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TransCanada Follies: Sell to China, Co-Opt Enviromental Panel

Last updated on 2013.03.16

A couple weeks ago, Plains Justice brought to my attention a persuasive argument that TransCanada's real customers for the tar sands oil it wants to ship across the prairie in the Keystone XL pipeline are not the Americans from whom it wants to seize land but the Chinese. A commenter said there's "zero reason for this scenario to occur." The same commenter said I need to learn a little about economics.

I defer economic judgments to professional investment advisors:

Canadian oilsands producers rely too heavily on the U.S. market and need to export more product to growing economies in Asia, taking advantage of higher prices and demand, according to a Scotiabank report released Thursday.

After the huge surge that oil prices experienced in December, rising 12.2 per cent over the previous month, there are signs domestic producers aren't tapping the full benefit, said Scotiabank's (TSX:BNS) commodities specialist Patricia Mohr.

..."The wide discount for WTI [that's TransCanada's] oil off Brent highlights the commercial risk for Canada's oilpatch of relying largely on one export market -- the United States," Mohr said [Sunny Freeman, "Oilsands Producers Should Diversify Exports to Maximize Gains: Scotiabank," Canadian Business, 2011.01.27; [link update!] also available at Oilweek Magazine].

The article lays out logic similar to that revealed in TransCanada's own research that finds building Keystone XL should reduce supply and raise prices in the United States. That same research indicates that, post-Keystone XL, the United States will still import just as much oil from unfriendly countries.

If you still think that TransCanada is building Keystone XL to do the United States a favor, you aren't paying attention to the evidence.

Meanwhile, from the fox-henhouse department, the Alberta government has appointed former TransCanada chief Hal Kvisle to take charge of Alberta's new oil sands environmental monitoring panel. Kvisle will co-chair the panel with former University of Lethbridge president and professor emeritus of management Howard Tennant. Apparently neither environmenal experts nor former BP CEO Tony Hayward were available to lead the panel.