Canada might well benefit from Keystone’s rejection – by Gordon Gibson (Globe and Mail – March 27, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Maybe the best thing for Canada would be President Barack Obama’s ruling against the Keystone XL pipeline border crossing. A turndown would certainly be a bad thing for the Americans, but that’s their business. It might quite help us.

Mr. Obama himself probably doesn’t yet know how he will rule. He knows his environmental base has decided to draw a line in the oil sands, to make this the central action against climate change. The Sierra Club has decided to reverse a long-standing policy against civil disobedience to fight this cause. The New York Times has graciously told Canada to stop. A large portion of the Democratic caucus in Congress is opposed. Opposition Leader Tom Mulcair went to the United States to say that wouldn’t bother him too much.

When the President decides, you can bet domestic politics will weigh very heavily, and the rapidly expanding oil supply inside the U.S. makes our oil less important economically.

If he approves the pipeline, well and good. It would unblock the capacity problem that keeps our prices low, costing Canada as much as $30-billion every year by many estimates, $6-billion to the Alberta treasury alone. That kind of money buys a lot of jobs and health care every year. Keystone would go a long way to remedy that, so Canadian governments press for approval.

A loss would bring great disappointment, but all wouldn’t be dark. It would also have the salutary effect of forcing us to immediately contemplate our great vulnerability in having only one customer for what’s by far our largest export. Keystone would have cemented that dependence even further.

That single customer has had us over a barrel on pricing because we have no alternative. Our oil currently is landlocked. The solution is dead obvious: Build pipelines across Canadian territory to the Atlantic and Pacific from whence it can be carried to any customer in the world, at top world prices.

So far, Canadians have declined to bite that bullet. We’ve been doing well by selling the raw product to an industry dominated by giant U.S. refineries. But now that comfortable situation has been changed by a combination of technological progress in the production of domestic U.S. oil and the pipeline crunch. So if there’s no Keystone, we have to react – or accept a somewhat lower standard of living. That’s a thought that’s perhaps politically even more powerful than opposition to new pipelines.

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