Opinion

Sequester heightens need for Keystone pipeline

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Photo - CUSHING, OK - MARCH 22: Pipe is stacked at the southern site of the Keystone XL pipeline on March 22, 2012 in Cushing, Oklahoma. (Photo by Tom Pennington/Getty Images)
CUSHING, OK - MARCH 22: Pipe is stacked at the southern site of the Keystone XL pipeline on March 22, 2012 in Cushing, Oklahoma. (Photo by Tom Pennington/Getty Images)
Opinion,Op-Eds

With the sequester on the horizon, the Department of Defense is going to face some serious challenges. The across-the-board spending cuts, which go into effect automatically this week, will not be easily digestible. But strategic decisions must be made in order to preserve operational integrity.

As the largest commercial consumer of petroleum products in the world, DOD purchases more than 125 million barrels of oil every year, or 350,000 barrels a day. The energy section of the Defense Logistics Agency -- responsible for the acquisition, distribution and storage of bulk petroleum and other energy commodities for DOD -- will not be spared from sequestration. Nevertheless, DLA Energy's mission to support the warfighter with agile and responsive fuel solutions remains critical.

In the fiscally constrained future that the Pentagon faces, DLA Energy will be asked to provide comprehensive energy solutions in the most cost-effective and efficient manner possible. This underscores the need for President Obama to approve the Keystone XL pipeline. As former Obama national security adviser and retired Gen. Jim Jones has said, "[T]he country can't afford to pass up the opportunity for reliable supply from a close ally and neighbor, which would leave us less vulnerable" to supply disruptions elsewhere in the world. Indeed, DOD is especially sensitive to supply disruptions, which can add billions of dollars in overruns to the military services' annual fuel budgets.

Completion of the Keystone XL pipeline would allow 830,000 barrels of domestic and Canadian oil sands crude to reach U.S. refineries every day, providing a safe, reliable energy supply while reducing our reliance on less stable nations. Given current trends, Canada could provide as much as 37 percent of U.S. oil imports by 2035, which would account for a significant amount of DLA Energy's petroleum supply.

Complicating matters is a little-known provision, Section 526 of the Energy Independence and Security Act of 2007. Section 526 prohibits federal agencies from procuring alternative or synthetic fuels, including fuels derived from nonconventional petroleum sources, that have higher life-cycle greenhouse gas emissions than conventional petroleum sources. Canadian oil sands are an important part of our energy mix and have the potential to continue to grow into a major source for military-grade fuel.

The statutory language should expressly exempt this technology, especially given oil sands opponents' attempts to limit DLA Energy's ability to procure these commercially available petroleum products. Although courts haven thrown out Sierra Club's unfounded legal challenge to the purchase of such fuels, Section 526 could still affect future DLA Energy operations.

Such restrictions on fuel choices do not improve the reliability of energy supplies, nor do they improve national security. DOD should be able to buy military-grade fuel refined from Canadian oil sands -- supplied by our largest supplier and closest ally -- without any reservations or legal challenges. In fact, Congress specifically exempted NASA from Section 526 because of uncertainties surrounding the procurement of fuel that is generally available.

Ironically, DLA Energy purchases most of the petroleum products and aerospace fuels for NASA. Absent full repeal, DLA Energy and the DOD deserve an explicit exemption from the uncertainties of Section 526.

By pushing for approval of the Keystone XL pipeline and removing potential restrictions on the military's ability to procure petroleum products derived from oil sands, DOD can enhance the energy security of the military and the nation despite sequestration.

Surya Gablin Gunasekara is counsel for tax and trade for the American Petroleum Institute. He previously served as assistant counsel for the Defense Logistics Agency's energy support center.

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