When Barack Obama made his landmark climate change speech in June, both proponents and opponents of the Keystone pipeline claimed victory.
President Obama’s latest smug comments on the Keystone XL oil sands pipeline suggest the Canadian project’s odds of being approved under his watch are waning.
Thankfully, Canada hasn’t stood still while the U.S. President dithered.
So many new pipeline options have emerged that Keystone XL’s relevance is diminishing as each one gains momentum.
The U.S. President said the State Department was in the final stages of assessing whether Keystone could go ahead. Mr. Obama said that the U.S. national interest would only be served if the pipeline did not “significantly exacerbate” carbon pollution.
Advocates pointed out the State Department had already ruled that Keystone would have little impact on the growth of the oil sands because Canadian crude would find its way to market with or without the project — a conclusion bolstered this week by TransCanada’s decision to go ahead with the 1.1-million barrels a day Energy East pipeline to Quebec and New Brunswick.
The opposition to Keystone, meanwhile, took heart from statements coming out of the U.S. Environmental Protection Agency that said the pipeline was bound to have an impact on climate change.
In an interview with The New York Times last weekend, the President resolved the various interpretations of his Sphinx-like comments by clearly siding with the latter camp.
He mocked the number of long term jobs that might be created as “somewhere between 50 and 100 jobs in an economy of 150 million working people” and expressed skepticism about claims the pipeline would bring energy security and lower gas prices. He noted that “oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States. In fact, it might actually cause some gas prices in the Midwest to go up where currently they can’t ship some of that oil to world markets.”
Leaving aside the extremely dubious claim that a secure supply of crude from the oil sands would cost Americans more than the oil they currently import, the response foreshadows a crisis in Canada-U.S. relations.
Stephen Harper was asked about the President’s comments at a press conference and tried not to inflame an already smoldering situation.
“I believe our perspective is quite clear. The reality is that the top priority for our government is creating jobs and this is a project that will create jobs on both sides of the border. And it will encourage energy security. So we are fully convinced that this is in the national interest of both of our countries.”
Some commentators have suggested that the Harper government link approval for Keystone to access to the Canadian telecom market for U.S. phone giant, Verizon.
The problem with this is that the Tories have deliberately picked a fight with the three big domestic telcos — Rogers, Bell and Telus — ostensibly to bring in a fourth carrier and lower cell phone charges, but also because its popular with their base. Diehard Conservatives may have no love for a tree-hugging Democratic president, but they reserve their real loathing for Big Telco.
The Conservatives could also bring in their long-promised oil and gas regulations to provide the President with some cover to approve the pipeline but this would lead to the inevitable charge from the opposition that the Tories were introducing a carbon tax.
All of which leaves Mr. Harper with very little room to manoeuvre. He has already appealed personally to the President, at the recent G-8 meeting in Northern Ireland.
It is hard to see how the relationship between the two men would recover if Mr. Obama blocks the pipeline.
The Economist suggested this week that the President’s comments amounted to a “kick in the teeth.” One senior Conservative said Friday refusal would be more like a “kick in the balls.” If the President turns down the project on domestic political grounds, Mr. Harper is unlikely to be so reticent when he’s next asked about Canada-U.S. affairs.
The feeling is that a rejection would signal a breakdown in relations, and there would be very little left to lose.