Lugar, citing Iran threats, pushes Obama on Keystone pipeline

Sen. Dick Lugar (R-Ind.) is urging President Obama to approve the Keystone XL oil sands pipeline from Canada by highlighting instability in other oil-producing regions including the Middle East, where Iran is threatening to block a major shipping lane.

Lugar, the top Republican on the Senate Foreign Relations Committee, wrote a lengthy letter to Obama late last week calling for a permit for the controversial pipeline that would bring Canadian oil sands to Gulf Coast refineries, noting that the project has been under review for 1,205 days.

Lugar’s letter states:

Consider some of the flashpoints in major oil supplying countries during the 1,205 days that indecision on Keystone XL has prevailed: Iranian threats against oil shipments and the U.S. Navy; war in Libya; hostilities in Iraq; Venezuelan antagonism; violence in Nigeria; political unrest in Russia; strained relations with Saudi Arabia; failing rule of law in Ecuador; and the ongoing threat of terrorism against energy infrastructure in multiple regions.

In contrast the only uncertainty in oil trade with Canada has been U.S. indecision over Keystone XL. This delay has caused the Canadian government to openly question whether the U.S. is a reliable market and whether it should devote new oil capacity to supplying China’s voracious appetite for energy.

The letter follows recent threats by Iran to block oil shipments through the Strait of Hormuz, which, according to the federal Energy Information Administration, is the transit point for almost a fifth of the oil traded globally.

The Indiana Republican is the lead author of legislation approved in late December as part of the larger payroll tax cut deal that gives the administration 60 days to approve or reject TransCanada Corp.’s Keystone line.

The White House has warned that the timeline will effectively force rejection of the project. The administration, facing competing political pressures from green groups and unions, had hoped to delay a permit decision until after this year’s election.

But Lugar’s letter makes the case that the bill ensures strong environmental safeguards, and also argues the project will bring substantial energy security and economic benefits.

Environmentalists are battling the project due to greenhouse gas emissions and ecological damage from Alberta’s massive oil sands projects, concerns about spills along the route and other factors.