The world has turned upside down. First, despite a decade-long exercise in hand-wringing about reducing American dependence on the oil of, shall we say, "unfriendly" governments, the U.S. just put the kibosh on a deal with Canada -- a deal that would have built a 1,661 mile, 36-inch pipeline to send oil from Alberta through Saskatchewan, Montana, South Dakota, Nebraska, Kansas, Oklahoma to be refined in Port Arthur, Texas. Whatever you think about Canadians, they are not an unfriendly people. Called Keystone XL, the project was turned into a political football, and President Obama walked away from it for fear of enraging the environmental left.
This despite the fact that the project was projected to provide a $7 billion economic stimulus and create 20,000 high-wage manufacturing jobs during its construction. In Texas, the project was projected to provide 50,365 person-years of employment and $41.1 million in state tax revenues. Even Montana, at the other end of the spectrum, might have enjoyed 5,531 person-years of employment and $7.5 million in tax revenues. It's not like people are looking for jobs these days, though, is it?
But let's get back to the world turning upside down. It used to be that the U.S. was the economic engine of this continent. Canada rode sidecar to its much larger and more powerful neighbor. And that's the way it went. Well, the U.S. economy is in the crapper, and Alberta—home to the proposed pipeline—is a landlocked island of prosperity amidst otherwise disastrous western economies. Economic growth is projected to be 3.8% in Alberta in 2012. You can't get a hotel room in Calgary these days if you don't book at least two weeks in advance. You can probably get one for this evening in New York City.
A third reversal? When the U.S. blew off the Canadians after years of work to get this pipeline going, the Canadians didn't just sit idly by and wait for U.S. political gridlock to resolve itself after this fall's election. Instead, Canadian Prime Minister Harper was suddenly in China, glad-handing that other world power and talking about just what it would take to get Canadian oil to the Far East.
Fortune.com caught up with Alberta Finance Minster Ron Liepert earlier this week to get a sense of what this upside-down world looks like from the Canadian perspective.
How do Canadians feel about the collapse of the Keystone initiative?
Let's start with the demand side. The U.S. imports somewhere in the range of 10 million barrels of oil a day. Seventeen percent of that is coming from Canada at the moment. But we have the ability to supply a lot more of the U.S. imports and not have you be reliant on…you name the place, but it's probably not as friendly as Canada. But you have to allow us to get it to you. We recognize that Keystone has been caught up in political gridlock in this country. It's out of our hands. But we also believe that there's a good chance something might happen after the election. And if it's not Keystone, it's going to be something else.
