Republican budget plan would force Keystone XL approval


The House Republican budget plan unveiled on Tuesday would force the Obama administration to approve the controversial Keystone XL pipeline and assumes that expanded oil and gas drilling on federal lands would deliver billions of dollars to federal coffers.

The spending blueprint, outlined by Rep. Paul Ryan, R-Wis., in a 91-page document dubbed “The Path to Prosperity,” aims to use domestic energy development to help pare some $4.6 trillion from the federal budget over the next 10 years.

“America has the world’s largest natural gas, oil and coal reserves — enough natural gas to meet the country’s needs for 90 years,” Ryan said in a Wall Street Journal piece outlining the plan. “Our budget opens these lands to development, so families will have affordable energy.”

The Obama administration is expected to offer its own budget plan next month.

For both parties, the budget documents are a major way to telegraph top legislative priorities, so the Republicans’ decision to include Keystone XL reveals the weight the GOP is putting on the $7 billion project that would deliver diluted bitumen harvested in Alberta’s oil sands to refineries along the Gulf Coast.

The administration rejected a permit for the border-crossing pipeline last year, after the State Department concluded it needed to do more environmental analysis of a new route through Nebraska. After conducting a fresh environmental study, the State Department on March 1 concluded that the project is unlikely to dramatically boost demand for Canada’s oil sands, rebutting a major concern voiced by environmentalists opposed to the pipeline.

The Republican budget document links more than 20,000 direct jobs to the construction of the Keystone XL pipeline, and credits the project with “battling the high cost of gas.” “Once it was in operation,” the Republicans add, “the pipeline would contribute an additional $5.2 billion in property taxes to communities along the route during (its) life.”

Critics of the project say the heavy oil delivered to the Gulf Coast ultimately would not remain inside the U.S., so the effect on domestic gasoline prices is likely to be slim. And they take issue with the job projections they say are wildly inflated.

“Ryan is citing false job numbers from the oil industry that have even been refuted by TransCanada,” said Jane Kleeb, a Nebraska landowner who has battled the pipeline. The State Department has projected that the pipeline ultimately will translate into just 35 permanent jobs.

Supporters say Keystone XL would ensure a source of heavy crude from a North American ally, displacing supplies from Venezuela and declining imports from Mexico.

The Republican budget also takes aim at subsides for green-energy programs, once again invoking the stimulus-funded loans to the solar panel maker Solyndra and the bankruptcy of A123 Systems, a battery maker that received federal support.

“The administration continues to penalize economically competitive sources of energy and to reward their uncompetitive alternatives,” the GOP budget plan says, adding that the government should expand oil and gas development on federal lands.

Although the GOP plan would cut government funding for clean-energy programs, it doesn’t make the case for spiking tax incentives enjoyed by the oil and gas industry, including deductions for drilling costs.

Sen. Harry Reid, D-Nev., called the Republican budget proposal an “extreme” plan that would “continue to tilt the playing field to the advantage of big corporate interests” while gutting investments in “scientific research and job-creating clean energy technology.”

And environmentalists cast the GOP budget plan as a giveaway to Big OIl. Sierra Club Executive Director Michael Brune said the budget promotes a “dirty fuels agenda.”

“This proposal tries to gut our clean energy economy while decimating programs that keep our air and water clean and subjecting our families to more climate-poisoning tar sands, oil and coal,” Brune said.

Key House Republicans countered that the budget would put the U.S. on the right path to harvesting more oil and gas on federal lands and federal waters.

Rep. Doc Hastings, R-Wash., said the budget “recognizes that expanded American energy production is one of the best ways to raise new revenue, bolster the economy, lower gasoline prices and put Americans back to work at good-paying jobs.”

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