Please disable your Ad Blocker to better interact with this website.

Image Image Image Image Image Image Image Image Image Image

Affluent Investor | July 27, 2017

Scroll to top

Top

No Comments

Obama to Trudeau: Congrats on the New Job, Keystone is Dead

Trans-Alaska Pipeline (Photo by Luca Galuzzi - www.galuzzi.it) (CC BY) (Resized/Cropped)

Trans-Alaska Pipeline
(Photo by Luca Galuzzi – www.galuzzi.it) (CC BY) (Resized/Cropped)

My sincere apologies to our friends to the North, but the US charts its own political path and doesn’t play nice at times even to newcomers.

The ball has been rolling slowly downhill on the Keystone pipeline for seven years and finally hit the bottom last week. The writing was on the border wall after Transcanada attempted to save face by requesting to withdraw its application for the pipeline prior to a US State Department national interest determination that was due to be released.

Announcing the decision, President Obama stated,

“It has become a symbol too often used as a campaign cudgel by both parties rather than a serious policy matter. And all of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others.”

However, the timing of the announcement was symbolic as it comes ahead of the United Nations summit meeting on climate change. Again, President Obama’s words,

“America is now a global leader when it comes to taking serious action to fight climate change. And, frankly, approving this project would have undercut that global leadership.”

Welcome to global leadership Justin Trudeau!

There has been tremendous speculation over the seven years as to why this pipeline was held up from helping Warren Buffet’s railroads (that move oil) to punishing a conservative Canadian prime minister. While these could be part of the explanation, what likely drove the process was that President Obama needed to have a symbol to show US environmentalists that he supported them and the view that climate change needed to be addressed.

Clearly, the Obama administration has pursued an aggressive stance on carbon with the EPA creating the Clean Power Rule regulation. As a reminder, environmental issues are important to both Republicans and Democrats, but Democrats support a stronger regulatory role to address the issue. After President Obama’s famous “I will not wait for Congress. I’ve got a pen and …I’ve got a phone,” statement, he has moved forward on not waiting for Congress to provide legislation on key issues, but nor has he compromised with Congress to create legislation both sides could agree upon. In the case of Keystone, there was bi-partisan support for it and President Obama vetoed a bill recently that would’ve allowed the pipeline to be built.

This process has played out as Canada went through an election with Justin Trudeau winning. While his predecessor aggressively pursued getting the US to approve the pipeline, Trudeau has carefully not made it a priority although he’s stated that he supports the project. As a matter of fact, Trudeau didn’t raise the issue when he had his first post-election call with Obama. To me, it appears Trudeau is making a wise, political short-term decision to avoid poisoning the well with the US before anyone can drink from it.

However, a bit of caution is needed on this strategy, as there is a US presidential election in 2016. Most of the Republican candidates have stated publicly that they would sign a bill allowing the Keystone pipeline to be built. While these candidates are currently running behind Hillary Clinton, things can change quickly in US politics.

Wrapping this up, the Keystone pipeline made a lot of sense when it was first proposed with oil prices moving above $100 a barrel. Now, it has become an environmental and political symbol outweighing any economic benefit it would have provided. The decision to kill Keystone occurred after Canada elected a new leader and is hurting economically. The country could’ve used the additional, albeit incremental economic help. This is an excellent lesson for Trudeau to learn as he attempts to lead Canada out of a recession.

 

Originally posted on Andrew Busch’s Website.

 

Join the conversation!

We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse.

The Affluent Mix

Become An Insider!

Sign up for Affluent Investor's free email newsletter and receive Jerry Bowyer's Special Report, "How to Be an Affluent Investor in the Age of Obama & Ineffectual Republican Opposition."


Send this to a friend