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.

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