On January 17th the Obama administration denied a permit for TransCanada Corp.’s Keystone XL. The pipeline would have carried tar sands oil to U.S. Gulf Coast refineries. Approximately one month earlier, Republicans agreed to pass legislation on tax-cuts and employment benefits by forcing the President to decide on the Keystone XL pipeline.
In November the administration delayed approving the project until after the 2012 election, saying it wanted to study an alternate route. Republicans felt that they could gain more political traction by making the President decide on the fate of the pipeline before the election. Which is why the President was forced to issue his verdict ahead of schedule.
Despite concerns from some quarters about how market would react, there was no reaction from Wall street on the news of the cancellation of the Keystone XL. Oil actually declined in New York as crude for February delivery fell below 100 dollars a barrel.
Although oil prices were not effected by the cancellation of the Keystone XL, Republicans will no doubt try to tar Obama as a jobs killer.
Many are breathing a sigh of relief now that Obama appears to have killed the dirty oil deal. However, the Keystone XL project may yet rise from the dead as the administration is expected to allow TransCanada to submit a new application for an alternate route that avoids the environmentally sensitive aquifer in Nebraska.
© 2012, Richard Matthews. All rights reserved.
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