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International turmoil gives Obama political cover on Keystone

If Barack Obama has been intentionally ragging the puck on the Keystone XL pipeline decision, he now has three good reasons to finally put it in the net.

Vladimir Putin, Venezuela and Lac-Mégantic.

It has long been apparent that the U.S. President's big decision was never going to be based solely on the merits of the proposed pipeline – creating jobs, meeting U.S. energy demand or filling

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underused refineries on the U.S. Gulf Coast. Mr. Obama wouldn't have spent five and a half years pondering if it were that simple.

So he might as well make the final verdict about something completely different, changing the tenor of the political debate on the home front.

Keystone detractors, after all, have cleverly cast the decision as the ultimate political litmus test of Mr. Obama's green credentials, and a critical milestone in the march of climate change.

Never mind that TransCanada Corp.'s Keystone, while a significant project, would account for less than 1 per cent of the pipelines that already crisscross the United States. Or that the U.S. State Department has concluded that the project would not substantially worsen carbon pollution.

A series of events outside the United States offers Mr. Obama a possible out from this political trap – should he want one.

The Ukrainian crisis and the wave of anti-government demonstrations in Venezuela highlight the often precarious nature of the global energy supply.

Just as the United States depends on oil from shaky Venezuela, Europe is hopelessly hooked on Russian natural gas that flows through pipelines in dangerous and unstable Ukraine.

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Embracing North American energy – be it the oil sands, Bakken crude or liquefied natural gas – could be part of a longer-term strategic response to the instability spawned by Russia's annexation of Crimea and its ominous designs on eastern Ukraine.

Little or no North American oil and gas goes to Europe now. But there are good reasons why both Europeans and Americans should want to maximize reliable alternatives to Mr. Putin's oil and gas.

More pipelines to get resources to refiners and LNG terminals is the only sensible way to make that happen.

In recent weeks, several respected U.S. voices on energy have made similar arguments, including former Obama national security adviser James Jones and Daniel Yergin, a prominent energy analyst and Pulitzer Prize-winning author.

Earlier this month, Mr. Jones told a U.S. Senate committee that "international bullies who wish to use energy scarcity as a weapon against us all" will see the rejection of Keystone as a victory. Blocking the pipeline would "make Mr. Putin's day and strengthen his hand," argued Mr. Jones, who left the Obama administration in 2010 and now heads a consulting firm that has done work for the American Petroleum Institute.

Dr. Yergin told The Globe and Mail's Shawn McCarthy last week that the Ukrainian crisis could boost Keystone's chances of approval by raising awareness in Washington about the geopolitical benefits of North American energy.

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Before last summer's deadly rail disaster in Lac-Mégantic, Que., many North Americans were unaware that so much oil was rumbling through peoples' backyards. Moving crude won't stop simply because one mode of transport is clogged or unavailable. One of the harsh lessons of the tragedy is that pipelines are the safest and most efficient way to transport a vital, but highly combustible, commodity.

The delays facing Keystone (which would carry 830,000 barrels per day of diluted bitumen from Alberta's oil sands and light oil from North Dakota's Bakken fields to the Gulf Coast) have given life to a spate of other pipeline projects. Among them is Energy East, a 4,600-kilometre pipeline that would carry 1.1 million barrels of crude per day from Alberta and Saskatchewan to refineries in Quebec and New Brunswick.

The question now is whether any of these new arguments are powerful enough to persuade Mr. Obama to defy the green lobby.

Facing tough midterm elections for congressional Democrats next fall, he might also choose to dangle for a while longer. After that, his party may have lost its grip on Congress.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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