Goldman’s Blankfein Talks Energy and Politics

In a round of interviews this week, Lloyd Blankfein, the chief executive of Goldman Sachs, was eager to talk about natural gas drilling in advance of the bank’s energy summit, which began on Wednesday. But he was hesitant to throw his weight behind one of the most politically divisive issues in energy independence: the Keystone XL pipeline.

Speaking to Charlie Rose on Tuesday, Mr. Blankfein talked about how the natural gas industry could create jobs and economic growth. But while he sees Goldman’s role as helping to broker a cease-fire between environmental and business groups, he stopped short of endorsing one of the most controversial energy opportunities.

“You have to take account of the fact that we not only want to invest, but we want to leave the right kind of world to our children,” Mr. Blankfein told Mr. Rose. “You want to incentivize people to invest in sensible projects that are done in the most environmentally safe way.”

Environmental advocates are worried about a number of ways the energy industry is extracting resources from the earth. Most recently, critics of hydraulic fracking, or the process of drawing out oil and gas from rocks deep underground, say that it contributes to a host of ills, like drought, water contamination and even difficulty obtaining a mortgage. But natural gas enthusiasts see the industry as a path to wean the United States off foreign oil while creating many jobs.

Opponents of Keystone XL, a proposed 1,700-mile pipeline to carry oil from Canada’s Alberta oil sands to Gulf Coast refineries, worry about the way that oil is extracted and the risks associated with the pipeline itself. In January, the State Department released a report that concluded that the pipeline would not substantially worsen carbon pollution. The report was seen as paving the way for President Obama to approve the project.

“Personally, I think we can have pipelines and do them in the right environmentally sensitive way,” Mr. Blankfein said without referring specifically to Keystone. “We have to reconcile the schism between the people who are only thinking in terms of the environment, and the people who are only thinking in terms of supporting the economy and get some sort of accommodation between the two.”

But environmentalists may not concede so easily.

“I think the evidence shows that pipelines are very dangerous and the regulations right now are inadequate,” said Jim Murphy, the senior counsel to the National Wildlife Federation. “I think perhaps an even bigger issue is that they’re locking us into the wrong type of energy decisions at a time when science is really demanding that we drive carbon emissions down drastically.”

“If investors have to worry about politicians changing the rules around natural gas drilling, they will be more hesitant to put their money into growth opportunities,” Mr. Blankfein said. When asked about what kind of political influence the bank had in Washington, Mr. Blankfein said Goldman had “the softest of the soft influence.”

Energy legislation is one of many seemingly peripheral policy issues that Wall Street executives must pay attention to. The shocking defeat of Representative Eric Cantor of Virginia, the House majority leader, in a primary election by an even more conservative candidate was still sending shock waves through the Republican Party and beyond on Wednesday.

“I hope it doesn’t mean that it will be impossible from this point to compromise on issues like the budget, immigration policy,” Mr. Blankfein said on CNBC Wednesday morning. “This is not necessarily a good signal, but we’ll have to see how this plays out.”

Goldman was among the firms to receive a government bailout during the financial crisis, but not just from Washington. Warren Buffett invested $5 billion in the firm, a move that instilled enough confidence in the tumultuous markets for Goldman to complete a badly needed common equity deal the next day.

“With Warren’s money, we got more than just money,” Mr. Blankfein told Mr. Rose earlier.