McGraw contributed to this story.

This story was last updated at 2:53 p.m.

14 Comments

  1. tboy in houston

    Source: CNN Feb 28, 2012
    “A decade ago, speculators controlled only about 30% of the oil futures market. Today, Wall Street speculators control nearly 80% of this market. Many of those people buying and selling oil in the commodity markets will never use a drop of this oil. They are not airlines or trucking companies who will use the fuel in the future. The only function of the speculators in this process is to make as much money as they can, as quickly as they can.
    I’ve seen the raw documents that prove the role of speculators. Commodity Futures Trading Commission records showed that in the summer of 2008, when gas prices spiked to more than $4 a gallon, speculators overwhelmingly controlled the crude oil futures market. The commission, which supposedly represents the interests of the American people, had kept the information hidden from the public for nearly three years. That alone is an outrage. The American people had a right to know exactly who caused gas prices to skyrocket in 2008 and who is causing them to spike today.
    Even those inside the oil industry have admitted that speculation is driving up the price of gasoline. The CEO of Exxon-Mobil, Rex Tillerson, told a Senate hearing last year that speculation was driving up the price of a barrel of oil by as much as 40%. The general counsel of Delta Airlines, Ben Hirst, and the experts at Goldman Sachs also said excessive speculation is causing oil prices to spike by up to 40%. Even Saudi Arabia, the largest exporter of oil in the world, told the Bush administration back in 2008, during the last major spike in oil prices, that speculation was responsible for about $40 of a barrel of oil.”

    #1
  2. Toocan

    Good point. Transporting Canadian oil to Texas for refining into Diesel for sale to China will help reduce America’s dependency on foreign oil. If you ignore that Canada is a foreign country, the oil is being refined into diesel, and sold to China it all makes sense.

    #2
  3. Enis

    3 years later and things are not looking good. Obama is to blame at this point.

    #3
  4. olddispatcher

    I at somewhat of a loss to why the Republicans are upset that a new line is being built from Cushing to the Gulf Coast. This is a business decision made by a private company; it is the free market at work. Why all the hub-bub? Apparently TransCanada made the decision and thinks they can make a profit on this segment of the line alone. I hope they are right as I love to see companies making money.

    And the whole north leg of the line? As soon as Republicans in Nebraska decide to OK the route across their state Obama can give the OK for the entire line to be built. As long as the Republicans are holding construction up it is hard to take any of their whining seriously. Their blaming Obama for the delay makes them sound either dumb or dishonest.

    On the practical side building the south leg first makes a lot of sense. There is currently too much oil going into Cushing and too little going out due to the lines in/out ratio. Before you build a line that delivers to Cushing, which would make the problem worse, build a line out of Cushing so the problems is solved before you start deliveries of oil from Canada.

    For some reason the Republicans think it should be the other way around. I think this is called ‘Putting the cart before the horse’.

    #4
  5. Anonymoose

    olddispatcher: Because it’s an environmental nightmare. Republicans and big business don’t give two craps about the environment. They care about money. Pure and simple.

    #5
  6. richard

    “Fundamentally, demand continues to drop. This means that this entire rally is being driven by speculation.”
    http://oilprice.com/Energy/Oil-Prices/Crude-Oil-Analysis-for-the-Week-of-February-27-2012.html

    Buncha socialist hippies.

    Senator Hutchison is either too stupid to realize that we can check this out for ourselves or she’s a liar. I’m going with the stupid thing. I’m familar with the Senator’s resume. Keystone XL does nothing about today’s gas price. If President Obama really was a kenyan-anti-colonial-socialist, he could decree that gas no longer be exported, the US is right now a net exporter of gasoline or he could demand that companies restart the refineries they have closed simply because they weren’t profitable enough.

    #6
  7. jlawrence

    So how will piping North American crude to the Gulf Coast so it can be refined and sold to China cause prices to fall here? I’m a bit lost. And the oil companies are closing three refineries on the East Coast…

    #7
  8. Paul

    Why do Democrats favor Middle East oil over American jobs?

    #8
  9. AmericanDefender

    Well it WAS Obama who SHOT DOWN the XL pipeline! So IS he for the AMERICAN PEOPLE as a WHOLE or his ENVIRONMENTAL BUDDIES? Lets ask the POOR PEOPLE who have to PAY THIS MUCH FOR GAS if HE REALLY CARES about them, or is he LYING to THEM like he did the Hispanics/Latinos in his 2008 Campaign? He SCREWED THEM ROYAL! He PROMISED them to HELP THEM and THEN did NOTHING, ON PURPOSE! Just like he SHUT DOWN our offshore DRILLING and THIS PIPELINE and SAYS he CARES about the POOR PEOPLE!

    #9
  10. AmericanDefender

    Bottom Line, Obama is protecting his OWN investments, look it up. This guy is ALL about HIMSELF, like ANY OTHER Chicago THUG! He SHOULD be impeached and TRIED!

    #10
  11. ntangle

    Even those inside the oil industry have admitted that speculation is driving up the price of gasoline.
    ——————–
    Of course those that benefit from higher crude prices would like to blame others. But that doesn’t stop them from accepting higher prices in exchange for their production. And it doesn’t impact their fixed costs to the same degree. Or their variable costs, except for the 20% or whatever they have to pay the royalty owners.

    #11
  12. almostdallas

    @Anonymoose – You spout pure fear-mongering rhetoric. What you say is simply not true.

    #12
  13. bob

    WHILE I AGREE THE COMMIE OBAMIE ENERGY POLICY IS WRONG I WOULD LIKE TO KNOW WHAT THE REPUBLICANS DID WHEN THEY HAD CONTROL ON ENERGY AND THE DEPARTMENT OF ENERGY? THE ANSWER IS AS I SEE IT NOTHING!!!!!! HOW CAN YOU BE TRUSTED?

    OBAMA IS ONE OF THE MAIN PRESIDENTS AGAINST THE ORIGINAL CHARTER FIRST BROUGHT ABOUT BY THE DEPARTMENT OF ENERGY WHICH WAS CREATED IN THE MID 1970′S.

    I find it interesting that everyone complaining about gas prices. yet i do not hear any complaints against the department of energy. They also created the EPA. THIS DEPARTMENT WAS CREATED IN THE MID 1970?S WITH THE CHARTER OF REDUCING IMPORTS ON GASOLINE. AFTER ALL OF THE CONGRESS PEOPLE, SENATORS AND PRESIDENTS THAT HAD OVERSIGHT THAT FOLLOWED THE CREATION OF THIS DEPARTMENT, DID THOSE POLITICIANS DO THE JOB OF OVERSIGHT? IF NOT WHY?

    I HEAR NOTHING ON THIS AND NEVER DO FROM ANY MEDIA SOURCE. THIS COUNTRIES TAXPAYERS HAVE PAID THEIR TAXES AND THIS DEPARTMENT SPENT CLOSE TO A TRILLION DOLLARS FOR THEIR CHARTER WITH WHAT TO ME APPEARS TO BE ZERO RESULTS.

    WHERE IS THE OUTRAGE FROM ANYONE INCLUDING THE MEDIA? HOW MANY FREEBIES WOULD THIS SUPPORT LIBERALS? ALMOST 40 YEARS OF NO FUNCTION AND NO COMPLAINS BY EITHER PARTY. WHATTA WAIST THIS IS.

    #13
  14. Mark from Louisiana

    The Energy Department isn’t working to lower gasoline prices directly, Secretary Steven Chu said Tuesday after a Republican lawmaker scolded him for his now-infamous 2008 comment that gas prices in the U.S. should be as high as in Europe.

    Instead, DOE is working to promote alternatives such as biofuels and electric vehicles, Chu told House appropriators during a hearing on DOE’s budget.

    #14