business

More Oil from Canada, Less from Venezuela

Within five years, a new pipeline will make U.S. oil supplies more reliable.

Venezuela's president Hugo Chavez is threatening to cut off oil exports to the U.S. But a new oil pipeline from Canada could help undercut his leverage in the future.

Expect President Obama to approve the new connection from Canada to Texas, but not until after the November elections. Many Democrats are against it, and Obama doesn’t want a fight during the campaign. By year-end, though, he’ll grant the permit, arguing the U.S. will need the oil during the 10-20 years it will take to build up alternative energy supplies.

The $7-billion pipeline from Hardisty, Alberta, to Port Arthur, Texas, already named the TransCanada Keystone XL, will boost Canadian exports to the U.S. by nearly 60%, to 3 million barrels a day within about five years. Canada is already the top U.S. foreign oil supplier at around 1.9 million barrels a day, far outdistancing Saudi Arabia and Mexico, which each export around 1 million barrels of oil here daily. Nigeria and Venezuela round out the top five, shipping roughly 980,000 and 895,000 barrels of oil here, respectively.

The increase will also wean the U.S. from Mexican oil, which is beginning to play out after years of underinvestment in new production by Pemex, the state-owned oil company. Ultimately, the U.S. may whittle down Saudi Arabian imports, too.

The pipeline would also temper prices. “The fact that it’s coming from Canada from a reliable supplier will help to keep oil prices more stable by easing traders’ concerns” about potential supply disruptions, says David Pumphrey, deputy director for energy policy with the Center for Strategic and International Studies, a think tank.

While we expect the administration to approve the permit, it won’t come without a fight. Fifty House Democrats, led by Rep. Henry Waxman (CA), who chairs the House Energy and Commerce Committee, object to importing oil derived from Canadian tar sands. They contend this oil is “dirtier” than crude produced from conventional wells, because gobs of energy are needed to convert buried bitumen into liquid oil, thereby increasing greenhouse gas emissions. Their argument is likely to delay the pipeline’s approval, but not derail it. “One can debate national energy security versus climate change, but as oil is a fungible product, if the U.S. doesn’t buy Canadian oil, China or others will,” says Adele Morris, policy director for climate and energy economics with the Brookings Institution, another think tank.

Most Popular

Is the Stock Market a House of Cards?
investing

Is the Stock Market a House of Cards?

The stock market volatility we’ve been experiencing and the apparent disconnect with the broader economy have some investors wondering just that. But …
October 12, 2020
Stock Market Holidays in 2020
Markets

Stock Market Holidays in 2020

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2020.
October 12, 2020
10 Worst Things to Keep in Your Wallet
Scams

10 Worst Things to Keep in Your Wallet

Storing your passport book or card, a spare key, or any of these other important items in your wallet leaves you open to identity theft -- or worse.
October 9, 2020

Recommended

5 Best Mining Stocks to Buy Now
commodities

5 Best Mining Stocks to Buy Now

Gold mining stocks have been on a tear in 2020, but they're not the only way to profit off digging into the ground.
October 23, 2020
12 Costs of Owning a Cat
how to save money

12 Costs of Owning a Cat

Housecats may be known for their aloofness and low-maintenance attitude, but they're not cheap. Here's what you can expect to spend if you plan on ado…
October 16, 2020
The Ultimate Guide to Amazon Prime Day 2020: When It Starts, the Best and Worst Deals, Competing Events, More
spending

The Ultimate Guide to Amazon Prime Day 2020: When It Starts, the Best and Worst Deals, Competing Events, More

In a first, the giant retailer has pushed Amazon Prime Day this year from July to October, effectively launching the holiday shopping season weeks ear…
October 8, 2020
High-Tech Aids for Aging in Place
Caregiving

High-Tech Aids for Aging in Place

Apple Watch and other technology provides fast feedback, comfort for older users, and a powerful assist for caregivers.
October 1, 2020