Jack Gerard, president of the American Petroleum Institute, said Tuesday that he expects the Keystone XL pipeline to move forward this year, despite President Obama's threat to veto a first shot by the Republican Congress at forcing its approval. In his annual State of American Energy address and a wide-ranging news conference, Gerard also addressed the risks and benefits of $50 oil and his vision for making America the world's dominant "energy superpower." Here's a transcript of the news conference, edited for space.
Q. Would API support an increase in the federal gas tax to finance spending on infrastructure?
Gerard: It might surprise a lot of you that in the past, API has not taken a position on the gas tax. ... We believe as a matter of public policy if the government believes that’s the way to generate revenue to build the infrastructure that those cars drive on, the bridges they cross, etcetera, we haven’t really entered into that debate.
Q. What's your reaction to the president's threat to veto the Keystone bill set for votes in the House and Senate?
Gerard: "Obviously, we’re disappointed. ... I believe at some point in 2015, the Keystone XL pipeline will be approved. How it gets approved, it may have to go through one or two other iterations. I believe it doesn’t bode well for relationships between the White House and Capitol Hill. Here they are, the leaders in the Senate and the House have picked an issue that has broad bipartisan support. The bill introduced this morning had 60 co-sponosrs on it -- six Democrats along with all the Republicans. And we’re aware of at least three other Democrats who will vote for the bill.
So you have a bill that has 63 members of the Senate saying: We’re for it. So I believe the leadership in the House and Senate are following the will of the American people, where 72 percent of the public says we support building the Keystone XL pipeline. I’m disappointed if the president has made that decision. I'm hopeful eventually he or his advisers will reconsider because by their own estimate this creates 42,000 American jobs.
Q. How do you respond to Obama's assertion that the project would benefit Canadian producers while doing little for American consumers?
Gerard: What the president said is factually incorrect. The State Department has already concluded … that that oil will be refined on the Gulf Coast. That’s why the Keystone XL pipeline is built to the Gulf Coast. It's built there because we have the world-class largest refinery sector to be able to produce that in a clean and environmentally safe way for the U.S. and global markets. ... [In addition,] all the reports today have concluded that crude oil exports will actually lower the domestic price of gasoline. It seems a little counterintuitive to some, but the reality is the number one driver of the price of gasoline is the price of crude oil. The more supply brought to the global marketplace continues to put downward pressure on the price of crude oil. … If you want to benefit the American consumer in the form of lower gasoline prices, the more supply you put into that marketplace, the better off you’ll be.
All the analysis … the best thinkers and minds regardless of political party, Larry Summers and others, have all concluded that crude exports actually put downward pressure on the price and would benefit the American consumer anywhere from 2 to 10 cents a gallon. There’s a broad consensus that crude oil exports would benefit American consumers ...
There are some whose minds are still stuck in the old 20th century mindset of scarcity and dependence. Which we’ve moved beyond now because of technological advancement to an opportunity of rich abundance. But those who think scarcity go back to when the crude export ban of the 1970s was first imposed. Their minds are still there. We need to move those to the new energy reality which says we have adequate resources. We have vast amounts of crude oil in this country. We have the technological advantage to produce it safely, soundly, to transport it by building the infrastructure. It’s a unique American moment that should transcend the old relics of the past, the old philosophies and get us to a new place as a nation.
Q. Given the collapse in oil prices, does Keystone still make economic sense?
Gerard: The economics of the Keystone XL pipeline -- or any pipeline, for that matter … should be determined by the marketplace. This is private capital. This is private investment. Let it follow the market and let the market determine what should or should not be built ...
If you look at the long-term projections, demand for energy -- particularly oil and gas -- will continue to rise on a global economy. So as a nation, we need to position ourselves to capture those markets. The way we do that is to provide efficient infrastructure to move the product efficiently and effectively so it can get to that marketplace.
Q. At what point would extraction from the tar sands no longer make sense?
Gerard: Today, we're at a lower price than we have been for some time. I can’t predict what the price would be. I don’t know what the costs are. Clearly, U.S. producers are competitive with global producers.
Q. Your new report on the State of American Energy doesn't mention climate change. Do you think it's an important issue?
Gerard: I did reference carbon emissions in there … and I think it’s a very important point. Because if you look at where we are today, we’re at a 20-year low in our carbon emissions in the Unite States, and why is that? It wasn’t a government mandate. It wasn’t government legislation. It was driven primarily by increased consumption of cleaner-burning natural gas. That was made possible by the American energy renaissance that we have in the United States today. That is what has gotten us to where we are today in bending the curve, if you will, in terms of the amount of carbon that’s being released.
Let me also add, our industry today is the leader in seeking zero-carbon-emitting or low-carbon-emitting technologies. ... So we take second seat to no one in working on and addressing the carbon challenge.
People have different views within our industry as to how that should be addressed. Some talk about a carbon tax; some talk about cap and trade, etc. But we think one of the things this administration and this Congress should focus on is to look at the reality of what the American energy renaissance has done for us. As we have brought cleaner burning natural gas to the marketplace, it's lowering our emissions. What would that mean if our vision is to export in abundance that cleaner burning natural gas around the world and begin to see that same effect on a global scale?
Q. What's your reaction to New York Gov. Andrew Cuomo's (D) recent decision to ban fracking in the state?
Gerard: Unfortunately, the ban's impact in the short term is denying those people in New York -- both the property owners and the people who would like to have a well-paying job -- the opportunity to do so. It’s a bit ironic that after years of looking at this question -- and I might add with no new research, only looking at current data that’s currently on the books -- the state of New York and the governor have concluded something exactly opposite what everybody else in the United States has concluded. … The science is clearly on the side of development and on the side of industry.
Q. What makes you think Keystone will be approved in 2015?
Gerard: There’s lots of ways to get something done in this town. I’m very disappointed the president has decided that he’ll veto this first opportunity, because I think leadership in the House and Senate on a bipartisan basis thought this would be one of the easy opportunities to show the new era, the new collaboration, the new opportunity to work together on something which frankly is relatively easy on the part of the president.
So we’re disappointed if the president carries through on what has been rumored to be a potential veto threat. Now, having said that, I believe there’s growing support for the Keystone XL pipeline, even in the Senate. We’ve already heard some members say they’re getting frustrated with the president's inaction. Heard some members who have voted against it repeatedly say they believe the president needs to make that decision. ...
Does that mean we’ll ever get to the point of veto override? I’m not sure. I’m hopeful we don’t have to get to that point. I’m hopeful cooler heads will prevail, we'll all get on the same side of the table … and say what’s truly in the national interest of the United States. And I believe the evidence weighs so heavily on the side of approval that hopefully people can work that out in whatever form on whatever piece of legislation and get to yes.