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Daniel J. Graeber

Daniel J. Graeber

Daniel Graeber is a writer and political analyst based in Michigan. His work on matters related to the geopolitical aspects of the global energy sector,…

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Post-Keystone, Canada Takes its Business Elsewhere

After Republican lawmakers in the United States lost their political gamble over the controversial Keystone XL pipeline, the Canadian government decided to issue a double insult to its southern neighbor by simultaneously condemning the political circus in Washington and saying it's time to look at markets in Asia, where a Chinese economy is bustling along at a growth rate of more than 8 percent.

Republican leaders in Washington waged a political bet on the Keystone XL tar sands oil pipeline and lost. Opposition over the original route through Nebraska prompted U.S. authorities to push a decision on the oil sands pipeline until late 2012. The Republicans, however, tried to make it a jobs issue and force the administration's hand, which backfired, giving incumbent President Barack Obama a nice environmental base to stuff in his political pockets as he draws up plans for re-election in November. 

As a side note of delicious irony, it's these same Republicans who are on one hand calling for more domestic oil and natural gas production while at the same time betting their political cards on Keystone XL, which could actually make the U.S. energy sector more, not less, dependent on foreign markets.

Obama, in a presidential statement, said he called Canadian Prime Minister Stephen Harper to "personally convey" the decision on Keystone XL and "reaffirmed the close alliance and friendship between the United States and Canada." 

What did Harper's administration say? Joe Oliver, the Canadian natural resources minister, said the Harper government was "obviously" disappointed by the fate of the Keystone XL pipeline, but felt it underlined the importance of tapping into the "growing Asian market."

Harper's government has been waging its own political battle over the Northern Gateway tar sands pipeline against what Oliver said were a bunch of environmental lunatics bent on thwarting national development.  Canadian pipeline company Enbridge wants to build the 745-mile pipeline to carry as much as 525,000 barrels of Alberta crude to Canada's west coast for deliveries to the Asian market. And why not? Ironically, in its monthly report for January, OPEC said the Chinese economy was slowing down with an expected percent growth rate of more than 8 percent forecast for 2012 while the upbeat assessment for the U.S. economy was a measly 2 percent. Seems like good business sense to look East, all things considered.

Oliver noted that "99 percent" of its oil exports are currently going to a U.S. market, where political wrangling last year prompted credit-rating agency Standard & Poor's to downgrade the credit rating for the U.S. government to AA+ for the first time ever.

"Our government respects the right of the United States to make its own decisions," said Oliver. 

Indeed, Mr. Oliver, indeed.

By. Daniel J. Graeber of Oilprice.com

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Leave a comment
  • Cheryl Condy on January 19 2012 said:
    The Enbridge pipeline to the coastal town Kitimat BC will probably never be built
  • Rob on January 20 2012 said:
    Again, how is it that the "Republicans" are to blame for closing the Keystone Pipeline? Hmmm? Really? Our screwball President shut the damn thing down, not legislators. He did it! Your logic is bizarre, to say the least.
  • Dave on January 20 2012 said:
    @Rob on January 20 2012

    The President was waiting on an environmental assessment - or dragging his feet until after the election depending on how one looks at it. The Republicans gambled attached a rider to an unrelated piece of legislation - extension of unemployment benefits IIRC that he wanted. That rider required the President to make a rapid decision ie. in early February.

    He made his decision early, probably to include in his State of the Union Address but it allowed TransCanada to re-apply later ie. after he is re-elected. TransCanada already has permission to construct the southern leg of the Keystone Pipeline and is moving to do so. I expect that the approval will be forthcoming after President Obama is re-elected.

    Not a bad maneuver for the President - he "stands up" to the greed oil companies which will ensure the environmental vote, he satisfies the union with the southern leg and with a wink and nod mollifies the oil companies.
  • Doug on January 20 2012 said:
    Lets see oil from Canada or the Middle East? Let me think about that. I agree with Rob
  • Scott H on January 20 2012 said:
    Your partisanship is getting in the way of your logic.
  • Matt on January 29 2012 said:
    Mr. Graeber - by your last statement, are you suggesting Canada isn't respecting the US decision? If so, I don't see how Canadians can't ensure that their best interests are looked after by diversifying their export partners, especially when so many Americans slag the oil sands so much on the international stage (which is bitumen, not tar sands... for the record as there is a difference). While I have my doubts that Gateway will be completed as it is a direct threat to American energy security (and Obama wouldn't be the one making that decision), I would love to see it be completed to put some perspective into American minds that they are not the be-all and end-all of the world. Countries like Brazil have been making this statement for a long time now, perhaps it's time Canadians do too...

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