Carol Browner, who served as the U.S. Environmental Protection Agency (EPA) administrator under President Clinton and as director of the White House Energy and Climate Change Policy under President Obama, told a Washington audience on Thursday that Obama will reject the 1,700-mile long Keystone XL pipeline being proposed for construction by Transcanada Corp. (NYSE: TRP).
At the end of the day, he is going to say no. There will be some more twists and turns before we get there.
Former U.S. Vice-President, Al Gore, called the pipeline an "atrocity" at the same meeting at which Browner made her remarks.
Obama has said that he would only approve the Keystone XL "if this project does not significantly exacerbate the problem of carbon pollution." A U.S. State Department study in March found that the pipeline would not cause major changes in the amount of carbon emitted as a result of the development of Canada's oil sands.
That is the point on which the U.S. government and environmental critics of the pipeline part company. The critics argue that if the pipeline is not built then development of the oil sands will not proceed at its planned pace. Keystone XL would have capacity to move more than 700,000 barrels of bitumen a day from Alberta to the U.S. Gulf Coast.
Increased rail transportation may play a bigger role in shutting down the pipeline than any environmental argument. Transport by rail to both the East and West Coasts of the U.S. has lifted the price of oil sands crude and it is far cheaper to build more rail terminals in more locations than it is to run pipelines. Pipeline transportation still costs less than half as much as rail transport, but the advantage of shipping crude by rail is that railroads go everywhere.