Commentary Magazine


China’s Getting Our Oil Because of Obama, Says Canada PM

This is big news, and not just because it refutes a lot of the skepticism that Canada would ever actually go through with its threats to sell its oil to China. It also shows there will be major consequences from what the Obama administration clearly believed was a harmless little political game it could play with the Keystone XL permitting. Even if the president backs down from his Keystone XL objections now – as Republicans have continued to urge him to do – Canadian PM Stephen Harper says it won’t make a difference.

Canada’s Sun News reports:

In a public one-on-one interview here with Jane Harman, head of the Wilson Centre think-tank, Harper said Obama’s rejection of the controversial pipeline — even temporarily — stressed Canada’s need to find other buyers for oilsands crude.

And that wouldn’t change even if the president’s mind did.

“Look, the very fact that a ‘no’ could even be said underscores to our country that we must diversify our energy export markets,” Harper told Harman in front of a live audience of businesspeople, scholars, diplomats, and journalists.

“We cannot be, as a country, in a situation where our one and, in many cases, only energy partner could say no to our energy products. We just cannot be in that position.”

Where to begin on this? First, there’s the amateurishness of an administration that thinks it can string along Canada for political convenience, without realizing the potential fallout. It’s also yet another example of Obama’s commitment to alienating allies while simultaneously aiding adversaries.

And the damages aren’t limited to diplomacy and the U.S. losing out on oil to China. The U.S. will also take a hit on the oil it already purchases, at a reduced rate, from Canada, because of the added competition in the market:

Harper also told Harman that Canada has been selling its oil to the United States at a discounted price.

So not only will America be able to buy less Canadian oil even if Keystone is eventually approved, the U.S. will also have to pay more for it because the market for oilsands crude will be more competitive.

“We have taken a significant price hit by virtue of the fact that we are a captive supplier and that just does not make sense in terms of the broader interests of the Canadian economy,” Harper said. “We’re still going to be a major supplier of the United States. It will be a long time, if ever, before the United States isn’t our number one export market, but for us the United States cannot be our only export market.

“That is not in our interest, either commercially or in terms of pricing.”

The U.S. could be paying for Obama’s political stunt long after he leaves office.