If you noticed a significant jump in price at the gas pump -- as much as 7 cents per litre in some places in Alberta -- there may be a pretty good reason for it: it's now finally down to the decision of the State Department of the United States.
Nebraska Governor Dave Heineman objected to an earlier planned route through the state. But now he's approved a revised route. That makes the decision up to US President Barack Obama and incoming Secretary of State John Kerry.
It remains possible that Obama may block the pipeline as part of his renewed pledges to fight climate change. But even if that doesn't prove to be the hinging point of a possible decision to reject the pipeline, there remains one other possible reason: and it may have effectively been provided by Alberta Energy Minister Ken Hughes.
There's little question that the US still needs to import oilsands oil. But they also benefit economically from being able to do so at a lower price -- something that will change if the Keystone XL pipeline and the Northern Gateway pipeline are approved.
During a recent stop in Lloydminster Hughes suggested that US oil imports from Canada have effectively been subsidized by lack of access to international markets.
“Today, we’re effectively capturing maybe 50 per cent of the world price for oil that’s being shipped out of Alberta and that’s a problem for all of Canada," Hughes declared. Hughes estimated that the lost income on exports to the US could total as high as $30 billion per annum. “What we have to do is we have to ensure that we have enough pipelines and enough railway capacity to ship the production of oil and gas, oil in particular, out of Alberta. Once we get world price, then we’ll no longer be providing Americans with that subsidy.”
Hughes had better hope that neither Obama nor Kerry have been paying attention to what he's been saying. Either that he or he had better hope that both Obama and Kerry agree that the economic benefits of the pipeline to the US are as clear-cut as they are to Canada -- and that these benefits make up for the approximately` $30 billion a year it will eventually cost them.
Ken Hughes could be in the midst of blowing the entire deal. If either Barack Obama or John Kerry look at that $30 billion figure and decide it's important they may have effectively heard it out of Ken Hughes himself.
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