Guest Opinion: Biden’s Keystone cancellation another blow to Canada’s energy sector
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It will also result in billions in lost revenue for governments in the form of lower corporate income taxes and royalties.
Ironically, cancelling Keystone XL will do nothing to lessen U.S. oil dependency and could very well result in more, not less, emissions.
The U.S. Energy Information Administration recently forecasted that U.S. oil consumption, which will return to pre-pandemic levels by next year, cannot be satisfied solely by domestic supply.
Scrapping Keystone XL will likely constrain the oil supply for U.S. refineries in the Gulf Coast and will force them to increase their reliance on other countries such as Venezuela and Russia. (Of course, Canada’s environmental record is much better than Russia’s or Venezuela’s.)
Moreover, there will be additional greenhouse gas emissions linked with the transportation of crude from these countries, whereas the Keystone XL pipeline would have eliminated all emissions from transportation.
Put simply, cancelling Keystone XL will not affect the demand for oil in the U.S. — it will simply alter the suppliers.
By scuttling Keystone XL, the new president has inflicted further economic damage on an industry and province already reeling from years of bad policies (mostly from Ottawa) and ongoing insufficient pipeline capacity.
And while the announcement may satisfy some campaign promises, it will worsen U.S. relations with its neighbour and number one trading partner while doing little or nothing for the environment.
Elmira Aliakbari and Jairo Yunis are analysts at the Fraser Institute.