By now, it should be clear that for the US government, the climate change argument serves as a thin veil to hide behind in order to prevent Canadian pipelines from being built.
While the Obama administration railed against Canadian pipelines crossing into the States,the US backed multiple pipeline infrastructure projects within their own borders and abroad. Furthermore, the construction of these pipelines was done concurrent with administrative process of lifting of the nation’s 40 year ban on crude oil exports. Each of these activities comes with a hefty carbon footprint, yet Canada’s proposed Keystone XL pipeline was denied for the apparent crime of carbon emissions – at least that’s what the common narrative appears to be (and the answer that our new Liberal government accepts).
Canadian oil sits on the sidelines, in part, because the US holds the keys to our largest client base and market access. Another piece of that puzzle lies with Canada’s own government – while the Liberals sign green deals with the US and Mexico, they also increased regulations on pipeline infrastructure (Energy East) and continue to preach the global warming narrative above all else. The US will keep the relationship with Canada this way while they begin to export their own oil to Asia, the Middle East, Africa and Russia – markets in which Canada could easily fulfill a portion of the demand if it only had access. While Canadian oil stands by, the United States has now started “test cargoes” and we can expect their export window to open in the coming years.
Since the 1970’s, the US imported the majority of its oil and most recently, Canada has been the country of origin for approximately one third of that supply. At 3.9 million barrels per day (bbl/d), Canada is the 5th largest oil producing country on the planet with only one major client – the United States. What’s more, Canada imports 50% of American oil exports, meaning we essentially buy back a product similar to what we are already selling – again, as a result of not having adequate pipeline infrastructure within our own nation.
American energy independence seemed like an Hollywood fairy tale just five years ago, but is becoming a reality thanks to the proliferation of unlocking previously uneconomic shale oil deposits. In 2013, the country produced more oil than it imported for the first time in two decades. As a result, the US demand for Canadian oil is hitting a plateau and annual forecasts for imports are declining.
Ultimately, it appears The US doesn’t want Canadian pipelines crossing their borders because 1) it would prevent total energy independence, and 2) increased Canadian pipeline infrastructure into the US pipelines decrease the price differential between WTI and WCS, and render the currently large discount a thing of the past.