KEYSTONE DELAY DAY 18: Canada Opens Hearings on Keystone Competitor

“I think it’s essential, based on what’s occurred with Keystone XL, that this country does diversify its energy-export markets.” – Canadian Prime Minister Stephen Harper

The Canadian government opened public hearings today on the proposed Northern Gateway pipeline, which would carry oil from the Alberta tar sands to shipping ports in British Columbia.  With our foot dragging on Keystone XL, this pipeline signals a dramatic shift in how our neighbor to the north plans to engage in international oil markets that will marginalize the interests of the United States.

Canada is extremely rich in proven oil reserves, and alone among the 5 most oil-rich countries for eschewing OPEC.  Because the vast majority of Canada’s 175.2 billion barrels of oil are unconventional, recent increases in global oil prices and technological advancements mean their oil output is expected to grow 50 percent over the next decade. 

With this explosion in production, Canada is logically searching for new markets.  As Natural Resources Minister Joe Oliver said in an open letter, “we must expand our trade with the fast growing Asian economies.”  China alone is expected to account for 40 percent of oil demand growth in the next two years, and Asian nations would guarantee Canada a thirsty, growing market.  Importantly, much of the region is heavily dependent upon imports from the Middle East, and a new, less politically volatile supply source would help fuel the economic boom they’re hoping will lift their populations out of poverty. 

So, what’s the big deal?  The United States currently buys 99 percent of Canadian oil exports, a position that has shielded us from major supply shocks and kept our petroleum-dependent industries vibrant.  Northern Gateway has the potential to diminish our relevance as Canada’s principle petroleum buyer, and force us to compete with Asian nations for the resources our economy has grown dependent upon. 

Activists may continue to clamor that Obama reject the Keystone pipeline to protect the environment, but these considerations will not hold up development or sales of Alberta tar sands oil.  In fact, failure to build the Keystone XL pipeline will leave Northern Gateway as the best option for exports, sending the fuel in tankers across the Pacific – at great environmental cost – to Asia, where less efficient refineries will process it into fuels for our competitors.

On the other hand, building Keystone will put Americans to work in construction jobs today and refinery jobs tomorrow, and increase our growing profile as a fuels exporter to the developing world. We can claim economic growth, heightened energy security, and a more prominent position in the global oil trade if only President Obama would concede to give Keystone XL the go ahead. 

The House Committee on Energy & Commerce is maintaining a clock on how long the President delays the jobs and energy security that Keystone XL will bring.