Canada is fed-up with US delay of Keystone, now planning alternative pipeline
President Obama and the Democratic Party have responded to deep-pocketed greenies, like coal billionaire Tom Steyer, by endlessly delaying the Keystone XL Pipeline, a project that enjoys wide public support, including that of labor unions in the private sector. The cost of that delay has included alienation of our friend and neighbor Canada, for whom finding markets for the vast tar sands energy reserves of Alberta is a key national priority.
It may be hard for Americans to realize how deeply dismayed Canadians are over our failure to proceed on a mutually beneficial project like Keystone. Poisonous seeds have been planted, as Canada sees its future prosperity imperiled by wealthy ideologues in the United States whose political donations mean more to the Obama administration than the welfare of our best friends and largest trading partner by far. Americans tend to take Canada for granted, and Canadians know and resent this. Now, some serious consequences are on the verge of being realized, as a huge project looks like it may happen in Canada that effectively tells America to go fly a kite, Canada will act on its own in its own best interests. Our nations are hardly about to go to war, but a Canada that sees its interests as in conflict with ours, and that seeks other partnerships in preference to us, is a very different neighbor across “the world’s longest undefended border.”
Bloomberg writers Rebecca Penty, Hugo Miller, Andrew Mayeda and Edward Greenspon have put together a long and fascinating article on Canada’s dramatic move toward building Energy East, a 10+ billion US dollar pipeline project that would take Alberta’s oil all the way to St. John, New Brunswick, where an existing oil superport and refinery could handle the world’s largest supertankers and export that oil to world markets, including notably energy-hungry India.
The energy business is like a three dimensional chess game, in which a move one place has ramifications in many other places, and in which high stakes bets are often placed that generate unexpected responses elsewhere. The Energy East project is one such wild card. And so deep is the Canadian dismay at our Keystone roadblock that it is almost unique in having support from all of Canada’s political parties.
Although few Americans realize it, Canadian oil sells at a steep discount because the Canadians have few other alternatives than the US market. Energy East would change that:
With the U.S. virtually its only buyer, the captive Canadians are subject to price discounts of as much as $43 a barrel that cost Canada $20 billion a year.
Energy East will dwarf the planned capacity of Keystone, carrying 1.1 million barrels per day, enough to affect oil markets significantly. We can kiss goodbye to that price break.
While there are still some political hurdles for Energy East to overcome, principally in Quebec, there are also some powerful reasons to expect that it will be built, and faster than Keystone would be. Due to the growth of American shale gas supplies in the East, Canada has an existing natural gas pipeline from Alberta to Quebec that would be available for conversion to crude oil use for much of the nearly 3,000 miles of the route to New Brunswick.
There is a lot of very interesting information in the Bloomberg article. If you care about energy policy and if you think that good relations with our neighbor Canada are worth maintaining (consider the alternative!), this is an article that is a must-read.