SOTU Response: Domestic Production, Keystone Could Bring Jobs

President Obama devoted a considerable portion of his 6,963-word State of the Union Address Tuesday evening to job creation, but the approximately 65-minute-long speech failed to specifically mention the Keystone XL project that supporters say could generate 20,000 direct and more than 100,000 indirect jobs.

At least, he did not mention the oil pipeline project by name.

Obviously referring to reports that the GOP may tie the extension of a federal payroll tax reduction to approval of Keystone XL, Obama called on Congress to stop "a tax hike on 160 million working Americans" so that they can keep an estimated $40 out of each paycheck.

Shortly before Christmas, Congress passed a bill preventing a federal payroll tax from increasing until the end of February. Obama signed the legislation, which called on him to make a decision on Keystone XL within two months. Thanks to Obama's decision to reject the project last week, the GOP's effort to advance the project failed. Obama advised Congress to focus solely on extending the payroll tax reduction.

"There are plenty of ways to get this done," Obama said. "So let's agree right here, right now: No side issues. No drama. Pass the payroll tax cut without delay."

In their responses to the address, a number of Republican elected officials were only too happy to refer to Keystone XL by name and remind the President of the jobs that would accompany it.

"He [Obama] claims to care about energy security, yet he stopped the Keystone pipeline -- and the 20,000 American jobs it would have created -- which would have done more than any other project to increase our energy security and revive our economy," said Sen. Jim Inhofe (R-Okla.) in written statement.

In the official Republican response to the address, Indiana Gov. Mitch Daniels noted that Obama's Keystone XL decision and other energy policy moves by the administration have curbed economic growth and job creation.

"The extremism that stifles the development of homegrown energy, or cancels a perfectly safe pipeline that would employ tens of thousands, or jacks up consumer utility bills for no improvement in either human health or world temperature, is a pro-poverty policy," Daniels said.

House Speaker John Boehner, who politely clapped during several of Obama's applause lines, verbally slapped at Obama's energy record in a blog posting criticizing the President's record on "Job- Creating Energy Projects."

In reference to Obama's statement that the U.S. "needs an all-out, all-of-the-above strategy that develops every available source of American energy," Boehner's blog accused the administration of failing to encourage the Senate to act on House-passed energy legislation that reportedly would boost job creation by expanding domestic energy production.

Specific bills that the House Speaker's office urged Senate action on include the following:

Boehner also ensured that Tuesday's event would include several living, visual reminders of Keystone XL. He invited a number of project supporters to sit in the speaker's box in the House chamber while Obama spoke.

In another GOP response to the State of the Union address, Kentucky Sen. Rand Paul reminded the public that allowing Keystone XL to proceed would facilitate private-sector job creation.

"The Keystone pipeline would instantly create thousands of jobs without costing the taxpayers a dime," Paul said, adding that it would enhance U.S.-Canada relations and lower America's dependence of oil imported from the Middle East.

"The Keystone pipeline was in America's best interest," Paul continued. "Yet the President rejected this pipeline and the American people, by siding with the liberal environmentalists instead--just as he did with Solyndra."

Industry Responses

Officials with oil and gas industry associations voiced support for measures to allow Keystone XL to proceed and boost access to domestic oil and gas resources.

"President Obama should reverse his unfortunate decision blocking construction of the Keystone XL pipeline," said Charles T. Drevna, president of American Fuel & Petrochemical Manufacturers (AFPM), which until this week was known as the National Petrochemical & Refiners Association (NPRA).

"The pipeline could bring us 700,000 barrels of oil each day from Canada and from North Dakota and Montana to benefit the American people," Drevna continued. "This vital project has already been subject to three years of permit delays and should be approved now because it is unquestionably in our national interest."

The head of AFPM also said that his 110-year-old organization has always pushed for more domestic energy production and manufacturing of fuels and petrochemicals. He urged the administration to take a more collaborative stance in shaping policies affecting the energy industry.

"While President Obama is correct that creating new manufacturing jobs and producing more domestic energy is critically important, we wish he would work with us constructively to enact regulatory and tax policies to preserve existing manufacturing jobs held by Americans today in our industries and others," Drevna said.

"Continuing to demonize our industries and falsely claiming we get subsidies is counterproductive and leads to job destruction instead of job creation," added Drevna. He urged Obama to "create a framework of sensible regulation and pro-consumer policies" to enable U.S. energy companies to "on a level playing field" globally.

"Far too many American manufacturing jobs have been lost to other nations in recent years," Drevna said. "We need to stop this exodus of jobs and reduce the intolerably high unemployment rate that is devastating millions of American families."

Obama's address reminded American Petroleum Institute (API) President and CEO Jack Gerard of an era when disco was king, bell-bottom pants were popular and long lines at U.S. fuel stations were at times the norm.

"The President's tax plan sounds like something Jimmy Carter would have supported back in the 70s," Gerard said. "It would raise energy costs, cut energy production, sacrifice jobs and increase imports. Our industry already pays income taxes at higher effective rates than most other industries."

"If the President is serious about creating more jobs and more energy, allow America's oil and natural gas companies to produce more of our energy at home, and we'll put people to work and deliver more revenue to the government," continued Gerard. "That's what the American people want."

Independent Petroleum Association of America (IPAA) Chairman Virginia "Gigi" Lazenby applauded the president for his stated commitment to "expanding the responsible development of job-creating American oil and natural gas," and noted that job creation and the "restoration of the American dream is a shared goal that exceeds political boundaries."

However, the energy industry's success in boosting U.S. oil and gas production, creating jobs and stimulating the weak U.S. economy has been achieved in spite of the administration's at times harshly anti-oil and natural gas policies, not because of them.

Lazenby added that independent U.S. producers are generating hundreds of millions of dollars in local, state and federal tax revenues, and investing an average 150 percent of their cash flow back into domestic energy development.

"Despite the unnecessary regulatory burdens and threats of massive new billion dollar tax hikes put forth by this administration, America's independent oil and gas natural gas producers -- with an average of just twelve employees each -- continue to enhance technology, bolster environmental safeguards, and provide the American people with the reliable energy our nation needs to remain strong," Lazenby commented.

IPAA Vice President of Public Affairs & Communications Jeff Eshelman disputed the assertion that government contributed to the development of fracking technology, noting that the technology used today in shale plays was created by industry more than 50 years ago and further development by Texas independent producer George Mitchell.

"The Department of Energy's Office of Fossil Energy has done some research into hydraulic fracturing over the years and may have developed some improvements, but fracturing technology wasn’t created by the government," Eshelman noted.

"Ironically, on one hand, the President tries to give the government credit for this technology, but on the other hand he has tried to 'zero out' the budgets of DOE's fossil energy research programs for the past three years," Eshelman commented. "If they've done such good work, why would the President want to dismantle these agencies?"

-- Rigzone News Editor Karen Boman contributed to this article from Houston.

Matthew V. Veazey has written about the oil and gas industry since 2000. Email Matthew at


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Ben | Jan. 27, 2012
Its funny that the person who has the most to gain by the keystone not going forward is Obama's biggest billionaire supporter. W. Buffett

Philippe | Jan. 26, 2012
It is obvious that Obaminable is intent to "kick start" the so call clean energy or solar, wind, with billion of subsidies. Obaminable is in a dream world that is contrary to any kind of stable and good judgment. November 2012 will tell if the US gets back to an sane energy policy. A sane energy policy has a place for clean energy, but clean energy cannot produce the energy necessary for the primary need of the US economy. Making the cost of fossil energy so expensive as to bankrupt the economy is not the way the US economy will regain its competitively.

Arlene | Jan. 26, 2012
I am all for putting the keystone Pipeline through and strengthening our alliance with Canada. I think every priority should be given for energy independence. It would be better to work with the Canadians on this issue than put our interests in the hands of countries that have proved themselves to be hostile. And we have the manpower and technology to make it a success.

Ron Heffernan | Jan. 26, 2012
Why would we here in Canada send it all the way to the Gulf to be shipped for export. We have a Gateway pipe line to the West coast for that. It is to be refined where there is existing facilities to save on green house gas emissions and these facilities are very expensive with small profit margins.The reason he stopped it is pretty simple because Hollywood told him to.

Rick | Jan. 25, 2012
Clyde, I have never heard "the oil is not guaranteed" as a reason why the pipeline was not approved. The stated reasons that I have heard were always about the environmental impact of the pipeline. The environmentalists also complain that getting and processing tar sands oil is more energy intensive than other types. And it is my understanding that the pipeline is being built by a corporation, so why does it matter if there is no guarantee for the oil, assuming their isn't? The corporation is spending their own money not tax money. The pipeline construction will create lots of jobs and the processing of the oil in U.S. refineries will create or sustain lots of jobs for Americans. Honestly, I don't think your comment makes much sense...

Mark | Jan. 25, 2012
Its mind boggling that the US government wont allow this project to go through. A safe pipeline, thousands of new jobs, all the oil you need, and a major reduction in US dependency on the middle east... I really don't understand it... Whats the downside? Being a Canadian in the industry, I know it would be beneficial to us Get it started!! -Mark in Canada

clyde | Jan. 25, 2012
I watched some of the debate about this on Cspan,and there was "NO" agreement from Canada or the Co. doing this line, that there would be a guarantee to US for this Oil, It might just be pumped through and shipped out for export sales. I am all for the jobs and a "guarantee",that we get the oil, but not for a free shipping line, through our country for Canada. I am so sick of the U.S caving in on things like this. If that is the reason he,passed on it then I am glad he did. The US must develop a backbone once again and stop being the worlds door mat Clyde


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