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TransCanada Suspends U.S. Permit Application For Keystone XL Pipeline


We are trying really hard to make sense of the latest turn in the debate over the Keystone XL oil pipeline. That pipeline will carry crude oil from Canada into the U.S. if, that is, it is approved. Supporters have been urging President Obama to approve it, which makes what happened yesterday seem like a setback for them. The company hoping to build it, TransCanada, asked the Obama administration to hold off. In a letter to the State Department, TransCanada said, let's give authorities in Nebraska some more time to settle on a pipeline route. NPR's Scott Horsley joins us this morning. Scott, good morning.

SCOTT HORSLEY, BYLINE: Good morning, David.

GREENE: And let's just say, this is a really weird turnaround.

HORSLEY: Well, that's right. As you say, backers of the Keystone XL pipeline have been pressing for years for this administration to hurry up and decide already whether TransCanada can build this pipeline. It's designed to carry crude oil from the tar sands of Alberta down to Nebraska and ultimately on to refineries along the Gulf Coast. And for years, the administration's been dragging its feet. The White House was trapped between the construction workers who stood to benefit from the pipeline project and the environmentalists who claim this pipeline would promote that dirty tar sand oil and worsen greenhouse gases. But now suddenly, just as it appeared the administration was getting close to a decision, it's the supporters of the pipeline who are saying, wait a minute. Let's stop the clock - maybe for about a year and probably until there's a new president in the White House.

GREENE: Oh, so that sounds key. They might be - they might be sort of betting their odds on a different president, thinking they have better odds of getting the decision they want.

HORSLEY: Well, that's part of it. One possibility is TransCanada was just worried this administration was going to say no. And so they'd rather roll the dice and see if the next administration's more accommodating. The other factor, of course, is the price of oil, which has tumbled by more than half since 2008, when this pipeline was first proposed. Here's the thing. If the price of oil is high enough, the tar sands are going to get developed whether there's a pipeline or not. You can practically gift-wrap that oil because customers are willing to pay so much for it. There's a middle range of prices where the efficiencies of pipeline delivery make the biggest difference to whether the Trans - whether the tar sands get developed or not. And then if the price falls too low, there's no demand for that tar sand oil, even if you have a pipeline. We may be approaching that low point now. And that's another reason TransCanada's happy to just take a timeout and see if maybe the price of oil recovers.

GREENE: So is the president going to give them the timeout they're asking for?

HORSLEY: Well, the White House was mum about this last night. The State Department says it's reviewing the TransCanada request. Certainly there was a time when this White House would have been more than happy to punt this decision to some future president. But now the administration's under pressure from environmentalists to drive a stake through Keystone once and for all. Earlier this year, the administration angered environmentalists when it gave a green light to Shell to drill offshore in the Alaskan Arctic only to have Shell decide a few weeks later it's not worth it. So ultimately, the low price of oil may be doing what the protesters handcuffing themselves to the White House fence were not able to.

GREENE: All right, NPR's Scott Horsley. Scott, thanks a lot.

HORSLEY: My pleasure, David. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.