Business

Forget the Keystone XL. It doesn’t matter (all that much) anymore.

The Northern Gateway, on the other hand…

What’s blocking up the pipeline?

Jimmy Jeong/Bloomberg/Getty Images

It was supposed to be a lifeline for Canada’s choking oil sands and America’s path to energy independence from the Middle East, Venezuela and the rest of the world’s rogue or unstable hydrocarbon exporters. It saw the Harper government lash out against “eco-extremists,” who, like other types of terrorists, we were told, are well connected to shady foreign financiers. In the U.S. it split “the Democrats’ twin pillars of big labor and environmentalists,” as the Washington Post put it at the time.That was the Keystone XL pipeline in 2011.

Just over a year later, though, it looks… well, not irrelevant, certainly much less important. “Even if the current Obama administration gives its final assent to the Keystone XL pipeline this will not resolve Canada’s export challenge,” notes a new CIBC report that came out yesterday. And it’s not just because we should really stop depending on a single buyer of our most prized export and diversify by catering to oil-thirsty Asian countries. It’s also because “US energy production is increasing at a pace that few, if any, saw coming,” reads a foreword penned by none other than Jim Prentice.

One of the few who did see it coming is Philip Verleger, a former advisor to President Ford and once director of the Office of Energy Policy at the U.S. Treasury under Carter. He thinks the lower energy prices brought on by the shift to shale will spur a productivity boom in the U.S. akin to what happened when computers started making their way into America’s workplaces. He  has also repeatedly said—for example, here—that Canada, for now, is the only country other than the U.S. with the ability to produce shale gas competitively. Trouble is, according to this study by TD Economics, that Canadian businesses and consumers don’t have much use for cheap natural gas since, unlike Americans, they already enjoy relatively low power rates. Here too, concludes TD, the key is turning to Asia: Canada would need to export to countries like China and India to find a market for its vast reserves of shale.

In all likelihood, the next furious pipeline battles will about tubes that get stuff to the Pacific, not the Gulf of Mexico.

Looking for more?

Get the Best of Maclean's sent straight to your inbox. Sign up for news, commentary and analysis.
  • By signing up, you agree to our terms of use and privacy policy. You may unsubscribe at any time.