The Keystone XL Pipeline is going to happen.
Those are the words I published back in November 2011, after the announcement that the United States would delay approval of TransCanada's Keystone XL Pipeline.
Here we are, more than a year later, and I still believe this to be true.
Because no matter how the spin doctors like to play it, the uncomfortable reality is that we have made little effort to aggressively transition away from the outdated conventional internal combustion engine. That alone is the reason that this nation — as well as the rest of the world — will continue to pay top dollar to produce the stuff.
Bottom line: The global economy implodes without a steady flow of oil. And with the Keystone XL Pipeline expected to bring in about 700,000 barrels per day, there's little chance this temporary delay will turn into a complete dismantling of the project altogether.
That being said, a change in President Obama's administration could realistically delay the pipeline for another few years. Certainly this isn't great news for TransCanada, but rest assured, every day this thing is delayed is another day one particular billionaire gets even richer...
Shake Up at the EPA
Word is EPA Administrator Lisa Jackson is leaving her post because of President Obama's support of the Keystone XL Pipeline. But I don't buy it.
Quite frankly, Jackson has been one of the most aggressive EPA administrators we've seen in decades. And while her letter to the State Department called the pipeline's environmental assessment “inadequate,” pointing out the project's poor spill-response planning, Jackson's priority list was not monopolized by this pipeline.
In fact, her agenda was so aggressive and so incredibly bolstered by dozens of different projects — from clean water programs to stricter regulatory enforcement on power plants — that she actually became a target for lawmakers on both sides of the aisle... even those who also had no interest in supporting this pipeline.
Some sources in Washington say that as a result, she simply came down with a very serious case of job fatigue. I agree.
In any event, I'm not convinced Obama is particularly enthusiastic about the pipeline, either. And while he knows at some point this thing will have to be approved, don't count on the approval process to be a fast and easy one.
Friends in High Places
Although it's no secret that Lisa Jackson was no fan of highly-pollutive oil sands operations in Canada, which would ultimately send their product to the U.S. through the XL Pipeline, the final decision rests on the shoulders of the State Department. And rest assured, Secretary of State Hilary Clinton has been a friend of this project for years.
As I pointed out back in October 2011, one of TransCanada's high-priced lobbyists was once a staffer on her presidential run. And employees from an outside lobbying firm called McKenna Long & Aldridge, which worked for TransCanada, donated more than $41,000 to Clinton's 2008 campaign.
Then there's another lobbyist from the same firm, one that was appointed by President Bill Clinton to serve as Chief of Staff to Gordon Giffin when he was the U.S. Ambassador to Canada: Maryscott Greenwood officially lobbied on TransCanada's behalf until 2008 on U.S. Pipeline permit policy.
And that's not all...
DLA Piper employees and PACs contributed more than $480,000 to Hilary Clinton's 2008 run. This was the single largest source of funding for a corporate entity to Clinton. And DLA Piper partner James Blanchard sits on the board of Enbridge, a major tar sands pipeline company.
My point: With Secretary Clinton making the final call, the XL Pipeline was in no danger of being rejected — regardless of any delays that may have occurred along the way.
However, those delays are likely to continue, because the new Secretary of State, John Kerry, has proven himself to be less of a friend to those behind the scenes of the Keystone XL Pipeline project...
The Lifeblood of Domestic Oil Production
Here's the deal: As reported in a recent piece in the Vancouver Sun, Kerry is one of the most vocal climate change hawks in Congress, and has long stressed the need for the U.S. to combat its addiction to fossil fuels.
In October 2011, Kerry vowed that no stone would remain unturned as senators examined the environmental impact of the pipeline, saying: “There's a lot at stake here and I'll do my best to leave no question unanswered including every possible economic and environmental consideration before a final decision is made.”
So, is Kerry going to put the kibosh on the pipeline?
Not a chance. But make no mistake about it; TransCanada's headaches are going to continue this year, and there will be plenty more hoops for the company to jump through.
Of course, there's a golden opportunity here for us...
You see, without the pipeline, all that oil must be moved via rail. This is why back in November 2009, Warren Buffett ponied up $34 billion for Burlington Northern Santa Fe.
This, my friends, is one of the primary carriers of North America's oil bounty absent any additional pipelines. And by the way, just last week we learned that Burlington Northern Santa Fe will boost crude oil shipments by 40% this year.
In other words, the one guy who couldn't be happier about a continued pipeline delay is Buffett.
But here's something that most investors don't realize: Aside from Burlington Santa Fe, there are two other rail-related companies that are now providing the lifeblood of nearly every oil & gas producer in North America.
Many of these operations would actually cease to exist without these two players... which is why we've been loading up since last year — right alongside Buffett.
To a new way of life and a new generation of wealth...
@JeffSiegel on Twitter
Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets. He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.