In the coming years, Canada's oil will continue to be extracted from the earth, but will it flow south to the United States or east across the Pacific in greater quantities? The ramifications of this answer impacts American, Canadian and Chinese economic and political relations for the coming years in subtle ways. The proposed Keystone XL pipeline is not the way to reduce dependency on fossil fuels, but it is an opportunity to access a reliable source of oil from one of the United States most reliable partners.
On November 10th, the Obama administration intervened into the slow-moving effort to approve the Keystone XL Energy project. In a statement released, the Administration argues "because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood." As of this week, Senate Republicans have pushed for an answer on the pipeline in a timelier manner.
Regardless of the political motives behind moving the decision on the pipeline until after the 2012 election cycle, the delay can be viewed as a wonderful opportunity by officials in Beijing to secure a reliable source of energy for the next few decades.
This opportunity has not been ignored by the Chinese oil industry. This year alone, Chinese exports of Canadian crude oil have increased by an astonishing 60%. The Chinese have received the support of Prime Minister Harper who agrees in principal to increase oil exports to China in the future.
This effort can be seen as Canada's warning to the United States that "if you don't buy our oil, others will."
Thus, the Canadian government has made it clear that the oil will be sold at market one way or another. This position was made clear in a November 12th Washington Post editorial that stated "despite the passion among environmentalists against Keystone XL, [Canadian Natural Resource Minister] Oliver's travels illustrate the critical point: Canada's oil will come out of the ground, and someone somewhere will refine it and burn it."
Protests in Washington in the last few weeks have called for the termination of the project and have rightfully pointed out possible detrimental environmental effects of such a pipeline. The transporting of a crude substance across the fragile American prairies has etched an image in the American zydgest of oil spilling in the Gulf of Mexico and providing the stage for one of the greatest environmental tragedies of the last hundred years. Quite possibly, if the Deepwater Horizon never exploded, we would not be having this debate today.
While the Alberta oil sands may not be the most efficient way of collecting petroleum, the sad fact is that it is going to be collected, processed, and distributed regardless of what the Department of State, the Obama Administration, or the State of Nebraska thinks. The International Energy Agency reports that in 2015 the United States will be outperformed by the European Union as the largest importer of oil in the world, but China does not fall far behind. According to the Huston Chronicle China has already invested $15 billion in the Canadian oil sands. The ever-growing Chinese market is always in search of sources of new energy. The Canadian company, Enbridge has proposed an oil pipeline to deliver crude oil sands from Alberta across the Canadian Rockies to the Pacific coast where it could be easily transported to the Far East.
While Americans protest the construction of a pipeline from Alberta to Texas, Chinese investors, such as Sinopec, are ready to take the unwanted tar sands to help fuel the Chinese economy. The oil sands are not the key to America's energy independence, but it is a source of energy from a friendly and reliable neighbor. While the United States needs to pursue cleaner energy sources, it can not, and should not pass up the opportunity to refine and distribute Canadian tar sands oil.
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