Iran threats add new dimension to Keystone XL debate

Threats by Iran to cut off the Strait of Hormuz, a vital artery for one-fifth of the world’s oil, have given further ammunition to both sides in the debate over the proposed Keystone XL oil pipeline.

Iran has reportedly said it would close the strait if the U.S. and other nations impose new sanctions that target the Islamic republic’s oil exports, but The New York Times has reported that the U.S. is working on a plan to keep the strait open if Iran does attempt to block it. The U.S. and some European nations have imposed sanctions against Iran to get the nation to halt its nuclear program.

Keystone XL supporters argue the threats from Iran highlight the need to reduce dependence on Mideast oil and proves the need to approve the TransCanada Corp.’s proposed 1,700-mile Keystone XL. But environmentalists, who have long opposed the project because of pollution concerns, say the threats show the need to reduce oil reliance in general, and they argue Keystone’s approval would do nothing to address the cutoff of a key oil-transport route.

The State Department announced earlier this year that it would delay approval of the controversial pipeline from Alberta, Canada, to Port Arthur, Texas, refineries until 2013. Republicans, seeking to force President Obama’s hand on the matter, won a provision in a two-month payroll tax cut extension that requires the administration to make a final decision on Keystone XL by February.

Sen. John Cornyn, R-Texas, who has long supported the project, indicated Iran’s threats strengthened his support.

“With Iran threatening to block the Straits of Hormuz, doesn’t the Keystone XL pipeline make even more sense?” he tweeted on Wednesday.

Asked by Fox News whether the Iranian pressure would lead Obama to approve the pipeline, Rep. Louie Gohmert, R-Tyler, said: “It should, but he doesn’t always do what’s best for American and American energy.”

The Natural Resources Defense Council, an environmental group, doesn’t buy those arguments.

The group suggested Iran may well be bluffing, a possibility raised by some analysts who say Iran would suffer more from cutting off the strait than the rest of the world would. The group also argued that tar sands oil production can’t easily be brought online to offset any cutoff initiated by a block of the Strait of Hormuz.

“You cannot turn the tap on high and have more come out,” Susan Casey-Lefkowitz, director of the international program at NRDC, wrote on her blog. “Unlike with conventional oil, it takes a long time to bring new tar sands production online.”

Casey-Lefkowitz said Iran’s threats underscore the need to reduce the U.S.’s reliance on all oil, not just crude oil from the Middle East. She added oil price spikes and supply shocks wouldn’t be solved by approving the Keystone XL pipeline.

“The bottom line is that even if we get more oil from Canada, we are still at the mercy of price spikes when some other part of the world oil market blows up,” she said. “True energy security lies in kicking our addiction to oil and moving ahead more quickly with clean energy that does not tie us to a dependence on the Middle East and other conflict areas.”

Saudi Arabia and other Gulf producers have said they plan to boost their production to counter any supply shock that would occur if Iran were to proceed.