Obama's Canadian Blunder

By John Donaldson, MD

President Obama and his advisers seriously misread the effect of the delay of the Keystone XL pipeline.  The alternative Northern Gateway pipeline is not a dream, but close to a reality which can ship oil to China and expand the use of B.C. Natural Gas.

The Keystone XL proposal would build a pipeline from the tar sands of Northern Alberta through Southern Saskatchewan into Montana and south to the Texas Gulf for end use of the recovered crude oil.  Its ultimate capacity would be 900,000 barrels per day and would significantly reduce imports to the USA from OPEC nations, none of which can be considered friendly or stable, making American energy supply and prices hostage to the whims of international politics.

With a major voter support group opposing the construction of Keystone from the Canadian border to refineries on the Gulf Coast, Obama again voted "present" on the issue, delaying any decision on permitting its construction until after the next election.  The foremost vocal opponents were the environmentalists, who continue to proclaim that this pipeline poses a threat to an aquifer in Nebraska, that the tar sands oil is "dirty," and that any hydrocarbon-based energy production contributes to global warming and/or climate change.

Currently, the Keystone Phase 1 pipeline is completed and able to deliver crude from the tar sands to Patoka, IL and refineries at Wood River, IL.  A side branch delivers crude to Cushing, OK for distribution to refineries in Kansas and Oklahoma via Keystone Phase 3.  The line is capable of supplying 435,000 barrels daily.  An interactive map can be found here.  Note that if all four phases are completed, the USA would receive 1.3 million barrels per day from a stable neighbor.

It is no secret that China is energy-hungry.  Anyone who has visited China, particularly in the cooler months, can testify that they have no interest in subscribing to any of the global warming fraud.  They are pursuing energy worldwide, including via the tar sands, where they have invested around $15 billion already, mostly through their government arm PetroChina.

To get that oil to their market will require a pipeline to the Canadian West Coast, specifically Kitimat, British Columbia from a terminal near Edmonton.  Plans are well underway for Enbridge Northern Gateway Pipeline to build two parallel lines, an eastbound 20-inch line to bring "condensate" B.C. natural gas to the terminal to dilute the viscosity of the heavy crude, thereby facilitating transmission via the westbound 36-inch line for transshipment via supertanker to China.  Around 500,000 barrels per day will be exported and inject roughly $20 billion per year into the Canadian economy.

If the USA is center-right-leaning, Canada would be centrist in nature.  Prime Minister Stephen Harper is an Albertan and a Conservative in a country where that means about the same as a RINO in the USA.  Harper represents a Calgary West riding, the oil capital of Canada, often referred to as Houston North.  An economist professionally, he has been prime minister since 2006, the first five years walking the tightrope of minority government.  In 2011, Canadians rewarded him with a majority government in return for turning around the economy by cutting spending and government debt without gutting the social programs.  Harper did this in the face of the entire opposition to his left.

Traditionally, Canadians have welcomed politicians who conduct themselves in a nationalistic fashion and who avoid being labeled as lackeys of the USA or accusations of turning Canada into the 51^st state (58^th for Obama).  Pierre Elliot Trudeau was a perfect example of a politician who was essentially anti-American, while Brian Mulroney was considered part of Wall Street.

Harper, on the other hand, has pursued a Canada First policy and has led Canada to be Israel's number-one supporter with absolutely no apologies to Obama.  He has pursued policies which strengthen economic ties outside the USA-Canada relationship.  He has refused to jump on the global warming bandwagon.  Rejecting any "obligatory" sale to the U.S. in favor of China will substantially strengthen Harper politically without public fanfare.

Harper has kept control of the Northern Gateway Pipeline in federal hands.  The Liberal British Columbia premier probably welcomed the chance to dodge the issue given the province's California Lite reputation, the need for job creation, and the development of B.C. energy resources the project will bring.  The pipeline has the backing of some of the more outspoken members of the environmental lobby.

The tar sands contain about 1.7 trillion barrels of recoverable oil.  Obama has again opted out of energy independence, as he did on the Gulf development and all the other energy projects that would make U.S.-recovered hydrocarbons available domestically.  His non-decision has demonstrably treated Canada as a client-state while catering to the Green base of his own party.

Politically, the decision defies logic without a presumption of the president and his inner circle as radical leftists.  Obama killed the project in the face of support from organized labor that envisioned 20,000 construction jobs and over 100,000 spin-off jobs which are likely to be permanently lost.  The environmentalist left have nowhere else to go next November, while labor needs something to offer its unemployed members, who are the most likely voters to stray from the Democratic plantation.

Obama's message to Canada was, "Be good little children and wait until our election is over!"  His advisers certainly misread the Canadian mindset.  Harper is not going to stand around and wait for a leftist U.S. politician to determine Canadian economic development.  Canada has a valuable product to sell and a hungry Chinese economy willing to purchase it.  He has a pipeline project that is viable financially and safe environmentally ready to go to the coast.

There is talk about a new route to the USA to the west of the Nebraska aquifer, but at best this is to keep labor at bay, given the huge job loss from shelving the project.  By the time that project would be approved, Canada could build the Kitimat route and, if supertanker dock space is available, double the line to 900,000 barrels per day.

Personally, I would love to see Harper build a series of refineries and coal-fired power plants along the American border from Alberta to Ontario and ship the finished products of electricity and refined petroleum products to the USA.  That might just prove to be a great "Envirowacko-Free" outlet for the North Dakota oil and gas, as well as additional Canadian production, circumventing the EPA and other radical hindrances to American energy development by reversing the energy flow.