Keystone, China and Access to Canadian Oil
As a follow on to “Why Can’t Conservatives Be Honest About Keystone?” and as a result of an e-mail exchange I had with a conservative friend I thought it best to bring up a sidebar story related to the Keystone pipeline decision. A corollary issue that conservatives have tried to raise is that Obama’s vetoing of the first Keystone application will result in Canadian Oil being sold to China and that this rejection will preclude any further chance of that oil being shipped into the American market. As it turns out nothing could be further from the truth. While Canadian Prime Minister Stephen Harper reiterated his country’s own national interest in saying “Canada will continue to work to diversify its energy exports”; that statement can only be seen to represent the fact that Canada has had an ongoing interest in more than one market for its natural resources, and that predates Keystone. In his conversation with President Obama Prime Minister Harper indicated “that he hoped that this project would continue given the significant contribution it would make to jobs and economic growth both in Canada and the United States of America.”
Juliet Eilperin of The Washington Post who has followed this story closely said “it would be more expensive for Canada to ship its tarsand oil to China but it could happen.” But does that mean it will, absolutely not as it’s in the interest of both Canada and the U.S. to pursue the alternate route for the pipeline. Why, because it would be much cheaper to construct a pipeline through the Great Plains of the United States than it would be to build one through the mountainous regions of western Canada. This is particularly true when you factor in the costs involved in building an oil out load port on the Canadian west coast, something not required when shipping oil to the United States via the Keystone pipeline. Moreover with the bulk of the background work on the original Keystone project completed, the costs involved in rerouting the pipeline are minimal compared to what it would cost to create a new project to Canada’s west coast? Why even the Premier of Alberta doesn’t expect to see his province’s oil shipped to the west. Quoting Bill McKibben a writer and activist monitoring Keystone: “The premier of Alberta said that without Keystone he’d be ‘landlocked in Bitumen.” More importantly TransCanada’s CEO, Russ Girling has made public his decision to reapply for a permit to build the pipeline and asked that the process be expedited so as to enable a 2014 construction start. Barack Obama yet to take issue with Mr. Girling’s new request and its not likely he will so long as environmental safeguards are respected.
Thus there is nothing in the Prime Minister’s comments or in TransCanada’s actions that would lead one to conclude that we have forfeited our opportunity to purchase Canadian oil. What I find remarkable in this particular conservative attack is the complete and total willingness to ignore the fact that Prime Minister Harper seems to be engaged in political posturing for the sake of Canadian public consumption on the one hand, and the fact that he in no way rules out a revival of the project after environmental concerns are addressed on the other. Harper’s own words clearly prove he would prefer to ship oil to the United States than to China and you can bet he’s more than aware of the far higher costs involved in the later. As such there is no reasonable indication that the rejection of the first Keystone application signals the end of any chance that Canadian oil will flow into the United States.
“Why Can’t Conservatives Be Honest About Keystone?”; http://open.salon.com/blog/steven_j_gulitti/2012/01/24/why_cant_conservatives_be_honest_about_keystone
Canada will look to China to sell its oil; http://articles.cnn.com/2012-01-18/americas/world_americas_canada-keystone-oil_1_pipeline-project-northern-gateway-pipeline-oil-exports?_s=PM:AMERICAS.
Keystone XL rejected by Obama; will Canada just sell that oil to China?;http://www.washingtonpost.com/blogs/blogpost/post/keystone-xl-rejected-by-obama-will-canada-just-sell-that-oil-to china/2012/01/19/gIQA7WnkBQ_blog.html
Could Keystone Pipeline Plan Be Revived After Obama’s Rejection?”; http://www.pbs.org/newshour/bb/politics/jan-june12/pipeline_01-18.html