22.01.202109:58 Forex Analysis & Reviews: Biden's Keystone decision to deliver blow to Canada's economy

Exchange Rates 22.01.2021 analysis

The leader of the Canadian oil center called Biden's decision to cancel the Keystone XL pipeline project an "insult" and urged Prime Minister Justin Trudeau to consider retaliation.

"This is a gut punch to the Alberta and Canadian economies," Alberta's Premier Jason Kenney said in a press conference on Wednesday. "It's an insult," he continued.

Last year, Kenny's government invested $1.1 billion of taxpayer money to accelerate the construction of the pipeline. According to the plan, the pipeline would carry more than 800,000 barrels a day from Alberta's oil sand to the south of the US, that is, to the coast of the US Gulf of Mexico.

Kenny said that Trudeau, Canada's prime minister, should demand that the new US administration discuss the project in the context of environmental, climate, and security policy. If this plan fails, then Canada should be willing to use "meaningful" punitive measures against its largest trading partner.

Biden's decision announced on Wednesday will affect the jobs of more than 2,000 people working on the project, Kenny said.

The pipeline is one of three projects that Alberta's oil sands producers have counted on to get their oil to foreign markets, especially after struggling for years with a lack of export pipelines. Environmentalists say the pipeline would worsen global warming by spurring the development of carbon-intensive oil sands.

If Biden does not change his decision, Alberta is prepared to "use every legal means" to seek compensation through the courts, Kenny said. He also added that the province has consulted legal experts and "has a strong case to make."

Angela Merkel supported Moscow on the Nord Stream project, saying on Thursday that sanctions are unacceptable and that Washington itself has energy ties to Russia.

"It's not as if there aren't any trade relations in the oil sector between the US and Russia," Merkel said. "We need to put all this on the table and discuss whether we won't have any more trade with Russia in the gas sector, what degree of dependence is acceptable."

Nord Stream is one of a long list of issues that Biden will have to face at the start of his four-year term. Anthony Blinken, Biden's pick for the secretary of state, is "determined to do whatever we can to prevent" the completion of the pipeline, he said during the hearing on Tuesday.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Andrey Shevchenko,
Analytical expert
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