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An oil pipeline may run through it

On Jan. 31, minutes after the State Department declared that a proposed cross-border oil pipeline would have little environmental impact, Canada's ruling Conservatives posted an online ad bluntly directing President Barack Obama to "approve Keystone XL now."

It is not the first time that Canada has dropped the diplomatic niceties when pressing Obama to approve the Keystone pipeline, which would carry crude from Alberta's tar sands to refineries on the Texas coast. Prime Minister Stephen Harper has previously threatened to sell the oil to Asia, called approval a "no-brainer" and insisted that he "would not take no for an answer."

Still, Obama seems to be in no rush. Developing the tar sands and exporting its oil is a priority for Harper, whose political roots lie in energy-rich Alberta. The pipeline, which would carry as much as 730,000 barrels a day of Alberta crude and an additional 100,000 barrels of Bakken crude from Montana and North Dakota, first was proposed in 2008. The southern part of the proposed network, within the United States, went into operation last month.

The northern part, which crosses the border, has been held up by court challenges and environmental reviews. Greens, who want tar-sands production curtailed, remind Obama of his 2008 promise to "free (America) from the tyranny of oil once and for all." The pipeline's backers promise that it would bring jobs and investment.

Despite its title, the State Department's "Final Supplemental Environmental Impact Statement" is not the last word on the matter. The public has 30 days to comment and America's federal agencies have 90 days to weigh in before Obama will be called on to make a decision. With congressional elections due in November, he may prefer to take his time.

The report supplied ammunition to both sides of the debate. Producing and using a barrel of Albertan oil emits 17 percent more greenhouse gas than the average barrel refined in the United States, it said, but building the pipeline would not have much impact on climate change, because without it Alberta crude probably would still be produced and shipped to market, through other pipelines or by rail. Unless the price of oil dropped below $75 a barrel — it is now about $97 — tar-sands producers could absorb the cost of rail transport, the report said. Rail freight had risen to 180,000 barrels a day in Canada by the end of last year, from almost nothing in 2011.

Last July Obama said that Canada could do more to lower its carbon emissions. However, Harper, who has accused the American president of "punting" the Keystone decision, did some punting of his own, saying before Christmas that he hoped new emissions regulations for Canada's oil and gas sector, first promised in 2006, would be passed within two years.

Canada had a bigger stick to wave at the United States before the surge in hydraulic fracturing or "fracking" led to predictions of American energy self-sufficiency by 2035. Mexico, which has begun to liberalize its energy sector, also looms as a potential rival.

Harper and the oil industry must hope that they can secure Keystone's approval before the well of interest dries up.

From the Economist magazine.


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