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Hopes for a quick U.S. approval of the Keystone XL pipeline fade, forcing Canada to rethink its status as an energy superpower.
Much has changed since Barack Obama threw a spanner into Stephen Harper’s plan to make Canada an energy superpower.
A year ago, the U.S. president rejected an application by TransCanada to run a massive pipeline from Alberta to Texas. Canada’s prime minister assured oilsands producers it was just a hiccup; the project would get the green light after the U.S. election.
Three months ago, Americans re-elected Obama. He still hasn’t approved the Keystone XL pipeline.
Last week he pledged to make climate change a higher priority in his second term. “The path toward sustainable energy sources will be long and difficult,” he said in his Jan. 21 inaugural speech. “But America cannot resist this transition; we must lead it.”
Two other shifts in the landscape have occurred:
- The U.S. has moved a long way toward energy self-sufficiency. It produces enough natural gas to meet its own needs thanks to hydraulic fracturing (“fracking”). And it is ramping up domestic oil production, thanks to new technologies that have unlocked the “tight oil” trapped in rock formations. Americans won’t be buying nearly as much energy as Harper anticipated.
- Ottawa’s backup plan — to export oil to eager overseas buyers — has run aground. There is no way to get Alberta’s bitumen to the Pacific coast. British Columbia won’t provide a transit route. The aboriginal peoples whose territory Enbridge proposes to cross with its Northern Gateway pipeline are even more adamantly opposed to the $6-billion project.
The bottleneck has already driven down the price of Alberta’s tarlike oil. It is now selling at 40-per-cent below the North American benchmark (the West Texas Intermediate price) and 50-per-cent below the global standard (Brent crude price).
Last week Premier Alison Redford warned Albertans the province faces a $6-billion budgetary shortfall because of dwindling royalty payments. Ottawa is feeling the fiscal pain, too. For two years running, Finance Minister Jim Flaherty has had to reduce his revenue projections because of lower-than-expected taxes from the oilpatch.
For the rest of this article, please go to the Toronto Star website: http://www.thestar.com/opinion/editorialopinion/2013/01/29/goar_obama_casts_doubt_on_canadas_ambition_to_be_an_energy_superpower.html