Keystone XL: Pipeline politics and the future of Canada-U.S. relations

Why Obama’s Keystone decision is so critical—and dangerous—to Canada-U.S. relations

Pipeline Politics

Ken Cedeno/Corbis

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In Washington last week, Maclean’s and CPAC hosted a heated debate on the future of Canada-U.S. relations, and in particular on the Keystone XL pipeline—one of the most important American policy decisions affecting Canada in decades. CPAC’s Peter Van Dusen moderated the discussion, which featured Maclean’s Paul Wells and Luiza Ch. Savage; Canada’s ambassador to the U.S., Gary Doer; former deputy prime minister John Manley; Danielle Droitsch, a director at the Natural Resources Defense Council, an environmental organization; Maryscott “Scotty” Greenwood, an American trade expert; and David Pumphrey, senior fellow at the Center for Strategic and International Studies, a Washington think tank. Below are excerpts from the discussion. Paul Wells kicked things off.

Paul Wells: The President’s got a decision to make; and our American hosts might not be aware, but this decision about Keystone has really transfixed Canadian politics over the last year and a half. When Barack Obama became President not that long after Stephen Harper became Prime Minister there were high hopes—at least on the Canadian side—for a really healthy relationship. Their politics are not that similar but they’re from the same generation, they’re both pragmatists, they’re both outsiders, not capital lifers. Unfortunately, over the first two years of the presidency, it became clear they’re not at all alike and they don’t agree on anything. Obama’s decision to delay a final decision on Keystone until after last fall’s election—Harper kind of freaked out about that. Within several weeks he implemented a major pivot in Canadian trade policy away from the U.S. and toward China; he essentially dropped Keystone as a priority and there’s been a really frosty tone to Canada-U.S. relations ever since. There’s some possibility Obama can fix that by deciding to proceed with Keystone, but there’s also some possibility that it’s simply too late, that our government has moved on.

Luiza Ch. Savage: When I look at the future of Canada-U.S. relations, I see two separate planes going in opposite directions. The best analogy I can think of is a racy one: that they’re headed toward an open marriage. They started out with this great, big fat wedding, the FTA [1988’s Free Trade Agreement], then NAFTA [the North American Free Trade Agreement, in ’94]—trade doubled, it was a great honeymoon, really exciting. Now we’re at a point where they’re looking around for sexier partners. They’re looking at China and seeing this growing middle class, this huge appetite for energy, they’re looking at the rest of Asia, at Europe. They’re seeing attractive opportunities elsewhere.

Gary Doer: I don’t believe in an open relationship—I want to start right there! But I do believe it’s like a company: you gotta take care of your biggest and most important customer first. But you shouldn’t have just one customer. You shouldn’t go to just one car dealership. We’re always getting unilateral decisions from the U.S. But by increasing our trade to Asia, 20 per cent one year, 20 per cent the next year, 20 per cent the year after that, we’re actually stronger—when it comes to negotiation.

Danielle Droitsch: The U.S. is really focused right now on a conversation around climate; last year was the hottest on record. We lost 50 per cent of our corn crops, 60 per cent of our pasture land. We’ve seen some of the most extreme hurricanes—one, hurricane Sandy, cost 130 lives and over $80 billion. This has really prompted the President to look more closely at confronting climate change, and that’s having ramifications for Canada. Sometimes neighbours and friends need to have tough conversations. There are concerns that Canada right now isn’t a climate leader. And that this is an export pipeline—so there’s a lot of concern about whether or not it actually supports U.S. energy security.

John Manley: For the Prime Minister, there are two rules to managing the relationship with the U.S. No. 1: don’t get too close to the U.S. And No. 2: don’t get too far from the U.S. Prime Minister Chrétien successfully campaigned saying it wasn’t his ambition to go fishing with the president, because he saw that as something his predecessor did. I think in fact he preferred to go golfing with the president. But that was part of staying close to him.

Tactically, it’s quite an error for the environmental movement in the U.S. to be focused on a pipeline which, if it is refused, gives people the notion that, “Okay, we’re done,” when it fact it reduces demand in the U.S. for climate-change-causing substances by zero—not one iota. But it’s a lot easier to plug a pipeline coming in from Canada than talking about demand-side measures in the U.S.

David Pumphrey: That oil’s going to get developed—whether it’s developed now, or 10 years from now, it still concentrates greenhouse gases in the atmosphere. Right now, we’re taking Bakken oil [from North Dakota’s shale deposit] by rail to the Delaware River, transferring it to a boat and bringing it down to a [Gulf Coast] refinery. Similar things will happen in Alberta—[shipping by] rail to the West Coast, possibly the East Coast. So stopping Keystone will perhaps slow the development process of the oil sands, but there are many other ways that this will move to market.

Peter Van Dusen: The Prime Minister said a couple of years ago that approving the pipeline is really a no-brainer. How has it become such a headache?

Doer: Really, it’s just displacing oil from Venezuela. And that is an issue of fundamental national interest to the U.S. Two years ago, the State Department evaluated that Canadian oil was, by comparison to Venezuelan oil, two per cent higher in GHGs [greenhouse gases]. The latest reports have it at or below Venezuelan oil. So two years later, it’s even better as a product. The unintended consequences of blocking the pipeline will be continued sales from Venezuela to the U.S., and emissions going up with all the trucks and trains [then needed to transport oil].

Droitsch: The conventional wisdom that the oil will be developed anyway, we reject. We believe that, right now, Canada does not have that opportunity to get their oil out. The U.S. brings in more oil from Canada than any other foreign country, and it’s more and more carbon intensive.

Wells: Just a question. You said Canada is the largest foreign source of oil in American cars and vehicles. Which foreign source would you prefer?

Droitsch: We’re actually looking at driving down oil production. We don’t look at it as should we be getting oil from Saudi Arabia versus Canada.

Wells: How’s that going?

Droitsch: It’s going well. Actually, President Obama has been able to drive down oil demand by 10 per cent.

Manley: Well, that’s because the economy’s down!

Doer: In Canada and the United States.

Droitsch: Well, no, in part because, actually there are fuel-efficiency regulations—

Doer: And we negotiated that fuel-efficiency standard together.

Droitsch: Yes.

Doer: And I have to say, the President and the Prime Minister get very little credit from your membership and from environmentalists for taking that action, and I think that’s too bad.

Van Dusen: Scotty, what would be the effect on the Canada-U.S. relationship if the project is turned down?

“Scotty” Greenwood: Well, if Paul thinks it’s chilly now, you’d better get out a coat. I don’t think Canadians would be impressed—if it would do something to reduce greenhouse gas emissions in the United States maybe you could make the argument, but the facts really matter. In a free world and in a global market, the oil will get to other places where it will be refined somewhere that doesn’t have anywhere near the rigour we have, and where it’ll be burned in cars that don’t have anything close to the Canada-U.S. fuel efficiency standard.

Wells: For five years, Canadian policy on climate change has been pretty much to take whatever policy Obama can get through Congress. It was smart because, as it turned out, Obama hasn’t been able to get much through. But in the last several months the Canadian administration has hinted that they are no longer going to take American policy on climate change if American policy gets too serious. They have signalled that we are willing to grab the competitive advantage that comes from having a dirtier energy sector than the Americans if it comes to that. It’s a fascinating development.

Van Dusen: How significant a dent would it put in the relationship if President Obama says no to Keystone?

Manley: It’s going to be very important how it is explained and what the justification is. [It could be] found to be quite unacceptable to the Canadian government. And that will be a problem. It would be very unhelpful if this was more than just a bump in the road but actually became something that pushed us off the road.

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Keystone XL: Pipeline politics and the future of Canada-U.S. relations

  1. I almost feel sorry for Obama – he is jammed between the proverbial hard place and a rock no doubt about it! either way he goes he is going to lose and lose big time !!!! either way canada wins!!!!! – we get pipeline and voila oodles of money :) – we don’t get pipleine and voila we build others heading east, west and north :) – either way we are in the catbird seat as they say .. what a strange turn of events – for the very first time in our history our unemploymewnt numbers have been way better than the yankees during an economoic disturbance – our debt is way way way lower as a nation – our ownership of american assets is now in a net position! I bet a lot of people out there don’t realize that canadians own more american assets than the other way around :) – canadain companies are purchasing more yankee assets and at a rate never before seen the sheer amount of real estate and especially rail rolling stock boggles the mind – I think it will take some serious re-evaluation of our mind set to put aside the old tired idea of us as powerless little northern cousins because we are in for serious change here the next while our economy is chugging along quite well all things considered and is about to do way better !!! go canada go !!!!

    • It’s a bit of a non sequiter that President Obama is dredging up the specter of Alberta’s tar sands development as being ‘dirty oil’ in light of the recent revelations about the horrific effects of fracking. They are both, at least in terms of the environmental consequences, guilty of committing the same sin. It would go a long way to keeping diplomatic relations between our two countrieson a positive note if the Keystone XL pipeline got the necessary regulatory approval to proceed as was previously planned.

      • If our diplomatic relations need Keystone, then harper just ain’t doin’ his job.

    • either way canada wins!!!!! – we get pipeline and voila oodles of money
      :) – we don’t get pipleine and voila we build others heading east, west
      and north :) – either way we are in the catbird seat as they say ..

      Boy Canadians aren’t very smart.

      The US will be energy independant in a decade or so, what does that mean?

      We will take all of Canada’s oil at a discount, refine the oil and at the same time create10’s of thousands of high paying jobs, then turn around and sell the refined oil at a huge profit.

      Missed Economics 101? Enjoy life hewers, when the party is over just turn out the lights.

      Your Rich American Cousin

      • take another look at how you have been calculating energy independence :) – hint : includes canadian sources – yes indeed :) – Keystone means we start getting world price and not discounted then we take profits and build more pipelines first we cqan stat shipping to our refineries out east here – with zero problems – second we start heading to valdez with you as partners and then we use profits to ship west to Kitimat or Prince Rupert – within 5 years we willl have energy heading in all directions and that is just how it is ! PS: take another long look at the partners in your refineries :) hahahaha! first we take USA then next stop world domination !!!!

      • Energy independant in a decade or so? On what? The Bakken? Windmills? Pixie dust and unicorn farts? Opening up every sacred offshore area to drilling?Invasion and conquest of Canada? Oops, that last one is a possibility, and China is too far away to help us.

  2. You could continue to receive your super heavy oil mined from the Orinoco Delta, a singular tropical rainforest biome that is one of the most species diverse areas on the planet.
    Or, conversely, you could get that oil instead from Northeastern Alberta, one of the least species diverse areas on the planet, and a microscopic part of the world’s largest land biome, the boreal forests.

    Seeing as freighting the oil by tanker across the gulf produces as much CO2 as producing and pipelining the Alberta stuff, you’d think the answers clear.

    But the opposition to Keystone isn’t logical or principled. It’s a new nature cult, masquerading as environmentalism, and flexing it’s political muscles by attacking an easy target.

    • well said = a new nature cult indeed ! I might plagiarize that from you – hope that’s okay?

  3. If Obama says no, then it’s no.

    Canada has nothing to say about it.

    • If its not US, Canada can look to see China and India as their option…

      • Yes indeed they can. There’s a whole world to sell it to…..so why Deniers insist on trying to force it on people who don’t want it….I don’t know.

  4. I firmly believe that the United States know how important the Keystone pipeline is to relations with their prosperous and safe neighbour to the north. The administration has most likely already influenced the State Department’s report. The United States will approve of the pipeline. This is a critical decision for the US. Think about it, they either lean toward tree hunger sentiment or risk their neighbour’s vast crude oil reserves being routed to China. That’s exactly why they are pressuring the Canadian government into committing to more green initiatives.

  5. We should really check if Mr. Soros has increased his holdings in the oil sands. If so, then the pipeline will be a go. If Mr. Soros has not divested himself of Venezuelan oil then Obama will not approve the pipeline. Spooky Dude is what matters.

  6. Climate Scientist Jim Hanson said if we build the XL Pipeline it is “GAME OVER FOR CLIMATE” and he has joined the protestors. That is ENOUGH for me. The argument that Keystone would just ship the tar sands via train making the climate impact INEVITABLE is INSANE. Keep it in the ground, stop subsidizing fossil fuel, subsidize wind and solar instead. It’s a no brainer! http://insideclimatenews.org/news/20110826/james-hansen-nasa-climate-change-scientist-keystone-xl-oil-sands-pipeline-protests-mckibben-white-house

    • Wednesday, January 18, 2012

      The Global Warming Fraud: Exposing The LIE That Carbon Dioxide Is A “Greenhouse Gas”

      Yes, it is now 2012, and the criminals behind the Global Warming fraud
      still do not know when to quit. More and more evidence is rapidly
      coming forward that shows how the entire Global Warming fear was done to
      scare everyone into accepting more taxes to “save the planet” from
      ourselves. It is too bad that nations such as the United Kingdom and
      Australia have already suckered their people into accepting “Green Laws”
      taxations under the false belief of curbing “Greenhouse Gas” emissions.

      For this article, I want to present the following article that comes from the website: “Climate ChangeDispatch” at http://www.climatechangedispatch.com.
      It is entitled: “That Bogus Greenhouse Gas Whatchamacallit Effect”,
      and tears the lies about the fraudulent Greenhouse Gas effect to pieces.
      I have that entire article right here, and I do have some of my own
      comments to follow:

      That Bogus Greenhouse Gas Whatchamacallit Effect


      NASA Scientist James Hansen Arrested, August 29, 2011

      Image via Wikipedia

      Red-faced global
      warming policymakers are now back tracking as independent experts
      increasingly discredit the cornerstone of climatology: the greenhouse
      gas effect (GHE).

      One such whistleblower is Dr. Pierre R Latour who explains adroitly below how
      his NASA colleague, septuagenarian Dr. James Hansen, concocted a
      mythical 33°C [91.4°F] atmospheric greenhouse gas global warming

      NASA’s global
      warming guru, Dr. James Hansen, will go down in history as climate
      science’s Bernie Madoff for his pivotal role in touting the GHE
      hypothesis. This is no imprudent comparison – just “follow the money” as
      they say. It was Hansen’s now legendary doomsaying pronouncements to
      the U.S. Congress in 1981 that spawned a hundred billion dollar,
      thirty-year government Ponzi scheme (Madoff scammed ‘only’ $50 billion).

      None who sat on
      that congressional committee appear to have been aware that in 1951 the
      American Meteorological Society (AMS) had already condemned the GHE to
      the trashcan of failed theories.

      • FEAR SELLS
        GUILT SELLS,

    • Stop fear mongering.

    • Then let’s all move back to our caves! World history is replete with social and/or political disasters driven by religious fervour such as that shown by Ms Hillson. “Keep it in the ground…” indeed. Not even master con artist Hansen pretends that civilization can suddenly wean itself from fossil fuels.

  7. Oil jobs are mute if the planet becomes uninhabitable .Climate change is already happening today. How much the climate warms in the future is up to us. http://clmtr.lt/cb/pzZ0HN

  8. Climate change is already happening today. How much the climate warms in the future is up to us. http://clmtr.lt/cb/pzZ0H2

    • Climate change is a CO2 death threat and in a real civilized society this fear mongering would be worthy of criminal charges.

  9. Dozens of climate change believers march as millions in the global scientific community just sit back and laugh.

    Do not question! Obey the word of science!

    Condemn your own children to a CO2 he!! because we must believe the scientists and the good and true word of the scientists who seek the truth for us. Only they know and we must obey.

    Do as they say and those that do not shall burn in a climate crisis fiery he!! on earth for science is the way, science is the truth, science is science and we must obey.

    The end is near so all repent our sins to the Mother Planet Earth for the weather gods are angry my friend, very angry and we must please and satisfy the angry weather gods of the poor little, tender and fragile planet earth.

    We must obey!

  10. Science didn’t lie, YOU did!

    Only you remaining fear mongers of climate blame belief and you lazy copy and paste news editors and you pandering politicians are saying it WILL be a crisis. Science only says it “could be” a crisis and has NEVER said it is imminent, only “likely”.

    Science didn’t commit the climate change hoax, YOU did Doomer!

    • Science ALWAYS deals in probabilities never certainties but hows this:
      99.9% sure there is going to be a climate catastrophie if we do nothing but burn fossil fuels.

  11. I’m sure all these protesters walked to this demonstration…………or did they drive?

    • they flew

  12. Listen to the ways these guys like Droitsch from the US talk!

    There’s no other country on earth that is so openly and persistently bent on crippling Canada than is the United States of our shared continent America.

    And it’s always been this way—from the time of confederation when they were trying to conquer us physically, to today when they continue attempting to conquer us economically.

    Yet most Canadians persist on embracing the US with near fanatical obsession. Allowing the enemies of the States to also be ours. Confusedly agreeing that the US somehow “protects us”. That we owe their military efforts something. Folks, it’s the exact opposite.

    We ogle and slobber over their media, movies and motor-vehicles to such a deranged degree we call our own films “foreign” and Chevrolets “domestic” while our politicians push legislation to reduce nearly non-existant shooting sprees in our schools.

    We need to recognize the US for what they are: A self-centred aggressor. And we need to warily but intentionally ignore them as we consciously focus on building our own empire and distinct culture.

    Quebec gets it. When they separate, maybe Canada should ask to join them.

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