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Obama advisers fret over pipeline's political risks

Thu, 3 Nov 2011 23:57 GMT

Source: reuters // Reuters

* Concern that a decision could affect campaign support

* Political pitfalls on both sides of Keystone decision

* State Department leading review process (Updates with quotes from White House, Sierra Club)

By Jeff Mason and Timothy Gardner

WASHINGTON, Nov 3 (Reuters) - Stung by months of protests, President Barack Obama's advisers are worried that administration approval for a planned oil pipeline from Canada could cost him political support from Democrats in 2012.

Senior officials at the White House and Obama's Chicago campaign headquarters have fielded complaints from supporters who are unhappy about TransCanada Corp's <TRP.TO> plan to build a massive pipeline to transport crude from Alberta to Texas, sources familiar with the situation said.

The State Department, which is overseeing the process, said this week a delay from its end-of-year target for the Keystone XL pipeline decision was possible as it evaluates the proposal. [ID:nN1E7A1196]

That would push the process into next year, just as the 2012 presidential election heats up.

Obama's own re-election plans depend partially on his ability to energize his base of supporters, many of whom are disillusioned with his progress in fighting climate change and attaining other environmental goals.

The pipeline has galvanized that discontent, leading to protests in Washington and across the country. More than 6,000 opponents have signed up to form a human ring around the White House on Sunday in what they hope will be a dramatic signal to Obama, according to environmental groups.

Obama advisers fear a decision in favor of the project could dampen enthusiasm among volunteers needed for door-to-door campaigning in battleground states that are critical to Obama's re-election.

"The potential that it's actually going to deflate their bodies on the ground in key states ... is kind of a new concern," said one environmental advocate close to the administration. He said officials were "very nervous" about the overlap between activists and potential political campaigners.

That concern has grounding. The Sierra Club, a prominent environmental advocacy group, said approval of the pipeline would dampen enthusiasm among its 1.4 million members and supporters to fight for Obama next year.

"If he approves this pipeline, it will be increasingly difficult for our members to stand behind the president," said Michael Brune, the group's executive director.

POLITICAL PITFALLS

Some administration policy advisers expect the pipeline will be approved because of the energy security and jobs it would create, according to one source who met with two White House staffers about the subject recently.

"Everything I heard suggests there's no change in the sentiment that this will go forward," the source said.

Another source, who said he discussed the issue with senior officials from Obama's 2012 campaign operation, said a delay in the decision seemed increasingly likely.

Obama has indicated he will make the final call. In a television interview on Tuesday, he outlined the economic and health criteria he would consider when the State Department's recommendations come his way.

Activists viewed that as a departure from White House assertions that State was running the process.

White House spokesman Jay Carney played down the president's comments, saying State was taking the lead but the final decision would clearly represent Obama's opinions.

"The State Department is part of the Obama administration, and you can expect that the ultimate outcome of this process will reflect the president's views," Carney said.

Taking responsibility for the decision will land Obama with political consequences, regardless of which way it goes.

Saying yes would hurt him with environmentalists and the young voters who helped propel him to power in 2008.

Saying no would mean turning down a chance to substantially increase oil imports from a friendly neighbor and halt a project proponents say would create thousands of jobs.

Obama's re-election hopes depend on his ability to bring down high unemployment and jump-start the U.S. economy.

"Politically it's his base versus the much broader constituency that's more focused on jobs and the economy, and that pretty much puts him on the horns of a dilemma," said Craig Pirrong, a professor and a director for the Global Energy Management Institute at the University of Houston.

Donors have complained about the issue to the campaign, and officials there passed on the feedback to the White House, one source said, adding that Obama's chief of staff, Bill Daley, had also fielded complaints.

As concerns mount, the administration is doing its best to highlight its green accomplishments, particularly its success in raising fuel economy standards for automobiles.

But environmentalists are worried about the carbon-spewing process of extracting oil from tar sands, the process used in Alberta, and charge that a decision in favor of the project would violate Obama's commitment to fighting climate change.

CLIMATE POLICY?

Carol Browner, who was Obama's top climate change adviser and a chief architect of his energy policy until earlier this year, has come out against the project.

"Until we do have a climate policy, the idea that we should be supportive of a pipeline that will increase greenhouse gas emissions is deeply troubling," Browner told an energy forum on Thursday.

Ben LaBolt, Obama's campaign spokesman, said Obama's record spoke for itself.

"The president has done more to wean us off of foreign oil and transition the nation to a clean energy economy than any other," he said. "When Americans compare the president's record promoting clean energy and America's energy security to those of the leading Republican candidates, who don't even believe that climate change is an issue that we need to address and would cede the clean energy market to China, there will be no question about who will continue our progress."

Mark Lewis, a partner at Bracewell & Giuliani LLP in Washington and a specialist in pipeline law, said the tar sands would be developed in any case, whether the oil comes to the United States or not.

"Politically if the pipeline project is approved Obama will take heat from the environmentalists, but not approving it won't stop the oil from getting produced, so it seems like a somewhat hollow victory, even for the environmentalists," he said.

"I'm not sure a delay helps (Obama) at all because ultimately he has to make a decision. I don't think you can delay this until after the election, but by that point a delay kills the project because the markets will look for an alternative." (Additional reporting by Christopher Doering and Ayesha Rascoe; Editing by Doina Chiacu and Peter Cooney)