Oil industry: 'Huge political consequences' if pipeline rejected

A top oil industry official delivered a clear warning to President Obama Wednesday: approve the Keystone XL pipeline or face “huge political consequences.”

American Petroleum Institute President Jack Gerard urged Obama to quickly approve the pipeline, which would carry oil sands crude from Alberta, Canada, to refineries along the Gulf Coast.

A payroll tax cut package signed into law by Obama last month includes a GOP-backed provision requiring the president to make a final decision on the pipeline within 60 days.

“I think it would be a huge mistake on the part of the president of the United States to deny the construction of the Keystone XL pipeline,” Gerard said during the powerful oil industry trade association’s annual “State of American Energy” event Wednesday.

“Clearly, the Keystone XL pipeline is in the national interest. A determination to decide anything less than that I believe will have huge political consequences.”

Gerard’s comments Wednesday marked the latest attempt by proponents of the pipeline to pressure Obama to approve the project.

Republicans, who secured inclusion of the Keystone provision in the broader payroll tax cut extension package, are also turning up the political heat on Obama to greenlight the project.

House Energy and Commerce Committee Republicans unveiled a countdown clock Wednesday that keeps track of the number of days since the president signed the bill requiring a speedy Keystone verdict.

The push by Republicans and the oil industry highlights the increasingly aggressive messaging war over the pipeline, which poses huge political risks – and potential rewards – for both the GOP and the White House.

Obama risks backlash from key union supporters if he rejects the project, but faces the ire of environmental groups if he approves it.

Republicans, meanwhile, stand to score a political victory if Obama OKs the pipeline. But their successful effort to force a decision could backfire if the president rejects the pipeline and pins blame on the GOP for rushing the review.

Obama administration and White House officials have said that the 60-day timeline could force them to reject the project because the State Department will not have enough time to conduct the necessary reviews. The administration announced earlier this year that it would delay a final decision on the pipeline until after the 2012 election in order to review alternative pipeline routes.

Environmental groups – who vehemently oppose the project, citing concerns about oil spills and greenhouse gas emissions – have said Obama has no choice but to reject the pipeline under the GOP-backed Keystone measure.