Free Markets, Free People
How Obama’s Keystone XL tantrum will cost the US
Not that President Obama will much care.
As you know, if you’ve followed the news, a few months back, President Obama stopped the building of a critical oil pipeline from Canada’s oil sands in a fit of pique at the GOP for demanding a decision sooner rather than later. His excuse was it hadn’t been studied enough even though his own State Department had unofficially announced they were satisfied with Trans Canada’s application and environmental studies and prepared to okay the project.
A huge outcry ensued and as he usually does, Obama tried to blame his decision on someone else. The result of his decision, of course, was to further delay the transport of up to 800,000 barrels a day of crude oil from Alberta’s oil sands to our Gulf Coast refineries. He essentially turned down an increase in safe and secure oil that is strategic to our economic growth and national security.
But it has had even more profound effect for the long term. Most people are pretty sure that the pipeline will eventually be built. However the sweet deal it offered us prior to the President’s turn down is no longer available. It is because the refusal pointed out that Canada couldn’t depend on the US to be a reliable trading partner:
In a public one-on-one interview here with Jane Harman, head of the Wilson Centre think-tank, [Canada’s Prime Minister Stephen] Harper said Obama’s rejection of the controversial pipeline — even temporarily — stressed Canada’s need to find other buyers for oilsands crude.
And that wouldn’t change even if the president’s mind did.
“Look, the very fact that a ‘no’ could even be said underscores to our country that we must diversify our energy export markets,” Harper told Harman in front of a live audience of businesspeople, scholars, diplomats, and journalists.
“We cannot be, as a country, in a situation where our one and, in many cases, only energy partner could say no to our energy products. We just cannot be in that position.”
Of course there’s no particular problem finding new customers. China, naturally, was waiting in the wings for us to shoot ourselves in the foot and when we obliged them, they stepped right in.
That, of course, has another effect:
Harper also told Harman that Canada has been selling its oil to the United States at a discounted price.
So not only will America be able to buy less Canadian oil even if Keystone is eventually approved, the U.S. will also have to pay more for it because the market for oilsands crude will be more competitive.
That’s right, we get less and it will cost more.
We have taken a significant price hit by virtue of the fact that we are a captive supplier and that just does not make sense in terms of the broader interests of the Canadian economy," Harper said. "We’re still going to be a major supplier of the United States. It will be a long time, if ever, before the United States isn’t our number one export market, but for us the United States cannot be our only export market.
"That is not in our interest, either commercially or in terms of pricing."
Congratulations Mr. President, with your childish fit of pique you’ve managed to again do something that will help achieve your goal of seeing energy prices “skyrocket”.
And the people you profess to be looking out for, the poor and middle class, are those who will pay the most for your tantrum.