Freaking Friday not only witnessed the great comeback of the employment sector in United States but also put an end to the 7 year old debate over the construction of the Keystone XL pipeline requested by TransCanada- a major North American energy company based in Calgary, Alberta. I am sure, in spite of this issue being such a pain in you know where, many of our readers wouldn’t know about this, Well, tell this to the thousands of environmentalists and activists who protested for more than 4 years. So, when President Obama announced the rejection of Keystone XL pipeline on the basis of climatic grounds and no national interest, it was a victory for the environmentalists who were campaigning against the project.
The Keystone XL pipeline would initiate in Alberta with 1700 mile course passing through 6 US states. The pipeline was expected to carry 830,000 bpd(Barrels Per Day) of oil to refineries on the coast of the Gulf of Mexico. Out of which 100,000 bpd would come from the producers in North Dakota. The proposal for the construction of this pipeline was put kept by TransCanada Corp. in 2008. It was heavily obstructed by the environmentalist and landowners in Nebraska. Obama was expected to give a finals decision before 2017 when he would leave the office. The growing skepticism about the project and increased participation of US in controlling climatic changes made it a huge political agenda.
The opposition government would support the construction of pipeline on the basis of job creation and stimulus to economic growth. TransCanada Corp spent at least $2.5 billion on Keystone XL and the initial cost expected to reach $10 billion from $8 billion. Now, just few days before Obama made his decision, TransCanada already issued a request letter to cancel their ask permit for the pipeline. Clearly, they wanted to wait for a more proposal-friendly government. TransCanada shares dropped more than 4% after the Obama’s announcement on the rejection.
Well, I must say that Obama is the first president who rejected a proposal on the grounds of climate change. Keystone was sure an important political agenda and rejecting the proposal would make US look good in Paris on 30 November 2015 when they would appear for Climate Talks Summit. It would show how serious US is about limiting the greenhouse gas emission.
Impact on Crude Oil Price???
I wish i could dramatize this situation and could tell you the impact on crude oil price. But the reality is that the Keystone pipeline was proposed back in 2008 expecting to link Canada’s Oil sands city to Steele City in Nebraska. From then, till now markets have already been adjusted with oil price hitting a possible rock bottom. So, the impact of the death of Keystone on crude oil may not be seen now but probably in the longer term.
However, WTI Dec contract fell 2% on Friday but that was more of a too amazing to believe Non-Farm Payroll data.
Will the Keystone Rejection increase the possibility for Obama to win the hearts of Go Greens?
Will the impact on crude oil prices be seen in a longer period?
What other projects Canada is looking forward to bring their crude oil to market?
There is only one way to find it out… Follow the TRADE JOKER
Sources and References: The Financial Times, The Globe and Mail, South China Morning Post, The New York Times, Forbes, Business World,CNN, Asia one,The Wall Street Journal, World Economy, The guardian, The Washington Post
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