After Republican lawmakers in the United States lost their political gamble over the controversial Keystone XL pipeline, the Canadian government decided to issue a double insult to its southern neighbor by simultaneously condemning the political circus in Washington and saying it's time to look at markets in Asia, where a Chinese economy is bustling along at a growth rate of more than 8 percent.
Republican leaders in Washington waged a political bet on the Keystone XL tar sands oil pipeline and lost. Opposition over the original route through Nebraska prompted U.S. authorities to push a decision on the oil sands pipeline until late 2012. The Republicans, however, tried to make it a jobs issue and force the administration's hand, which backfired, giving incumbent President Barack Obama a nice environmental base to stuff in his political pockets as he draws up plans for re-election in November.
As a side note of delicious irony, it's these same Republicans who are on one hand calling for more domestic oil and natural gas production while at the same time betting their political cards on Keystone XL, which could actually make the U.S. energy sector more, not less, dependent on foreign markets.
Obama, in a presidential statement, said he called Canadian Prime Minister Stephen Harper to "personally convey" the decision on Keystone XL and "reaffirmed the close alliance and friendship between the United States and Canada."
What did Harper's administration say? Joe Oliver, the Canadian natural resources minister, said the Harper government was "obviously" disappointed by the fate of the Keystone XL pipeline, but felt it underlined the importance of tapping into the "growing Asian market."
Harper's government has been waging its own political battle over the Northern Gateway tar sands pipeline against what Oliver said were a bunch of environmental lunatics bent on thwarting national development.
Canadian pipeline company Enbridge wants to build the 745-mile pipeline to carry as much as 525,000 barrels of Alberta crude to Canada's west coast for deliveries to the Asian market. And why not? Ironically, in its monthly report for January, OPEC said the Chinese economy was slowing down with an expected percent growth rate of more than 8 percent forecast for 2012 while the upbeat assessment for the U.S. economy was a measly 2 percent. Seems like good business sense to look East, all things considered.
Oliver noted that "99 percent" of its oil exports are currently going to a U.S. market, where political wrangling last year prompted credit-rating agency Standard & Poor's to downgrade the credit rating for the U.S. government to AA+ for the first time ever.
"Our government respects the right of the United States to make its own decisions," said Oliver.
Indeed, Mr. Oliver, indeed.
*Daniel J. Graeber of Oilprice.com.