The oil industry is one of the pillars of Canada‘s economy.
The oil industry is one of the pillars of Canada’s economy, and the cancellation of the Keystone XL pipeline project from Canada to the United States by the new U.S. President Joe Biden has caused outrage among Canadian governors, who have called on Prime Minister Justin Trudeau to “go to war” with the United States.
The Keystone pipeline, an oil pipeline system between Canada and the United States, came into service in 2010 and is owned by TC Energy and the Canadian government of Alberta. It begins in the Western Canadian Sedimentary Basin in Alberta, Canada, and ends at refineries in Illinois and Texas, and at a tank farm and pipeline distribution center in Cushing, Oklahoma, respectively. Construction of Keystone XL, the fourth phase of the project, drew opposition from environmentalists, and was temporarily delayed by then-President Barack Obama in 2015. on January 24, 2017, President Trump allowed construction of Keystone XL to continue.
On Jan. 20, 2021, Biden canceled Keystone XL, an $8 billion project, on his first day as president.
On Jan. 22, sources told Global News that Canadian Prime Minister Justin Trudeau’s conference call with governors lasted more than an hour, and while it touched on the outbreak and plans for vaccine distribution across the country, the hot topic was new President Biden’s controversial move to announce the cancellation of the pipeline project, even as the issue of Canada-U.S. relations became a topic of discussion.
According to aides to top officials at the meeting, the governors were so upset with Biden’s decision that they strongly urged that the U.S. be punished or sanctioned, even though it could lead to damage to relations between the two allies. Some aides, who did not want to be identified, said people at the meeting were extremely agitated and emotions ran high, with “some senior officials even calling on Prime Minister Justin Trudeau to go to war with the U.S.”
Several aides told Global News that during the discussion, Ontario Premier Ford, Alberta Premier Jason Kenney and Saskatchewan Premier Scott Moe were in complete agreement on their positions, warning Prime Minister Trudeau that “Biden is a total bully on the pipeline thing and we Canadians can’t just concede defeat.”
Ford and the governors of other non-oil-producing provinces are concerned that if Biden can cancel the pipeline project, he may also be able to take advantage of it and will shut out Canadian steel, aluminum and other manufactured goods, which would be very damaging to the Canadian economy.
Prime Minister Justin Trudeau told the governors that he would call Biden to speak up for the Keystone XL pipeline.
The oil industry is a very important sector for Canada and one of the few energy exporters in the developed world. The offshore Atlantic provinces are rich in natural gas resources, while Alberta also has significant oil and gas resources, and the huge reserves in the local Athabasca oil field make Canada the third largest oil reserve in the world with about 13 percent of the world’s oil reserves.
In addition, Canada is the largest foreign supplier of energy to the United States. Canada holds the third largest oil reserves after Saudi Arabia and Venezuela, and is the only non-OPEC (Organization of Petroleum Exporting Countries) member in the top five. Canada and the United States operate an integrated power grid based on jointly developed reliability standards. Uranium mined in Canada helps fuel U.S. nuclear power plants.
Canada and the United States have the largest investment relationship in the world. By far, the United States is the largest foreign investor in Canada. Half of Canada’s foreign investment dollars come from the United States, more than 20 countries combined. Canada is the second largest investor in the United States, accounting for 45% of Canada’s global direct investment. U.S. investment in Canada is concentrated in the Canadian software, IT, transportation and business services sectors. Canadian investment in the United States is concentrated in software and IT.
Last February, Canadian analysts noted that Canadians should not expect better Canada-U.S. relations if U.S. Democrats prevail.
According to Craig Geoffrey, an assistant professor at the University of Toronto, Canada could actually face a whole new set of challenges if the U.S. Democrats are in power.
U.S. Democrats have already given plans to control the big banks. Many Canadian jobs, especially in Toronto, are tied to the financial services industry and would have a negative impact on Canadian employment. These businesses are tied to the U.S. market, and if there is a real change in U.S. legislation that makes financial services less profitable, it will hurt the Canadian financial sector.
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