It’s either a boon to the burgeoning domestic energy sector, or an environmental disaster in the making. The controversial Keystone XL pipeline has been in the works (and news headlines) for years, but after the U.S. State Department gave its seal of approval for the project, President Obama is still faced with a tough political decision.
The pipeline, which would span a massive 1,600 miles connecting Canadian tar pits in Alberta and eventually reaching to existing pipelines in Nebraska (enroute to Texas), has been a political hot potato, one the White House has been noticeably keeping at arm’s distance.
Approval of the pipeline would boost domestic energy production (as well the political fortunes of Democratic senators up for election in red states), but would hurt Obama's standing with ardent environmentalists, one of his core constituencies. Adding to the complexity is latest polling shows only a slight majority of Americans approve of the pipeline’s construction.
Dan Dicker, president of MercBloc, says the time for stalling tactics is over. “Well it’s been two years now that the president has ducked a decision on Keystone, and he’s running out of places to hide on this.”
Dicker notes the recent state department study which declared environmental impact from the pipeline to be minimal, has “been the 3rd study that we’ve gone through,” and he wonders why the administration hasn’t moved on it.
That being said, his prediction is that the “[pipeline] seems like it’s going to be built,” and Dicker sees two distinct winners resulting from its construction.
The first winner is Calgary-based TransCanada (TRP), who owns the right to make the Keystone XL pipeline. Dicker notes the company has gone on the offensive, already putting out ads and blog posts presuming the pipeline is going to be built.
The second winner is big oil behemoth Exxon Mobil (XOM). “Another big winner over the course of time, not immediately, is Exxon because a lot of their growth, or at least prospective growth, in growing barrels is from their Kearl project which is a huge Alberta sands project. They will need Keystone in order to make Kearl work.”
Between the Keystone pipeline and the possible loosening of restrictions on exports of U.S. oil abroad, Dicker notes that if President Obama puts pen to paper and approves these policies, there could be a lot of room to run for TransCanada and Exxon.
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