Last night I had the tube on CNN for background noise, and from a Canadian's perspective, noise it was.
It was mid-term election day in the United States. That meant all of the House of Representatives were up for re-election on their two-year cycle (kinda like many First Nations here, meaning never-ending election cycles). It also meant one third of the Senate was being voted on, based on their staggered six-year election cycle. Some state governors were up, too. Anything beyond that was too confusing for a Canuck.
What I did gather was the only thing that really counted were the Senate seats, and it showed a major shift to the right, giving the Republicans control of the Senate and the House once again.
But in that curious American way, a majority of seats is still not enough to get things done. They need a super-majority of 67 seats to really get serious about overriding the president, however, so it really doesn't make much difference. It's truly remarkable that the strongest, wealthiest and most mature democracy in the world is structured in a way that makes it next to impossible to accomplish anything.
And so it falls again to Keystone XL debate, a $5.4 billion pipeline that is now expected to cost $10 billion. Six years of delay haven't been enough - it will likely be at least another two years. The "thumping win," as CNN boldly declared the day after the election, still means little when it comes to Keystone XL.
Even if the energized Republicans start feeling their oats and pass bills demanding President Obama approve it, he'll likely just keep vetoing the proposition. And the pipe stockpiled near Shaunavon will sit a little longer (assuming it's still there. It was stockpiled several years ago).
It's with no small irony a targeted ad appeared beside that headline: "Energy East Pipeline - A project to bring Western Canadian Oil to Eastern Canada."
In the meantime, while the long-term horizon demonstrates a need for Energy East (Atlantic), Northern Gateway (Pacific) and Keystone XL (Gulf Coast), I wonder about the short-term need. Astonishing growth in shale production just a two-hour drive south of me, near Williston, N.D., and even more shale production further south in Texas, has shaken the industry to its core. An American investment firm recently bought the Come-by-Chance Refinery in Newfoundland. That refinery has now apparently given up on Iraqi sour crude and is instead processing American light sweet crude, presumably from this shale development.
The Saudis have dropped their price of oil to below $80 a barrel, and everyone I've talked to in the industry over the past week is speaking with nervous apprehension about how much work there will be with $80 oil.
Will the American election change any of this? Not at all. North Dakota is on a continual tear, breaking production records. Texas is re-invigorated in its production. Those two states, and their impact on world markets are going to have a bigger impact on Keystone than anything else.
North Dakota stands to benefit from Keystone, as it is supposed to gain an "on-ramp" with the new pipeline. But its production has grown so large, that on-ramp only equates to a few more unit trains of oil per day. It's no longer a major factor one way or the other.
The net result of this election will not be a quick approval of the pipeline. Instead it means more crude-by-rail trains for at least another two years.
It would be nice if they did approve it, because too many trees have been killed writing about it.
- Brian Zinchuk is editor of Pipeline News. He can be reached at [email protected]
