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Politics Blocks Another Pipeline

Last January plans to build the Keystone XL pipeline were halted by the Obama administration; this January it’s Canadian politics that is blocking a new pipeline. Plans to build the Northern Gateway pipeline, a Keystone alternative that would bring Canada’s vast reserves of crude from its Albertan oil sands to the Pacific Ocean, are buckling under pressure from British Columbia. The Wall Street Journal has the story:

To boost the chances of the Northern Gateway—a six billion Canadian dollar development—the Harper government streamlined environmental reviews of big energy projects, and made the rules retroactive to apply to the pipeline project. . . . The move came after the White House in January 2012 denied approval of . . . [the] Keystone XL pipeline expansion, which would carry crude from the Alberta oil sands to the U.S. Gulf Coast. . . . But now the project’s chances are fading, industry executives and former British Columbia government officials say.

The stakes have risen in recent months amid a plunge in the price that Canadian producers get for their oil. Because of a lack of pipeline capacity out of Alberta’s oil patch to non-U.S. markets, and a growing supply glut in the U.S., Canadian blends are selling at sometimes-sharp discounts to other oil . . . [costing] the Canadian economy . . . roughly 2.5 billion Canadian dollars a month in lost revenue.

Canada currently exports 98 percent of its crude to the United States, but the waning U.S. appetite for Canadian oil as US production increases has the Harper government eyeing a pipeline to the Pacific that would give Canada access to oil-hungry Asian markets.

But as hard as the Harper government has worked to fast-track the Northern Gateway,  opposition from British Columbia’s powerful green lobby has remained intractable. Risks of spillage and increased coastal tanker traffic have galvanized opposition to the pipeline.

Amid all this confusion, one thing is clear: As the energy revolution continues to cause tectonic shifts in the global marketplace for oil and gas, the politics of pipelines are becoming increasingly convoluted and contentious. Pipelines can and sometimes do pose serious risks. These should be thought through carefully and reasonable precautions should be taken. But contentious and bitter though battles over pipelines can be, these are basically very good arguments to be having. They are arguments about how to manage abundance, and it is much better to be worrying about how to ship our abundant energy than to be trapped in zero sum competition over a vanishing supply.

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