You're almost certainly familiar with an unsuccessful effort in the Senate late last week to nudge along approval of TransCanada's (NYS: TRP) controversial Keystone XL pipeline project. But you may not realize that the real defeat appears to have gone to those who beat back the effort by a 56-42 vote.
The winners had the smaller number?
All 45 voting Republicans supported the measure to fast-track approval of the pipeline, which would stretch 1,661 miles from Alberta, Canada, to refineries on the Texas Gulf Coast. The Republicans -- two of whom were absent for the vote -- were joined by 11 Democrats, bringing the measure within a hair's breadth of the 60 votes needed for passage. Clearly, some Senate Democrats were swayed by a concerted telephone lobbying campaign conducted by the president, who urged opposition to the bill.
Sponsors of the measure, upon which the floor debate was led by Sen. John Hoeven (R-N.D.), sought to tie the Keystone measure to a two-year, $109 billion transportation bill that likely will come up for vote this week. Should it pass -- which also isn't a certainty in the face of opposition and concern over its size among House Republicans -- the pending bill would establish the federal approach to the construction of roads and highways, along with addressing other transit projects.
Also suffering defeat was a measure proposed by Democrats that would have required that oil transported in the pipeline be excluded from exports, along with a Republican move to increase the U.S. coastal areas open to exploration. Conversely, gaining passage was a bill sponsored by Sen. Bill Nelson, a Florida Democrat, that would direct 80% of fines and penalties related to the 2010 Gulf of Mexico tragedy and paid by BP (NYS: BP) and possibly Transocean (NYS: RIG) toward restoring affected ecosystems and economies in the gulf.
Crude and gasoline: How much higher?
Crude prices have risen 25% during the past five months as concern has mounted about the likelihood of a military confrontation with Iran. In part as a result, the national average price of gasoline has plodded seemingly ineluctably toward $4 and likely is headed beyond that tipping point, pulling attention to the Keystone issue to the front of this year's presidential campaign. The issue will almost certainly raise its head next in the House of Representatives, where Speaker John Boehner (R-Ohio) appears destined to transplant the Senate bill "or something like it."
How the folks feel
But Congress isn't the only place to go for a reading on Keystone's ultimate potential for approval. Back in January, when pump prices were below current levels, a pair of Rasmussen polls combined to tell us about the citizenry's preferences. One test of the electorate's collective pulse found that 56% of those who are likely to cast a vote on Election Day were at least somewhat behind construction of the line, while 36% favored it strongly.
And just a week later, a second poll by the firm found that 59% of those questioned believed that creating jobs trumped protecting the environment as societal objectives. You've undoubtedly noted that the media have described Obama's position on Keystone as a test of his relative loyalties to two of his core constituencies: environmentalists, who are generally opposed to fossil fuels, and organized labor unions, whose members are attracted to the job-creating potential of the project.
In the case of Keystone XL, environmental concerns are tied to its proximity in Nebraska to the Ogallala Aquifer, which supplies irrigation and drinking water to portions of the Great Plains. But as William O'Keefe, CEO of the George C. Marshall Institute, a science, technology, and public policy think tank, suggested, "the President could have approved the project on the condition that Nebraska and TransCanada agree on a route through the state."
Do you know any non-environmentalists?
On that basis, I'll take this opportunity to insert myself into the president's fray. I'm an environmentalist. In fact, I really don't know anyone whose objective is to unnecessarily damage one blade of grass on our glorious planet.
But I'm also a realist in that I find it obvious that oil and natural gas will comprise the vast majority of our fuel sources for many years to come. As my colleague Aimee Duffy put it eloquently on Monday: "When I'm outside, I hug as many trees as I can, but for the next five to 10 years, my portfolio is going to have a lot of oil- and gas-related stocks in it."
The trends in our energy future
And Fool analyst John Reeves recently noted that energy expert Daniel Yergin (author of a tome published last year that no investor should be without: The Quest: Energy, Security, and the Remaking of the Modern World) sees three big trends in the energy space. Those trends involve ongoing development in our hemisphere of our resources and a consequent reduction in our dependence on Middle East producers, increasing competition for energy between our country and China, and ongoing destabilization of the Persian Gulf by Iran's determination to join the nuclear world.
It's impossible to dispute Yergin's vision. Indeed, as an indicator of the apparent accuracy of two of his predictions -- which together indicate the wisdom of our giving TransCanada the green light on Keystone XL and working as closely as possible with our friends to the north -- China's CNOOC (NYS: CEO) , the country's biggest offshore producer, has steadily become more active on our continent. In the process, it's entered into a pair of U.S. deals with unconventional production pioneerChesapeakeEnergy (NYS: CHK) . And last summer, it spent $2.1 billion to acquire a 35% stake in Alberta's Nexen oil sands project.
Given the way most indicators appear to be pointing, I'm strongly inclined to expect a U.S. approval for Keystone XL prior to our coming election. As such, I'm also strongly suggesting that Fools add TransCanada to their individualized versions of My Watchlist.
At the time thisarticle was published Fool contributorDavid Lee Smithdoesn't own shares in any of the companies named in this article. The Motley Fool owns shares of Transocean.Motley Fool newsletter serviceshave recommended buying shares of TransCanada. Try any of our Foolish newsletter servicesfree for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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